I am interested in getting into bird dogging as a way to very slowly becoming a wholesaler…My idea is this…There surely must be people out there bird dogging who dont have a lot of time to spend doing it…Just wondering if there might be a little niche for someone like me who has a lot of time available and I am very familiar with 2 cities in the US. Know them like the back of my hand…There may be investors who live too far away or dont have time to hop a jet and rent a car. Even if they did they would be clueless where to start with that city…Im thinki9ng I could help someone like that by bird dogging for them…It would be bird dogging only, right now i have no interest in getting involved with REOs, short sales, negotiations, realtors, etc… Has anyone in here ever done anything like this?? I would love to hear from you if you have a commment…Thanx
As a bird dog you still have to know what your investor is looking for? What method the investor would use to acquire it? And how to make financial projections to determine it's worth presenting to the investor?
Without knowing the basics, it’s like saying “There’s got to be homes for sale in that state”!
And that’s not worth paying a “Bird Dog” fee for! I expect my Bird Dogs (Labradors, Pointers and Retrievers) to weed out what’s worthless and find deals with meat on the bone!
You know that great big juicy steak with lot’s of meat!!!
stick with it, you get there. in the mean time, consider this
Finding Potential Buyers
There is an old saying in the real estate business that goes something like this, “It’s easier to find a house for a buyer than it is to find a buyer for a house”; I agree. Which brings us to how we use options to raise chunks of cash.
The first thing that I do when a prospective buyer responds to my marketing or has been referred to me is to setup a personal interview. I’m trying to see what he or she can and is willing to do. The first question I ask before anything is whether or not they have visited any of my properties in person or on my website.
If they have and did not like what they saw or thought that the price was too high to pay, I offer to find one that fit their needs. I explain that even though I currently don’t have a property that fits there need right now, it shouldn’t take me long to find a couple of candidates that may. If they are interested, we’ll need to meet so that I can get an understanding of what they are trying to do. If they really are interested they will have no problem with meeting for a lunch or coffee house interview.
I start with some basic info such as who they are, what they want and what they are trying to do. Then I get down to the meat of the deal, how much money they have access to and how much more can they get. I hate to sound greedy, but as the song goes, ‘there’s no romance without finance”.
To make things easier and so that I don’t miss anything, I like to use an interview sheet that asks the following questions [lets assume we’re dealing with the johnsons as the buyers]:
[In this section I’m trying to find out who they are and how to reach them]
Name: James & Jenna Johnson
[Here I am looking to see if they are employed and the type of work they do. If they are self-employed there can be a big issue if they are getting a bank loan)]
What kind of work do they do? Both are bank tellers
Who do they work for? ABD Bank
How long have they worked there? 6 Years & 3 Years (her)
[In this section I’m looking to see what their goals are and what they have done to achieve them]
What are they trying to do? (purpose) buy a house to use as a rental
Why? (motivation) income
[I am looking to see how quickly they want everything to be done by. If they want to have it all done within the next 90 days. If they qualify, I know I may have a winner and need to get started immediately,]
When do they need to move by? in next month or so
[Here I am finding out what amenities I need to look for in a house or investment property. Size of house, number of bedrooms and baths, if it needs a garage, basement or garage, etc]
What type of home are they looking for and what amenities are important to them? Single family home with at least 3 bedrooms, 2 baths and a 2 car garage
[Most buyers want to focus on a specific part of town, zip code or school district]
What areas are they interested in for their home or property? Stephenson High School district in Lithonia 30058
[These questions give me a feel for the type of project I need to find for them. If they need consistent monthly amount I know to look for some rentals, if it’s a large chunk of cash (over $5,000) I know it needs to be a flip]
How much cash do they need to raise and how often? ______________________________
What are they going to use the money for? __________________________________
When and why do they need to have everything accomplished by? __________________________________________________________________________________
[These questions help me to understand their thought processes and see if it’s realistic for me to work with them. If they sound like they have no idea what they are talking about, I pass]
Their planned path to accomplishing goals: ____________________________________________
Why they chose that path? __________________________________________________________
Steps taken so far: __________________________________________________________________
Steps they feel they need to take in future: ___________________________________________
Why with real estate _______________________________________________________
[In this section, I’m looking to see if they have the ability to get a deal done. If they are not already qualified to get a loan with a lender or are willing to get pre-qualified with mine, I have to pass]
What lender are they pre-qualified with? Not qualified yet
Lender Name / number: ____________________________________________________
If cash buyers, how much are they willing to spend? ____________________________
[If their credit score is not higher than 590 for a home buyer there is no way I can get them a loan or close on a deal. For investors, a minimum 640 credit score]
Credit Score (if known) about 680
[I’m checking to see if the buyer has had any major credit issues like bankruptcies or foreclosures that would prevent them from getting a loan]
Credit issues within past 2 years 1 late car payments last year, none since
[The buyers’ income has to be at least 4 times as much as what I know the loan is probably going to be for the property they want to buy. They must also have at least a fourth of their income available for reserves]
How much do they earn per month and how much is leftover for other stuff? $8,000 income, with about $4,000 available
Amount of cash available for monthly payments & other expenses: $2,000
[The retail buyer needs to have at least 4 percent of the purchase price available for their down payment and other costs; 20 percent for investors]
Amount of cash available for down payment and closing costs: $25,000
[This helps me determine the max loan they can handle. Includes mortgage payments and marketing expenses]
Max amount of cash they want to spend each month? No more than $1,000
[I need to know where there money is coming from because banks want the funds for the deal to be the buyer’s own money. Also if they need to borrow the down payment they probably won’t be able to afford to do the deal]
Sources of cash: savings / Line of Credit
[I do a little math to quickly estimate the size of the deal that they can get into, based on the financial questions above]
Available cash and credit qualifies them for what size project? ($1,000 per month equates to a $100k or less project)
Investor Experience & Education In Real Estate
[Here I’m looking to see how complex a project they can handle. For a new investor I’ll usually provide a property needing cosmetic repairs]
How much experience do they have in Real Estate investing? none_____________
(none, just home, already landlord, sold several before)
What types of properties desired & why? _Single Family 3 beds/2baths
Level of repairs desired & why? cosmetic
Do they already have a relationship with a contractor or will they be doing the work themselves? need contractor
Addressing Their Needs With A Plan
[After determining what the buyer can is willing to do, restate their goals and suggest a Plan For Them To Reach Goals (the services that you’ll provide for them. For investors it’s the number of houses they would need to buy and sell for large chunks of cash & number of houses they need as rentals for income)]
- Set criteria for the project:
Areas to focus on – Stephenson HS District, 30058
Secure Funding & Get proof of funds – Get application or present list of lenders. Get lenders letter or bank statement in amount needed to close deal.
Set Max Value of project – Based on what their finances can support, timeframe, and desired contribution to achieving goal (i.e. $150,000 house) up to a $120,000 Home
Seek 5-7 candidates - based on criteria below:
• Types of property
• Single Family Home; Minimum 3 bedroom, 2 bath, 1,000 to 2,200 square feet livable space. Useful for chunks of cash and income
• Level & cost of repairs – Based on experience, desired level of repairs & 2 contractors estimates (cosmetic is less than $10k, moderate is less than $20k) __________________________________________________
• Positive Cash flow – Must net at least the amount it needs to desired plan contribution (i.e. min $100 per month). 200______________________
• Gross Profit - (Can be split among several projects). __________________________
• Select 3 best candidates – Based on repairs, income potential, salability, time, gut feel & fit to plan.
Make offers on best one or two that meet the criteria - with a signed contract and earnest money of at least $500, with 35 to 45 days to closing for retail buyer, 15 – days for investor using cash.
Send closing attorney & lender a copy of the contract - with instructions to begin their processes; order title work and appraisal; set closing date.
Go to closing with certified funds. Cashiers check or wire based on settlement statement from closing attorney and contract.
Stop, Ask For Questions & Give The Big Close
Ask ‘are you seriously ready for my assistance in locating an investment property & when do you want to get started? Yes, asap
If the answer is yes, then the first step is getting proof of funds letter or filling out your application to get approved for a loan.
All of those questions are designed to quickly let me see if they really know and understand what they are trying to do. I don’t want indecisive buyers; I want to work with qualified, decisive people that I know will get deals done. Based on how well they answered my questions, I make a decision on whether or not to work with them.
If it appears that they can afford a property and have decent credit then I would move forward with them. If they are not pre-approved with a lender, I let them know that before I’ll do anything, they’ll need to fill out a credit application to get approved for funding or show a bank statement showing enough cash on hand to fund a cash only purchase. This protects us both from wasting time and my money. They have two choices, they can either apply with one of my lenders via phone or they can fill out my application, which I’ll forward to my lender for a decision.
Reviewing the Buyer’s Application
Once you have received the buyers’ application, review it with them over the phone to make sure that they have provided all info needed for each applicant that will be on the loan. Also make sure that all fields have been filled in completely and that the form has been signed.
Make sure to verify the following:
• Their names, addresses and phone numbers
• Employer name and contact info
• Their job title and monthly Income
• Other income from other investment properties
• Amount of assets available (long form)
• Monthly rent and debt payments (long form)
• Down payment available
• The amount of Monthly payments they are comfortable making
• SSN, DOB & Drivers License Number
Once you have confirmed the buyers’ information, take a few minutes to explain the rest of the process to them. That process being that your finance person will review the application and run their credit report. Based on her review, a decision will be made as to what they can or cannot do. If you are able to move forward, they’ll need to come up with their past two months bank statements and last two paycheck stubs. They may also need to provide some other documents at a later time. Let them know that if want to buy a property they will have to put down at least $500 in earnest money as a deposit and will need to sign an offer contract on it.
Processing The Buyers’ Application
Even though you will have already asked for this info during the personal interview, nothing is official until you get it in writing from the buyer. Trust me, you’ll be amazed how much more concise the buyers’ information is when it’s written on an application
In reviewing their application I am trying to make sure that they have a decent chance of getting a loan. Only when I feel good about the buyers’ chances will I forward the application to my loan officer. The last thing I want to do is lose a good loan officer because I flooded her with a bunch of unqualified buyers, especially since it costs the loan officer time and money for each credit report run.
The number one thing I am looking for is an estimate of what they can afford to do. As a rule of thumb, many sellers try to estimate the max value of the loan that the buyer is able to get by multiplying the amount of cash that they are comfortable spending each month on mortgage payments by 100. Using this theory, a person that wants to pay no more than $950 per month would qualify for a loan of no more than $95,000.
For most of the deals where the purchase price will be less than $120,000 that calculation is ok. Unfortunately it doesn’t take in to consideration the various levels of down payments, interest rates, taxes or insurance premiums that the buyer will have to contend with; so you’ll need to work the numbers a little more.
The buyer has to deal with what’s called their debt to income ratio. This ratio, which is calculated by dividing their total monthly household income by the amount of the debt payments (car notes, credit cards, mortgages, etc) that they are making each month, let’s us know if picking up the debt for the property will be too much for them to handle. this should not exceed 40%
The next thing you are looking for is to see if they have had any major credit issues in the past 12 to 36 months; don’t be afraid to ask about it. Major credit Issues are things like bankruptcies, foreclosures or unpaid collections. They can only be resolved by paying them off or with the passing of time. If the buyer has filed for bankruptcy in the past, it must have been discharged for at least 12 months. Likewise for a foreclosure, it can’t have occurred within the past 36 months. Ask the loan officer what their rule are so that you don’t send bad applicants that waste their time.
Once you are satisfied with what you see on the buyers’ application and feel that they have a decent chance of qualifying for a loan, forward it to one of the loan officers on your team for a credit file review.
The Loan Officer’s Review
Shortly after receiving the application the loan officer will try to pre-qualify the buyer by ordering a copy of their credit report and pairing them with a lender. Based on what they see, you’ll hear one of three things:
- The buyers’ credit is ‘Toast’ and there is nothing that anyone can do.
- They’re marginal loan candidates that aren’t able to get a loan right now, but may be able to in the near future with credit repair.
- They are qualified to get a loan right now.
If the retail buyers are marginal candidates and are not cash buyers then you should probably pass and move on.
If they are qualified to get a Loan Now, the loan officer will tell you what they really can afford to do. The loan officer will let you know the type of loan the buyer qualifies for and the terms. Those terms will include the interest rate, down payment percentage, the maximum that the buyer can borrow, the max monthly payment the buyer can afford and number of years that they’ll be making payments on the loan.
from here you try to find a deal
Yes, there are tons of investors looking for bird dogs. What I would simply do, find an agent to run an MLS search for the areas you want to use your bird dog skills and find which cash sales have been there in the last 6 months. Also you can do some reasearch at the Recorder of Deeds office. Once you have a list of cash investors, contact them via letter or call them: you can find their contact information in so many ways, there are many postings in this forum on how to do it. And offer them your bird dog skills. You will get a response
Join your local real estate club
Amateur Bird Dog,
Maybe you could be part of an investors marketing team! Put up bandit signs on the weekend,
let the investor pick the deals he wants!Pay you when he closes a deal! Just a thought! Different levels of getting involved!