Bird Dogging 101
Every day more and more people are inquiring about how they can make some extra side cash or get started into real estate. Bird dogging is a great way for anyone to make some extra money on the side, as well as a great entry level strategy for those looking to get started in real estate investing.
What is bird dogging?
Most simply put, a “Bird Dog” is someone who seeks out real estate properties for investors and gets paid a fee. Some people use Bird dogging interchangeably with wholesalers. I believe these are essentially different considering a wholesaler takes a few extra steps before providing the deal to investors. I will cover wholesaling in a separate blog post so you can understand the differences. (update: please see Wholesaling 101)
Now that we covered what a bird dog is, let’s discuss the steps in getting started:
Who can become a bird dog?
Anyone can become a bird dog. There is no license required for scouting out leads and providing them to a real estate investor. Bird dogs can be a great alternate source of income even for someone not looking to pursue a career in real estate. For example, good sources of leads are vacant properties. Anyone can jot down the address of a vacant home, provide this lead to a local investor, and get paid. Please note, there are certain RESPA guidelines preventing unlicensed individuals (Real Estate Agents) from bringing a buyer and seller together, therefore you have to be careful of how this is structured. There are a few unique methods of how this can be arranged, one of which is being paid “per lead” instead of when the deal is closed.
Where do I find leads?
Leads can be found by driving through neighborhoods, word of mouth, flyers, networking events, clubs, bandit signs, cold calling, lead sites, etc. You might be driving by great leads every day on your way to work without even know it. As I mentioned previously, vacant homes are a great lead source for investors. Signs of vacant homes include overgrown grass, weeds that have taken over, old coupon flyers attached to the doorknob, newspapers piling up, clear signs of property not being up-kept, no snow shoveling, and orange stickers on windows (typically condemned properties), Jedi Tip* (from my #1 bird dog) You can check the electric meter to see if the electricity has been turned off.
What do I do with these leads?
In order to receive compensation, you need cash buyers to pass these leads to so they can purchase the property and pay you for your lead. Before you start looking for leads you should build your buyers list (the same goes for wholesaling). It might seem backwards at first, but the truth is, you want buyers lined up so you can pass these leads to them as soon as they become available. Building a buyers list is easy to do.
Where do I find buyers?
There are various sources you can use to find investor buyers. For starters, if you’re hunting deals in New Jersey, you can add me to your buyers list (now you have no excuse not to jump into this business). Here are some other steps you can use to build your buyers list:
- REIA Groups
- For Rent Signs
- County Clerk’s Office
- Bandit Signs
- Foreclosure Auctions
- Phantom Ad Posting
- For Sale By Owner (FSBOs)
- We Buy Houses / I Buy Houses ads
- Real Estate Agents
- Title Companies
- Real Estate Attorney’s
2. Call every “For Rent” sign in the neighborhood and ask if they are in the market for purchasing any properties. These are your landlord buyers.
3. Jedi Tip* – Go to the county clerk’s office. Bring up every deed assignment in the past 6 months (or even as far back as 1 year). Skip all records that show mortgage lenders such as Chase, Bank of America (BoA), Wachovia, etc. Look for all transfers that have:
John Jensen to David Smith
We buy ugly houses to Real Estate Investments LLC
Jeff.B family trust to Eric’s NJ Investments
*these are your local investors*
(I just saved you a few hundred bucks on today’s popular guru courses – someone owes me a blue monkey coconut water for that one)
4. Put up bandit signs advertising for cash buyers (be careful about town regulations. you can refer to my experience with bandit signs in one town on the “Warrant For Your Arrest” blog post)
5. Visit the foreclosure auctions (sheriff sales) and network with the people attending the sale. Pay attention to those bidding on the properties and tell them what you do
6. Some gurus suggest “Phantom ad posting”. I personally have mixed feelings about this one since you might start off on the wrong foot with some investors who are familiar with this type of marketing. You can post a deal on Craigslist such as “50% FMV Property – Need to Sell ASAP. Cash buyers needed!”. When you get responses, you can tell them this property is no longer available, however, you would like to notify them of future properties as soon as you obtain them. Obtain their buying criteria and store it in your database.
7. For Sale By Owner (FSBOs) properties (both online and in your neighborhood) – especially poorly advertised FSBOs.
9. Talk to Real Estate agents and try to obtain investor referrals
10. Title companies – ask them who is buying properties cash and doing a lot of deals in your farm area
11. Real Estate Attorney’s – ask them the same
What do I say to these potential cash buyers?
“Hi my name is <your name> and I’m scouting for deals in <location>. I’m looking for investors who are looking for deals 65% of fair market value (FMV) that can buy cash and close fast. Would you like me to put you on my buyers list so I can send you these properties as soon as they become available?”
Information to obtain from Cash buyers:
-What area(s) are they looking for properties
-What price range are they looking to purchase properties
-What types of homes (residential? commercial? styles, bedrooms, baths, etc.)
-If they are looking for rehabs, how much repairs (light rehab, full rehab, knockdowns, etc.)
What information do I provide to cash buyers when I find a lead?
The more information you provide the easier it is for the investor and typically the better compensation you will receive. At the bare minimum you should provide the property address so the investor can perform due diligence. Provide the following information if available:
-phone number of homeowner
-mailing information of homeowner (if property is vacant)
-information about the area (quiet neighborhood, busy street, etc.)
How do I know the Investor isn’t going to steal my lead?
This is the #1 concern of all new bird dogs. The truth is, there are some unscrupulous investors out there that give the rest of us a bad name. Fortunately, there are some investors who actually practice ethical business. Personally, I never understood why an investor would ever short change a bird dog a referral fee. For starters it’s foolish to risk having your reputation tarnished in the real estate industry. Furthermore, (besides being unethical) it makes zero business sense to bite the hand that feeds you. Why would someone jeopardize future deals for a small bird dog fee? Especially when the investor has potential to make five times the amount it costs them to pay a loyal bird dog.
I believe (scratch that, I know) the information provided above is enough to get started bird dogging in real estate. I now have arthritis from this novel write up, so if you made it through to this point, go out and hunt some deals (plus someone still owes me a blue monkey).
Stay tuned for Wholesaling 101.…
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