Want to make money in real estate without owning property? Yes, it is possible through bird dogging, and it’s much simpler than you’d think.
If you are interested in alternative real estate investment strategies, perhaps you’ve heard of bird dogging.
Table of Contents:
- What Is Bird Dogging in Real Estate?
- Is Real Estate Bird Dogging Legal?
- Pros of Bird Dogging
- Cons of Bird Dogging
- 5 Common Bird Dogging Techniques
- How to Bird Dog the “Right” Way
- How to Find Real Estate Bird Dogging Deals Fast and Easy
Becoming a “bird dog” or property locator is an excellent choice for many individuals, including aspiring investors, who don’t want to assume the risks associated with buying an investment property. It is also a great business opportunity for entrepreneurs looking for a side hustle with the potential to turn it into a full-time career.
Likewise, if you are wondering how to invest in real estate with little money, this could be a strategy worth trying. Though bird dogging does cost some money, it is significantly cheaper than traditional real estate investing.
That said, let’s dive right in.
What Is Bird Dogging in Real Estate?
Bird dogging is a term borrowed from hunters who use dogs to help them spot and retrieve fallen birds.
So, what does bird dogging mean in the real estate industry?
A bird dog searches for undervalued or off-market property deals, hands them over to willing real estate investors, and earns a flat fee or a percentage of the deal price as agreed. A bird dog could deal with either commercial or residential real estate property.
Essentially, a real estate bird dog’s work is to look out for deals that may make great investments for investors who want to flip properties, rehab and resale, or rent our multifamily properties. Whichever the case, a bird dog is constantly looking for great deals.
While becoming a bird dog may sound too good to be true, it’s not. Bird dogging isn’t as easy as it appears. There is certainly a right and wrong way to do it, which we will explore later in this article.
Real Estate Bird Dogging vs Wholesaling
At first glance, real estate bird dogging may seem synonymous with wholesaling. Both involve looking for great property deals and passing them on to willing investors. The main difference is wholesale real estate involves entering into a contract with the property seller.
A wholesaler enters into a contract with the property seller that gives them exclusive rights to buy the property for an agreed amount. The wholesaler then finds a buyer willing to buy the property for the wholesaler’s price and reassigns the contract to them for profit.
A wholesaling contract details how much time the wholesaler has to find a buyer and the minimum price the property must be sold for.
Another difference is that a wholesaler must put down a deposit in order to be assigned the contract. Once you’ve paid the deposit and entered the agreement, you essentially become the homeowner with the right to transfer the contract. The final buyer completes the transaction directly with the seller.
On the other hand, bird dogging doesn’t necessarily have to involve any contracts. It means the property may sell to someone else before the bird dog finds a willing investor.
However, a bird dog can opt to have a contract in place to protect their time and efforts. We’ll be looking more into that a bit later.
As you can already tell, wholesaling costs more money compared to bird dogging, meaning people who don’t have financial resources can get into real estate. However, it also gives you the security to sell the property within a certain period before the seller finds a buyer.
How Are Bird Dogs Paid?
Real estate bird dogs are either paid with an hourly rate or a referral fee once the deal actually closes. The referral fee can either be an agreed-upon flat fee, a percentage of the selling price, or a hybrid of both.
Some real estate investors may choose to keep their most productive bird dogs on retainer. They may pay them a certain percentage of the monthly rental income collected from their property. It can be an investor’s strategy to motivate the bird dog to keep looking for more high-quality deals.
When it comes to how much money a bird dog deserves to be paid, it can vary. It depends on a few factors, such as:
- How competitive is the market?
- What’s the working relationship between the investor and the bird dog?
- What’s the quality of the referral brought by the bird dog?
As a rule of thumb, though, a typical bird dog referral fee could be anywhere between $500 and $1,000. It could also be more based on the factors mentioned above.
For bird dogs paid on a percentage basis, they may receive 2-8% of the deal’s profits.
One more factor to remember is that the more time and effort you put into bird dogging, the more you get paid.
A bird dog who locates great off-market deals calculates accurate estimates of repairs, estimates the after-repair value (ARV), and the property’s maximum allowable offer (MAO) is sure to receive more money once the job is over.
Is Real Estate Bird Dogging Legal?
Yes and no.
Ultimately, it is your responsibility to check your local and state laws before assuming bird dogging is legal where you live.
Even so, the legality of bird dogging can be slippery, and you want to ensure you don’t cross any lines.
While it isn’t clear what the penalties might be for illegally supplying real estate leads, it would be best not to find out in court. Even if an illegal bird dog is not caught, they would likely risk tarnishing their reputation within the real estate community. It could make the job of a bird dog very difficult and potentially put them out of business.
The trouble with bird dogging is that it is a fine line to walk. You do not necessarily need to be a licensed realtor to refer real estate leads. But becoming overly involved in real estate transactions can place a bird dog in a realtor or broker’s territory. A bird dog must never facilitate transactions between buyers and sellers because they are not qualified, and doing so is undoubtedly illegal.
That being said, collecting a “finder’s fee” for supplying basic information might be completely legal where you live. If you are interested in becoming a bird dog, it is simply a matter of checking local laws and finding out.
Find out what the pros and cons of bird dogging are.
Pros of Bird Dogging
There are many advantages associated with bird dogging real estate. Apart from making you handsome profits, there are also other benefits you can enjoy, such as:
Low Entry Cost
As we’ve seen, you don’t need any money to start bird dogging. You can literally start without any capital as long as you have the necessary skills.
No Credit Needed
In bird dogging, you don’t need good credit to get started. In many forms of real estate investing, you’ll need to secure financing, which means you’ll need good credit. Bird dogging is a great option for you, even if you have bad credit.
Opportunity to Network
One of the skills needed to successfully bird dog is to have a strong network of sellers, agents, and motivated buyers in your area.
The best thing is that it gives you an opportunity to create these networks. If you take the time to build these valuable connections, you could find yourself with crucial networks later in your career.
Less Risk
Since you’re not putting any money down, you have little to lose if the deal falls through or the seller finds another buyer.
Flexibility
You can commit to bird dogging based on your schedule. You can choose to either do it full-time or commit just a few hours every week if you have a full-time job.
Gain Hands-On Real Estate Skills
Bird dogging is a great way for beginners interested in the real estate industry to learn outstanding real estate skills. The more deals you look for, the more you understand what encompasses a good deal and what it takes to secure the deal.
You can use these skills and experience to succeed late in your real estate career.
Build Your Own Business
With the vast skills, experience, and networks you get from bird dogging, you can easily build your own real estate business as you grow.
Cons of Bird Dogging
While there are many benefits of bird dogging, there are also some potential downsides to keep in mind before committing your time. They include:
No Guaranteed Income
Bird dogs aren’t on anyone’s payroll. It’s only commission-based. You only earn an income once you’ve successfully connected a willing buyer who completes the transaction. If you get engaged in other commitments or fail to bird dog enough properties in a month, then your income from bird dogging decreases significantly.
Needs Commitment
Bird dogging is quite demanding. While you can do it part-time, you need to put in a lot of your time and effort. Even then, there’s no guarantee that you’ll actually make a sale. To start with, finding good property deals can be a challenge. Also, finding investors willing to fully commit to your deals isn’t easy.
Takes Time
Becoming successful in bird dogging takes some time. Quality networks aren’t built overnight. You will have to refine your lead-generation techniques over time. It can take up to a few months to generate your first referral. You must also take time to learn how to tell a deal that sounds too good to be true and leads that may not be worthy of your time.
A Bit Risky
Bird dogs can easily get scammed. Some property sellers out there are looking to take advantage of someone who’ll help them find a buyer. What do you do if a seller fails to pay the agreed commission?
5 Common Bird Dogging Techniques
At this point, you might be wondering, how do bird dogs find real estate deals?
Let’s break down some of the most common techniques real estate bird dogs use to identify suitable property deals and make better use of their time.
1. Driving for Dollars
Driving for dollars is often regarded as an old-school deal-hunting technique. And it’s understandable since many people won’t find the essence of driving or walking around different neighborhoods looking for property deals in this age of the internet.
But for bird dogs, it’s one of the most effective ways to spot deals.
The key to this strategy is to set aside a reasonable amount of time, drive around different neighborhoods looking for distressed properties, and reach out to the property owners to see if they might be interested in selling.
Common signs of a property in despair include overgrown lawns, peeling paint, and basically anything that may signal that the property owner may be behind maintenance.
Note that sometimes, the house may not actually be on sale. The owner may have previously thought of selling, or you could convince them to sell. A good bird dog may also be the first person to spot good for sale by owner (FSBO) signs.
And speaking of FSBO…
2. For Sale By Owner
This is a great strategy to find a motivated seller. For Sale By Owner is almost similar to driving for dollars, only that you’re looking for FSBO signs. Some owners, especially those who want to sell their homes without an agent, put up these signs on their lawns.
You can also spot these deals by looking online. Some owners post their property listings on listing sites and on social media by themselves.
FSBO properties tend to be good deals for bird dogs since you or the property owner don’t have to pay any commission to a real estate agent. Due to this, the property owner might be more willing to negotiate on the sale price.
3. Public Databases
Many tax assessors and county recorder offices keep a public online database that you can use to search for potential property deals. You can use these databases to look for distressed properties.
Signs that a property owner may be willing to sell below the market rate include tax liens and judgments, and bankruptcy notices. Owners who’ve had the same property for many years and “accidental” owners who recently inherited a home may also be willing to sell at a deal price.
You can also use the Multiple Listing Services (MLS) database to find properties listed for sale. It is also effective since it shows you properties that are actively listed for sale either by the owner or an agent.
4. Life & Economic Events
While it might sound unfortunate, life-changing events and economic turmoil may sometimes lead to the best real estate deals.
For example, a major employer in your town going out of business or relocating operations could mean that some of their employees may be compelled to sell their homes since they’re out of employment.
A colleague or an acquaintance going through a medical condition that drains their finances could also be an opportunity for you to bird dog a deal and help them get more finances.
The two Ds, Death and Divorce, are also great opportunities for bird dogs to spot potential property deals.
5. Direct Marketing
Some smart bird dogs buy prospect lists from services such as ListSource and DataTree Lists to spot out-of-town property owners. With such a contact list, you can call, mail, or email your prospects to let them know you’re willing to help them find a buyer quickly.
Basically, the most successful bird dogs implement various techniques to boost their chances of finding potential deals.
How to Bird Dog the “Right” Way
Real estate bird dogging can take quite some time if you’re still learning the ropes. But it doesn’t have to be that arduous if you have someone to hold your hand. This is why Mashvisor is here.
Let’s break down the process of bird dogging your first property into these simple, actionable steps;
Step 1: Research
Before anything else, you need to equip yourself with the correct information. As the adage goes, information is power. Get down to really know how bird dogging works and specifically to your location. The more you know, the easier it will be to spot good deals and sell them.
Your research should also focus on finding out the legal restrictions of bird dogging in your market. In most cases, you won’t have any problems if you don’t facilitate the actual real estate transaction. However, all laws vary from one location to another.
The key is to avoid conducting activities specific to real estate agents. These activities need you to have an agent license. Tiptoeing around the boundaries will lead to legal issues and harm your reputation in the industry.
Step 2: Get a Mentor
As we mentioned before, many real estate transactions are empowered by your networks. Seek to build up your networks through various channels, such as Facebook, LinkedIn, and even local events where you’re likely to find other professionals in your field.
The best thing about this approach is that it becomes easier to find someone willing to hold your hand. Your mentor will be someone who’s experienced in bird dogging and is ready to show you how to spot great deals, how to prospect potential buyers, and common pitfalls to avoid.
In essence, your mentor should help make your journey easier. While it might take some time to find the right mentor, their advice will be invaluable and instrumental in helping you succeed.
Step 3: Consider Specializing
Different types of real estate investments have different levels of profitability. Consider specializing in a specific niche, such as fix-and-flip properties, short sales, pre-foreclosure homes, or buy-and-hold investments.
Specializing will make it easier to build networks with investors looking for the specific properties you deal with. You become the go-to person when an investor seeks such a deal.
Besides, specialization may allow you to set a higher commission rate.
Step 4: Estimate Your Profitability
While still laying the groundwork, you want to also estimate whether bird dogging is worth your time and effort. Estimate how much money you can make from every lead.
The best place to start is talking to real estate investors in your market. Find out how much money they might be willing to pay someone to bird dog property deals for them.
Would they rather pay on commission, flat fee, or keep you on retainer? Is the amount enough to cover your expenses and leave you with a good profit?
Also, talk to other bird dogs in your market and find out how much they charge for their services. However, keep in mind that this is based on their years of experience.
Step 5: Create a Sample Contract
While the law does not require it, you need to have a bird-dog contract to protect your commission. Savvy real estate investors, agents, and professionals put everything in writing.
Draft a sample contract that outlines your scope of work, how much you’ll earn once the deal goes through, and what will happen if the deal falls through. It’s also a wise idea to consult a real estate attorney to come up with a good contract that ensures all parties involved are treated fairly.
Generally, a bird dog contract should contain the following terms and clauses:
- Real estate investor’s name, contact details, and business address
- Bird dog’s full legal name, contact details, and address
- Bird dog’s requirements, such as finding a fix-and-flip property, an out-of-state owner, or a pre-foreclosure home.
- Bird dog’s commission, such as flat fee, percentage of the sale price, or any other mode.
- Length of contract and terms of contract termination
- Other conditions, such as restricting the property from being publicly listed
Step 6: Generate Leads
Now you’re ready to start looking for potential property sellers. Your goal is to look for motivated sellers who may not have listed on public platforms yet or homeowners willing to sell for less than the property’s market value.
There are different ways to source motivated sellers. The most common way is searching on online platforms, such as MLS, Facebook marketplace, and other listing sites. You can also use the techniques we discussed earlier or go through foreclosure auctions.
The key to succeeding in finding motivated sellers is to think like one. If you were a motivated seller, who would you approach to sell your property? Which platforms would you possibly find buyers on?
Once you’ve found a motivated seller, don’t stop there. Dig deeper to find out whether they’re indeed the property owner. This is to protect yourself from scams, talking to listing agents, or any possible legal issues that may come up down the line.
Also, carry out due diligence on the property itself. Are there any hidden issues that may compromise the deal? Does the appraisal value match the seller’s expectations?
Step 7: Locate Buyers
It’s now time to get to the sweet part. Look for willing buyers to sell the property for profit. There are usually investors looking for the particular property type you’re selling.
The techniques of locating willing buyers are similar to those of finding motivated sellers. You can check online or ask your networks. You can also involve a real estate agent if you’re willing to split your commission.
How to Find Real Estate Bird Dogging Deals Fast and Easy
Real estate investment analysis allows you to narrow down the best investment properties for sale with the highest potential for profitability. While it’s possible to spend hours hunting for real estate data and rental comps, it is not the most effective way to find leads. With this method, you’ll be stuck using real estate investment analysis spreadsheets and making complicated calculations.
Remember: with bird dogging, you only get paid when a real estate investor makes a purchase. Since investors want to purchase property that will make them money, you will be expected to find them the very best on the market. And the longer you take to find deals, the less you are being paid for your time.
The question is, how can you put in less work to find leads for investors?
You don’t have to look far: Mashvisor’s real estate investment software can produce quality property leads quickly.
Finding Property Leads: Mashvisor’s Tools
Mashvisor allows property locators to find the most profitable neighborhoods for purchasing investments with our real estate heatmap. This tool provides data such as listing price, rental income (traditional and Airbnb), cash on cash return (traditional and Airbnb), and Airbnb occupancy rate. With this information, you can determine which locations are best for investing.
Once you determine a good location, our Property Finder will help you search for listings. You can use filters such as location, budget, type of real estate, and rental strategy to pinpoint the perfect find.
Lastly, Mashvisor’s rental property calculator automatically generates metrics such as cash on cash return, cap rate, and cash flow. Bird dogs can use this tool to judge a property’s overall return on investment before passing it along to investors.
What’s more, you can easily share the analysis with investors by downloading the PDF report. That way, you aren’t just sharing an MLS listing but rather the proof that it’s a great find.
Sign up on Mashvisor today and begin your 7-day free trial!
Bird dogging takes more than just skills. You also need the right tools like Mashvisor’s Property Finder. It has its own calculator that uses comps for greater accuracy.
Key Takeaways
Bird dogging is a great way to make money in the real estate industry. This strategy involves looking for property deals, mainly off the market, looking for a willing buyer, and earning a commission once the deal is successful.
Many people would think that real estate bird dogging and wholesaling are the same. However, the latter requires a contract and is costlier since you need cash to put down as a deposit.
Bird dogging has many benefits. It’s beginner-friendly since you can learn the needed skills and acquire experience along the way. You also don’t need any money or credit since you’re not actually purchasing the property.
As long as you diligently research before starting, you can earn an excellent income by bird dogging houses. Just double-check that it’s legal in your area, and arm yourself with Mashvisor’s real estate investment tools to ensure your success.
Book your demo on Mashvisor today and learn what our tools can do for you!