Bird Dogging: The Most Reliable Way to Find a Mentor
Like so many other people I have talked with, I am assuming you are in the following situation. You have read the articles on this web site and you understand the basics of real estate investing, but you want someone in your area to show you the ropes, so that you can see how an already successful person is making it happen. So, you post a message on the TCI forums, asking for a mentor in your area. But no one responds. What now?
The fastest, most reliable, most profitable way to have Mentor's knocking down your door is to become a bird dog. A bird dog is someone that finds a potentially profitable property and gives another investor information about it in exchange for a finder's fee (typically 1%) when this investor closes. Yes, it takes a lot of work to find these properties, but if you are willing to put in the sweat, I will guarantee you that you will learn how to spot those delectable pieces of real estate in no time. How will you learn? Other investors will show you.
For example, let us say that you are driving around your neighborhood and you spot a vacant house. The yard is overgrown, one of the windows is broken out, and it looks empty inside. So, you knock on the door of the next house up and find out the owner was recently divorced and doesn't want anything to do with the property anymore. Better yet, they give you the owner's phone number. You now have a way to contact a motivated seller!
You give the owner a call, and he is thrilled at the idea of getting rid of the property. You find out that the property was appraised six months ago for $100,000 (which, based on your comparisons, is still accurate), but the property needs $10,000 dollars of repairs. The owner says he is willing to accept as little as $80,000 for the property, just to have it off of his mind.
This is a great deal waiting to happen! You now have several options. You can post the property on TCI Realty, place and ad in the newspaper, or take the information to a real estate investment group meeting next week. In this particular situation, the investment group sounds exciting, because you want to build a large network of investors.
Here is where the mentoring comes in. When you arrive at the meeting, your guns are loaded (metaphorically!). You have a motivated seller and a property with potential profit. So, you start talking to other investors, and they give you their opinion of the deal. In this scenario, I would guess that some of them would reply that a rehab (which means fixer-upper) is too much work and takes too long to see a profit. Another investor might be willing to make the repairs, but needs the owner to go lower on his price. Yet another investor might look at the property with you and discover that, in reality, it needs $20,000 of repairs!
You can learn from each of these investors. All of them might have different criteria, and you can ask them to explain their reasoning because you are already offering them a deal where they can make thousands of dollars. For example, the first investor might show you how to make money without expending much effort. The second might teach you about negotiating. The third one might show you how to accurately estimate the repair costs. All of this is super valuable information, but here is the best part: if one of them closes on the house, you make 1%. In this case, that will probably be at least $600!
Do you see how this is such a powerful strategy for learning about real estate from other investors? Instead of pleading for someone to take you under their wing, you have become a valuable business associate. And, best of all, you are collecting bird dogging fees, meaning you have transition from the realm of simply learning about investing to actually making money from your skills.
If you are just starting, give it a try. I will be waiting in the forums to hear about your first successful transaction!
Hello Everyone,
I am new to real estate investment. And would love to work under someone to learn the ropes. I've gone to the groups section and in the state of Arkansas no listings are available. I would definitely be more than happy to be someones birddog. Is there someone willing to help me get started? Any help would definitely be appreciated.
Dural,
I like the basic message of your post, however I can't believe you would only pay your birddog a 1% finder's fee! Check your math...if the profit margin on a deal is $20k, 1% is $200. Realistically, I can't imagine you'd have a very loyal (or savvy) base of birddogs if you paid them $1000 for deals where you see $99,000 profit. I guess you might be able to take advantage of the occasional newbie that way.
I am a birddog, and while doing just what you suggested, I have learned the value of finding a good deal. Everything is negotiable, but try 10-15%.
Ahah! You caught a place where I should have clarified. In my area, the term finder's fee refers to a percentage of the overall closing price. Therefore, if an investor buys the property for $60,000, then you collect $600. Also, the 1% figure usually only applies to properties selling 20-25% below market value. If you find a property selling for less than 25% below market value, I recommend putting it under contract and then flipping it to another investor for substantially more profit.
I concur and go one step further. I would have nothing without the BD to bring me this deal. I pay 15% for the first and 25% for everyone thereafter.. I love my BD's
is that 15% or 25% based solely upon the net profits that are earned on the property? Thanks
I really like the basic idea of this message, but like the guy that first replied to this article, I can NOT believe that investors would expect to have loyal and savvy BD's by paying them only 1+% :( Tracy Barber (who visits this site often) is an investor, and he has offended me greatly with his attitude of "I would pay you 1% of what I pay for the property, then could selectively pay you 2-3% after completion of project (talking about rehabs here)". He then pulled the sales tactic by saying "I'll be gone all this week, so get in touch with me next week". Well, I'm going to be looking for investors in THIS area and if I find one I won't be calling Tracy Barber.
As a newbie, i have a concern about people being honest when it comes to paying the birddogger. Should the bird dogger have that investor sign an agreement? Has anyone had an experience of a more experienced investor stealing their find? I guess i'm just a little paranoid.
Different people follow different strategies in regard to contracts. Most professional real estate investors should be glad to sign a bird dog contract. In my opinion, the biggest benefit to a contract is not the fact that it is legally binding, but how it acts as a point of agreement. If your fee is spelled out in black and white, no one can forget the amount they promised later.
You should realize that some people will not pay, even if they do sign a contract, so you have to consider if the amount is worth going to court over. You may just decide to never do business with them again.
A lot of investors I know don't bother with contracts unless at least a few thousand dollars are involved. But in the end, it's up to you.
Absolutely have a contract with your investor. You as an independent broker or contractor actually must if you ever need to enforce your rights. Its a simple thing to do and earns you respect and rights.
peace
David
how does the new guy go about learning how to draw up a contract that will hold up in court, especially about something that is so new to him/her?
are we talking about something that is 1/2 page or longer or shorter? Thanks
Hi I am a local handyman in the Phoenix area. I am looking for partners to fund rehabs. I have been in the home maintenance business for 20 years and know home values and the amount of work needed for resale. I have a decent credit score myself but little for downpayments. Have found some decent HUD homes in the area. Looking at one now which needs very little work. Contact Jim Canty.
Sure, let me know what you've!
Hi Jim
I could possible help you out here post your email address so I can get in touch directly.
Deka R
Sure, let me know what you have, I'll bite.
I need to have more information on this if I were to invest.
Hi - This is a new concept for me but am always very willing and able to learn... Forgive my naivete, does bird-dogging violate any real estate law? Don't you have to be licensed in real estate to receive a commission? I live in New York...
THANKS for any comments/ideas...
I'm not familiar with the laws in New York, but I think you can dance around the regulations in just about any state. For example, if you sign a contract with an investor, make sure your finders fee is a flat dollar amount, rather than a percentage. This way no one can nail you about charging commissions.
However, talk to some real estate investors in your area to make sure that no one is going to get in trouble. If they have been around for a while, they will know how to handle the fee.
Ok, so I see properties like that all the time. Who are the people that I take this info to, or where do I find them? More specifically, where do I find the potential mentors??
I am in Stockton, CA.
There are several different ways, but the one I normally advocate is attending your local real estate investment group. For example, here in Charlotte, it's not uncommon to have over 150 people in one meeting. That's a lot of mentor possibilities!
Hi Pinky,
I just posted a message on a forum offering my birddogging services, where I was located, and the fact that I was willing to work and learn - 2 individuals contacted me asking for my services and explaining what they needed from me.
Give it a try, you have nothing to loose and posibilities to gain.
ive never bird dogged before but i know of a nice empty house in wyoming michigan, any one intrested?
Post the information on your property in the TCI Realty section of this web site.
Hello, I am a totaly intrested in learning in REI but i keep looking at all these courses and i just get confused with all these people saying this course is good and this course is bad. But this "Bird dog" sounds like a good way to start.
I was wondering how could I find an investment group in my area to get started with, or do i need to learn some things before becoming a bird dog. I am just really confused.
I live in Miami, so if some one knows of an Investment club let me know.
Thank you!
Click the "Groups" tab at the top of the screen for a list of real estate investment groups. Also, you might consider buying John Locke's bird dogging book.
Good luck!