A few pics from the last house we bought from a “bird dog”. My wife said, “I love it!” with genuine enthusiasm upon prying the door open. Despite the smell.
Bird Dog and Wholesale Your Way In
A bird dog, for those unfamiliar with hunting, is a dog (or “dawg” in parts of the south) who finds birds. Most are named something like Cletus, Rosco or any other character from The Dukes of Hazzard. Pointers, will find quail or other birds and literally freeze and “point” out the direction to the hunter. Some are trained to retrieve; which is to bring the bird back after the hunter shoots it. You may have heard of breeds with “pointer” and “retriever” in their name such as German Short-Haired Pointer or Golden Retriever. It may be self-explanatory how this term relates to real estate but it essentially means finding deals and “pointing” them out to the investor. I would say the retriever may be more like the wholesaler in the transaction; they actually get the deal and secure it with a contract and bring it to the investor to put into their portfolio. The pointer would be the “bird dog”; just pointing out a deal and letting the hunter (investor) go get it themselves. I’m going to try to leave the canine references here but I make no promises.
Low Risk Ways to Get Started
These two concepts are low-risk ways to get started in the real estate game. If you are unfamiliar with them; they are ways to become a deal finder and get paid for your skills finding the good deals. Some people make these their business but I would argue that they aren’t actually “investing”. They are in a real estate business but when they stop working, the money stops; unlike in passive investing. They are, for some people, a great way to get into the real estate game and learn a lot. The skills learned in this arena could pay massive dividends as one progresses into other areas of real estate investing. I think they take more determination and drive than most gurus would admit but for those with the hustle, they can be a great way to get started. I think these techniques are particularly useful for the person with more time than money but who has a hunger to succeed.
My Grandaddy was a “Bird Dog”
We’ll start with bird-dogging. My grandfather introduced this term to me. This is how he got started in the real estate business. He would find deals for investors who had more experience and deeper pockets. If they closed on the property, they would pay a referral fee to him. These were commercial properties and vacant land but the same applies to residential properties. If someone brings us a deal, we will pay them 1000-1500 dollars just for giving us the lead. This is zero risk to the bird dog. The bird dog doesn’t have to get the property under contract; they just supply the address. This technique is even used amongst people who focus on other areas of real estate when a deal comes along that they don’t want to act on or that doesn’t fit their model. For instance, we found a package deal of two properties of which we wanted one. A fellow investor was looking for a project and we sent her the other lead. Instead of paying us a fee, she lent us money on our deal and waived the points on the front end of the loan as a form of payment for us essentially “bird dogging” her a property. This deal was from a wholesaler. So we essentially combined the strategy of wholesaling, bird dogging, private lending, and ultimately her property will be a flip and ours will be a buy and hold property. I find this interesting as it exemplifies how investors look for opportunities to capitalize on by knowing different techniques. Another good friend and realtor found a lead through his network of connections that was abused and wouldn’t sell well on the MLS. He referred the lead to us and we will be paying him a bird dog fee upon closing. He saved his seller the expense of paying two realtors and helped them get rid of a problem property that they didn’t want to fix up to re-sell.
Wholesaling is similar but the wholesaler goes farther and gets the property under contract and then sells their rights to the contract to another investor for a fee. For instance, they may get a house under contract for 60,000 and sell it to me for 65,000 and make a wholesale fee of 5000 dollars. This sounds pretty easy but they usually market or network a lot to get these leads. The sources of these discounted properties are numerous but they could be anything from code violations lists from the city to pre-foreclosures. Sometimes they are investors who are marketing for their own deals but have more projects than they need at a given time and choose to just sell the lead to another investor.
This isn’t a full instructional on either technique but a primer on what these terms mean and what they can provide. This is why investing is a collaborative endeavor for many. You never know when someone in your network may have a deal they don’t want. We absolutely buy from wholesalers and bird dogs. When a new wholesaler is stuck, we will offer to help them through the transaction and let them learn how we do contracts etc. This could benefit both them and us. I try to get people to see this as a a collaborative, rather than a competitive, endeavor. Most of the investors I know will willingly share the information they have that has worked for them. I am trying to carry on that tradition here with this blog. The information is available all over and it is largely free!
Networking, you will see over the course of my writing, is one of the most important things we have done to grow our business. We don’t go to every event as we have young kids at home; but we try to be present at a few a month. We have bought deals at these events when a wholesaler just stood at the front of the room and pitched a deal they had under contract. I can’t stress enough the power of networking. I’ll write more about this in the future. But if you choose to start with bird dogging or wholesaling, these groups can be a room full of buyers for your properties. But call me first!
I hope this has helped you see where these important players fit into the real estate ecosystem and how you may incorporate these strategies into your game plan. Please share this information with anyone you think may gain value from it. Remember “collaboration; not competition.” And as my bird-dogging grandaddy always used to say “keep the main thing the main thing!”