How To Make Money As A Real Estate Bird Dog
Definition: A real estate bird dog is a person who locates either distressed properties or distressed sellers on behalf of another investor. This "bird dog", otherwise known as a "property locator" gets paid a fee by the investor they work for if a deal is reached.
Becoming a real estate bird dog is a great real estate investing strategy especially if you do not have any experience, resources, or money to do your own deals. Think of birddogging as being a paid intern that works for an experienced, local investor that pays you to bring them good deals. If done correctly, there is no risk to being a real estate bird dog, however, it is important for you to check the legalities of getting paid a "finders fee" in your state. In many states it is a requirement to be a licensed real estate agent in order to collect anything that resembles a commission on the sale or transfer of real property. In most cases though, the investor simply hires you as an independent contractor and pays you a marketing fee for your "advertising services"!
Now at this point you might be asking yourself...how is being a real estate bird dog different than being a real estate wholesaler? A wholesaler locates significantly discounted deals, gets them under contract, and then markets them to their own list of cash buyers willing to pay more than what the wholesaler got it under contract for. In other words, wholesaling is the next step in the evolution of a real estate bird dog. When you first get started you may not know how to find deals, negotiate, handle paperwork, or even have any cash buyers willing to work for you. As a bird dog, you are partnering with someone that is already established (could be a local wholesaler with a good buyers list) and just focusing on the "locating" part of the equation.
Below you will find the 3 simple steps to getting paid as a real estate bird dog:
Step #1 - Find a local, experienced real estate investor that is willing to train you on the criteria they need in order to pull the trigger on any deals you bring to them. Each investor will have their own criteria, but typically they will want all the property info (address, property age, square footage, repairs needed etc.), as well as the contact information to the seller and the reason the seller is motivated (job loss, facing foreclosure, death in the family, divorce etc.).
Step #2 - Go on the hunt to uncover good deals. Focus on finding motivated sellers or distressed properties that fit the investors criteria that no one else has access to. The key is getting an "in" with a motivated seller or REO agent and doing as much due diligence as possible before bringing the deal to the investor your working for. No investor will be willing to pay you for leads they could easily get themselves. For example don't focus on leads from the MLS (unless you have some special relationship with the seller or REO agent that allows you to get a deal no one else could get). Instead learn from the investor your working for and have them show you how to market directly for motivated sellers.
Step #3 - Begin packaging up the deal so you can deliver it to the investor your working for on a silver platter. Your goal is to do all the research necessary so your investor can make a good buying decision. By now you will be at the point where your starting your negotiations. This is typically the point where you begin introducing the investor that you work for to the seller. Make sure you do a good job edifying the investor to the motivated seller so they can take over and complete the negotiations and handle all the paperwork from here. At this point your job is pretty much done. You simply sit back and wait to get paid!
The main benefit to being a real estate bird dog is the fact that you can "earn why you learn". One great place to find experienced investors willing to work with a bird dog is at the local real estate investor association (REIA) meeting. Focus on networking with those that "own their local market" and are the best at what they do. That way you learn from the best and eventually graduate up to being a wholesaler or investor that can do you own deals.
Another great place to find experienced investors willing to work with real estate bird dogs is down at the local foreclosure auctions. At the auctions you will find tons of cash buyers fighting for good deals. Network with some of them and ask them if they would be willing to train you if you focus on hunting down good deals for them. This gives them the ability to stay focused on their auction business while you (the real estate bird dog) focuses on finding motivated sellers and distressed properties!