How To Bird Dog Real Estate Deals

How To Bird Dog Real Estate Deals

December 14, 2021

Produced by:
Richard Stevens

Richard Stevens is an active real estate investor with over 8 years of industry experience. He specializes in researching topics that appeal to real estate investors and building calculators that can help property investors understand the expected costs and returns when executing real estate deals.

If you’re interested in becoming a real estate investor but lack the experience or funds to do it on your own, you may consider a strategy called bird-dogging. Here is a look at this concept and whether or not it’s actually profitable.

Table of Contents

What Is Bird Dogging In Real Estate?

Bird dogging refers to the act of scouting profitable real estate properties on behalf of an experienced investor. A bird dog will go out and search for properties with investment potential and then turn them over to someone else to purchase and make the necessary repairs. This is similar to the concept of wholesaling but is slightly different. A bird dog simply scouts the property and alerts the investor. A wholesaler will take the extra step of getting the property under contract, then sell that contract to the investor. Typically, a bird dog will not negotiate prices with the seller, but will merely pass the information along to an investor who will.

How to Bird Dog Real Estate Deals

Bird dogging can be hard work, but it’s a good way to learn the basics of investing. Here are a few simple steps you can follow to get started.

Step 1: Find an Investor:

The first step is to build a network of investors willing to buy under-market properties. This could be one individual or a pool of qualified buyers who might be interested in your deal. It doesn’t make much sense to start scouting properties until you have a few leads on potential partners. Otherwise, you’ll just end up wasting your time. A good place to look for investors is at local real estate networking events. You can also look online in Facebook groups or call up local brokerages and ask to speak to investors. It may take some time and creativity to build a solid network. But it will be worth it in the long run if you can build successful partnerships.

Step 2: Scout for Properties:

Once you’ve found an investor willing to help with your deal, the next step is to look for potential properties. Many bird dogs will go after distressed or REO properties. You can locate these homes by simply driving around a neighborhood and looking for abandoned houses, checking local court records, or going directly to a bank or lending institution to see what they have on their books. There are dozens of ways you can locate potential investment properties, so you’ll have to experiment and find a strategy that makes sense for you.

If you aren’t sure where to start, FlipScout is definitely worth a look. It gives you access to a database of properties that are ideal for flipping, wholesaling and long term investing.

Step 3: Crunch the Numbers:

Once you’ve found a potential investment property, it’s time to crunch the numbers and find out if the deal actually makes sense.

Before you bring it to an investor, you’ll want to be sure that the owner of the property is willing to let it go at a price that allows a healthy margin to turn a profit on the deal. You can figure this out by running comps of similar properties in the neighborhood, estimating rehab costs, and calculating the after-repair value of a property to ensure the listing price is within an acceptable range. The last thing you want to do is bring a deal to an investor that isn’t feasible. This could damage your reputation and waste your time. So, it’s important to get a handle on the math and identify the factors that make a successful deal.

Step 4: Draft a Contract:

Before you pass off the deal to an investor, it’s important to draft a contract stating the compensation you will receive for your hard work. Some bird dogs are paid on commission, while others get an hourly rate. It’s up to you and your investing partner to decide what kind of compensation structure makes the most sense. But it’s important to have everything in writing before you hand over any information. Otherwise, you run the risk of getting scammed or cut out of the deal.

Step 5: Close the Deal:

Once you have a feasible property and a contract in place to protect your interests, the only thing left to do is close the deal and collect your payment. Once you’ve passed along the property to the investor, they will take care of the acquisition and rehabbing of the property. If you’re looking to gain experience as an investor, you may want to shadow your partner and observe the steps they take to get the property in shape and bring it to market. Or you can move on and start scouting for new properties.

How to Find Good Real Estate Bird Dog Opportunities

There are a variety of ways that you can find good real estate bird dog opportunities. Some common strategies include:

Creating a solid strategy for locating properties is a major part of how you will earn your money as a bird dog. So, it’s vital to find a technique that you feel comfortable with if you want to be successful. This may involve testing a variety of techniques, then settling on one or two that bring you the best results.

Can You Actually Make Money with This Strategy?

Yes, there is money to be made bird-dogging real estate, but you have to be careful. Make sure you have everything in writing before doing any legwork and passing along any information. Otherwise, you run the risk of getting scammed. If you don’t have a contract in place, nothing is stopping an investor from going behind your back and purchasing the property themselves without giving you a cut.

Bird dogs can make anywhere between 2%-10% of the profits of the deal. So, it’s up to you to negotiate compensation you think is fair.

Even though you can make some decent pocket money by bird-dogging, it’s not going to make you rich. It’s better for those who want to gain experience as an investor without taking on the added risks right away. If you want to increase your profits, you may consider wholesaling instead. This requires a similar skillset but involves the added step of getting the property under contract before flipping it to an investor, which results in higher profit margins.

But if done correctly, bird-dogging can be a great introduction to the world of real estate investing that can put some extra cash in your pocket.

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