The purpose of this posting is to give you Birddogs (Property Locator sounds better) a little help in getting started in the birddog world. I just want to outline your responsibilities as a birddog and how to avoid pitfalls, which may discourage your efforts.
STEP 1. Find an Investor to Birddog for.
-You can find investors anywhere. ReiClub is a great start. Look at the Investor Ads for your state and find out if that Investor gives out referral/finder fees for properties that you locate for them - You can always advertise your services in the REICLUB Classified Ad Section. - Use websites like craigslist.com, backpage.com, kaboo.org, etc. One thing you will learn in the Real Estate world is that MARKETING is what drives the biz. No matter if your a birddog, or an investor.
STEP 2. Identify your Investor’s Criteria
- Ask them what areas they need properties in. If they say Nationwide, then you hit the jackpot because you can look anywhere. - Ask them what ARV (After Repair Value) or LTV (Loan to Value) they purchase at minus the repair costs. Here's an example: Let's say a property is worth $100,000 and needs $0.00 in Repairs. The investor tells you that they purchase at 70% ARV - rehab costs. How much should the seller's asking price be? Your answer $70,000 [$100,000 (Home Value) X 70% ARV - 0.00 repairs= $70,000.
Therefore your investor will most likely not purchase this home for more than $70,000. If the seller is asking for more, Ask them if they’ll consider less. If they say No, Move onto the next one. If they say Yes, contact your investor ASAP. If they say maybe, Contact your Investor ASAP. Unless you are really skilled at negotiating, let the seller know that you’ll get in touch with your investor and he/she will be handling the negotiating offer, once you submit the deal to them.
STEP 3: GET IT IN WRITING.
-This is a good way to do business, but if you can't get it in writing, then so be it. You can still do business with the Investor. Don't let that hold you back. BUT with that said, when you become an INVESTOR, everything you do should be in writing. IT BETTER BE!! LOL
Step 4. Give your Investor as much INFO upfront as possible.
- The less info you provide, the slower the deal will probably go, because You'll be busy playing the messenger. Everytime Your Investor asks you a question, you have to run back to the seller, then you take the seller's answer and run back to the Investor to give them that. This can go on for days, before your Investor even contacts the Seller. DON'T WASTE TIME. Here's what they will most likely be looking for and forgive me if I miss anything, but you can always ask Your INVESTOR ANYWAY: 1. Asking Price 2. Property Value 3. Repair Costs 4. Repair details 5. Mortgage Balance (If applicable) 6. Mortgage Payments (If applicable) 7. Reason Why the seller is Selling! 8. Comparables 9. PHOTOS 10. Full Address and contact INFO of Owner
Now, I listed 10 things that are necessary for Investors to make decisions. There are much more thing’s they’ll need, but what I listed above should keep the questions to a minimum. If anything the 1st 6 steps to include the Photos is definitely a MUST Give. Investors want the NUMBERS and PICTURES. Just Numbers will do for some of them. That is what will make them look at your deal.
Step 5. Always keep the Contact Info of the seller and the Investor.
-If you do not hear from your investor. Follow up with them. If they can't be reached, follow up with the seller. Sometimes Investors get so busy that they may forget to update you on the status. -Another thing is, if the Investor tries to go around you and cut you out the deal, then you can just follow up with the seller to find out what the status is. This is a rare situation, but it can happen this day and age. In this situation, you can let the Investor know that because he closed on the deal, he needs to pay you what was agreed to. If he ignores you, then simply move on. It would probably be less cost effective for you in the long run if you avoid courts, etc. NEVER DEAL WTH THAT INVESTOR AGAIN!! Yes, it is true that you lost out on a deal and the investor made money because of you, BUT with that said, they won't be making any more money off of you.
Ok Enough of the Negative side to this. Let’s move on to the next step.
Step 6: When your Investor has the deal under contract, help him MARKET it. Many birddogs just rely on the Investor to market the deal and they just sit around waiting to get paid.
-Check this out, if you find a buyer for the property then you have basically coordinated the entire thing and you should get paid as soon as they close. I say should, because you know what we discussed in STEP 5. - Another reason you want to find a buyer, is because some investors offer Double Bonuses!! They'll pay you for finding the the Property and finding the Buyer!!! Ask your Investor about that....They may do it, or they may not. Don't let it discourage you though. - Not only can finding a buyer for your Investor make you money, but if you just happen to find another Investor who's interested in the deal, then you just found another Investor that you can BIRDDOG for. - Now Occasionally you'll get people who will respond to your ad about your Investor's property and they want to see the property, or they just want to inquire about it. Then they decide it's not for them. So what do you do.....Forget about them, right? WRONG!!!!!! You keep their contact information and start building a Buyer's LIST. These are for those future properties that you'll be finding, that just may spark their interest! Grow your list by MARKETING, MARKETING, MARKETING. Eventually when you move up to the investor stage, you'll have a Buyer's LIST of your own!! Make Sense???
STEP 7. GETTING PAID!!!
-Absolutely, this is the best part right? When your Investor Closes on the deal, you get PAID anywhere between $500 -$1000 per deal. If you find 5 deals a month that your Investor closes on, you could be making an extra $5000 a month that your investor. Sometimes you can even make more. It all depends on your investor. These are just average figures -NOTE: You may have to wait 2-6 weeks to get paid. It all depends on the buyer. If they are a cash buyer, you should get paid within 2 weeks. If it's a buyer that is looking to close on a conventional loan or something, then you will be waiting a lot longer. But whether it is a cash buyer or a conventional buyer, you NEED TO FIND A BUYER PERIOD!! Income is Income no matter how you look at it. Patience is a Virtue! - Set up a PayPal account, if you'd like. You'll get paid Instantly when Your Investor closes. Instead of having to wait for the mail. But hey, Income is income, right?
Well, that’s all I can think of. I’m tired and I need to get the bed. I hope this will help you get started. Don’t be a BIRDDOG Forever. Move up Quickly! You can Do it. You’ll find that the biggest struggle that everone has when getting started in Real Estate is themselves!!
INVESTORS PLEASE LET ME KNOW IF I MISSED ANYTHING!!
Disclaimer: This is based on my personal opinion/experience. Proceed at your own risk!