There’s a lot of information around on how investors make offers, get the information they need to accurately assess a deal, and how they go about obtaining properties. But I think it gets confusing when it comes down to the actual role of the birddog in finding the deals investors are looking for.
Now, many investors don’t want more than 60-70% of the properties market value wrapped up in the property in terms of their investment. You’re not going to find very much like that on MLS.
So you have to look outside MLS, right? Farming a neighborhood, knocking on doors, looking for distressed properties, going to the courthouse ect… Well how does that work as a birddog?
You knock on a door and you find out if the person is willing to sell their house. Ok, well, for the investor to know if it’s a good deal he needs to know what he can purchase the property for, right? It doesn’t make sense to forward a “deal” to an investor only for him to make an offer and the homeowner to tell him to take a hike! Because he won’t sell that low.
I guess the real question is how can you forward a deal to an investor if there is no “asking price” on the property?
The obvious answers would be (1.) Forward property info to investors and let them worry about what they’re willing to pay for it and how they’re going to get it for that price or (2.) decide on a price with the homeowner without giving them any certainty of your investor actually buying the property.
I’m sure there’s just something I’m missing but is there anyone that can field these questions. It would be helpful to me and I’m sure others.
The idea is to make money. Not all buyers need 70% of the retail value. Find a house that is $10,000 below market and in good shape and sell it to a home owner at market and you will make some green. When you hear about 70% of appraised value it is usually investors who are buying the property for cash and fixing it up and using a hard money lender. With all these expenses it takes a really low price to make a deal work.
I did find my last good deal on the MLS. It was a house on 1.3 acres for $25,000 which was the cost of the land alone. We spent over $75,000 in rehab but now have a house we are marketing for $165,000. We have other expenses too but should net around 50 grand profit. Not too shabby.
You can also sell to other investors who are looking for rental units. Usually 10% below retail is a bargain for deals like this.
Ok, see that makes sense to me. Thanks for the wisdom, you’re right. But on the other hand, MLS is the only place I’m finding properties right now (I birddog/rehab for one investor right now). I’m just trying to figure out if it’s even feasible for a birddog to find deals outside of MLS and forward them to an investor (or group of investors) without risking their personal assets (albeit one could form an LLC). Is there a way to secure a selling price without a contract that puts the “birddog” at risk.
Chained to MLS. No not at all. There are plenty of other deals: Pre-foreclosures are a great method to find deals just for one. Tax sales are another source. For Sale by Owner signs are great too.
Let the investor worry about their personal assets which has nothing to do with where they find the deal to start with.
No way to really secure the deal without a contract. All Birddogs do is sniff out the deal and point and beg for a fee. To get a bigger fee but more risk you will need to get it under contract and then flip or wholesale the contract.
ok, I get it I was a little fuzzy on exactly where the bird dog’s work would stop without crossing into being a “wholesaler.” It would be nice to have everything set up for the investor so all they have to do is say, “Yes. Let’s do it.” But that’s obviously not possible if you don’t have a definite selling price and you can’t have that without some kind of contract or agreement.
So what I am then to conclude is that in a situation outside of using MLS the bird dog finds out whether or not a particular homeowner is willing to sell and if there is a good flip potential by them being really motivated sellers willing to sell low and/or the house possibly needing repair, then he/she would then give the investor all of the info (comps, repair costs, DOM, situation of homeowner ect) and the investor can make his/her own decision whether or not to make an offer on the property. Did I get this right? That makes sense to me.
I just wonder how awkward it would be for a homeowner to have someone inquire as to their selling intrest and then be contacted by a different person making an offer on the house. I think that many might not go for it. But then on the other hand, maybe those aren’t truely motivated sellers. :-\
I agree to pay fees all the time for leads. Just yesterday I got a lead from a website that I agreed to give the lead provider $500 if I buy the property. All they did was have a national we buy houses type web site and get leads automatically. They have never even talked to the seller.
In Killeen I have a birddog looking for FSBO signs and getting me the phone # and for this I give him $500 as well when I buy. We almost did two deals last week but the floor plan was bazaar on one and the other was a retail deal for a fixer. He knows nothing about the deals and can hardly read as a matter of fact.
As far as who calls and who buys it really does not matter, just get some deals.
Well if you ever want to invest in York County, PA. Let me know. I’ll be glad to give you plenty of leads of that nature. There are a lot of FSBO properties out here. And I’m getting better and better at getting quality leads. Shoot me an email anytime and thanks for your wisdom it, was helpful!
I was just getting ready to type in a similar question because I think I’m reading myself into a fog! These postings in this thread really helped, but just to clarify one more time. . .
I want to do as this person - find the leads, make the deals, get the property under contact, and then resell (flip it) to an investor and/or rehabber for profit. At this time I want no part of rehabbing other than to make an assumption/estimate of the repairs that may need to be done.
Since I would be assuming more risk in actually getting the property under contract and maybe putting some of my own money into. . . 1) an earnest money deposit 2) appraisal/inspection 3) estimated cost of repairs 4) anything else I can’t think of right now (please add to that list if I’m missing some major items!), I would account for those costs plus my profit - plus an realtor commission if working with an agent - in offer price.
Please clarify for me these points -
Do I need to include the discount as far as what an investor would be willing to pay of the property’s after-repaired value (ex. 65% of LTV of ARV) in my initial purchase offer?
Do I need to work with a real estate lawyer in drafting purchase contracts under this type of situation where I would not be the owner-occupant but flipping the property over immediately , or can I use the contracts my real estate agent would us (marked up as appropriate for contingencies, etc. that I want in there).
I guess th bottom line in this winded message is that I too am confused as to where the lines between birddog, wholeseller, and investor/rehabber are. I don’t want to be just gathering information per se but I don’t want any part of rehabbing the house at this point. I want to get it under contract and then assigned or doubled closed to an investor ASAP. . . so other than the earnest money deposit and maybe some miscellaneous items, do I have to worry about money? And is this the definition of a “birddog?”
Sorry if I’m just not getting it - analysis paralysis!!
It is not an easy business to learn to do. I have lost a bloody fortune twice buying and holding property with over a million in equity the second time. BS happens and I have learned the hard way on everything I have learned. It is a long and drawn out process and nothing closes when it is supposed to for many reasons if it ever does. It is not a get rich quick and easy business for sure. Some have made it fast and easy. Some started with $5,000,000 and turned it into $500,000,000 and some started with a wooden nickel and still have it.
To help you answer your questions if you want to be the middle man you need to price it to the rehabber so the can make a profit and you get a fee too. If they can only pay 65% of the ARV then you need to find a deal where you buy it at around 60%.
I would only put up the earnest money and make this as small as possible. Realistically at least $100 but even more reasonable is at least $250 and more like $500 if a Realtor is involved. I would let the rehabber order the survey and appraisal and any inspections. Their lender most likely will require a particular appraiser or one from an approved list.
One item you failed to mention is the title report. Order this asap as all else may depend on recorded liens against the property or even if the seller is the actual owner of record.
Hiring an attorney is up to you. Most deals are done with an assignment of contract or two earnest money contracts if a double closing. Some gurus will get you to use a buyer friendly form when buying and vise versa when selling but I think it is too damn confusing and retentive. IMHO of course.
As in my previous example my friend in Killeen is a birddog, just find a property that may be for sale and tell me about it. A wholesaler gets the property under contract and then resells it. I did not mention it above so I will add it here. Most rehabbers have their own method and expenses to do a rehab so I wold not spend a whole lot of energy on getting bids and putting together a formal estimate. Just use some ball park figures. If you have a hard time with this however you may want to get a friendly contractor to pitch in.
First off, if in Balt City, you need to order a lien certificate. This sets forth all the liens that must be paid prior to taking title to the property. You do not need an attorney. What you need is a title company. They will handle everyting for you including ordering the liens, title insurance, Deed docs, etc.
Thanks for the information - its certainly invaluable. I realize this is not a get rich quick business but that is not what I’m looking for; if I get in, I want to be successful over the long haul.
Thanks again!
What is the typical fee that bird dogs are paid, and do you enter into a contract with investors before giving them your leads? (And if so, is there a form to use for this contract, or what is the generic language?)
I have never had a contract with a birddog. I guess you could draw up something. It would still be up to the investor to be honest and let you know if they were buying a property that you sniffed up.
I get leads presently from several on line services as well as my Killeen contacts. The more they do the larger the fee. Generally $500 is a starting point and for this all I get is a name and address and phone number. They have not even contacted the owner to get the sales price. Two recent deals as an example>
One was a duplex for $9800. The price was listed on the yard sign. I was all excited about the price and the location. As I walked in I noticed all the rotten sub floor and floor joists and then looked up and saw daylight thru the ceiling and not just a small hole but the entire flat roof was caving in. I was just getting used to accepting all this when I walked into unit B and noticed the concrete slab in this unit was cracked and about a foot out of level. It was also a funky add on deal and a horrible floor plan. I wanted to buy it but with all the rot and design I had a to pass.
The second deal was a no brainer not to buy. It was a probate deal and in bad condition. With all this info I knew I had a $15,000 or less deal and was excited to get the hear the sellers asking price. When I heard $54,900 I had to get them to repeat it twice to make sure I was hearing correctly. I passed mucho rapido and could not get off the phone fast enough.
I would like to train by birddog here a little better but he is not capable of helping me with the leg work. He is too afraid or insecure or something and does not want to contact the owner and can not figure the repair costs and compare those to the appraised value. The first duplex is worth less than $30,000 repaired and would cost more than that to repair. I did not even want it free. The second house as stated was a good deal at $15,000 tops and again worth about $30,000 retail once updated at about a cost of $5000 in rehab.
I hope all this helps some. I tend to ramble early AM
Is it beyond the ordinary for a bird dog to perhaps include photos of the property? I would have imagined that one would also have to find comps for the area.
Also, is it ever appropriate to bird dog for more than one investor? i.e. maybe one investor only wants to pay $400, so he’d get just a list of names, addresses, and prices, but another wants more detailed info, so for - say- $750, I’d give him names, addresses, prices, photos, comps, and perhaps find out why the seller is selling?
And is there any reason a bird dog can’t tell a seller something like " Hi there… can I have more details… I have several contacts who may be interested in your property, but need more information in order to consider your house."… you know… the direct and honest approach?
Photos would be great. You would be surprised how many listings on Loopnet do not even have photos. A lot are bare bones info. I am looking at one listing that tell the price and the address and the fact it is a 6 plex and the footage and that is about it. No bedroom count or potential rent or pictures or age or condition. I do not know how they expect to get it sold like that. The more intelligence available the faster the decision to buy or pass can be made. Comps would be nice too or at least you best guess of the after repaired value based on the comps.
I would be working with dozens of investors if I wanted to be a good doggie. You should even get them to bid against each other for your leads.
The more information the better. I love to know the reason they are selling. I just bought a shifter cart for my son that was advertised at $2500. They had just had a small fire in the garage and he had also wrecked the cart and bent the axle. His wife wanted the junk out of the garage that weekend or else. After he let us know all this I was getting ready to make a $1500 offer when he spoke first and said he would let it go for $800. I slowly said well I guess we will take it. My son fixed the wreck for less than $50. Even at $1500 it would have been a great deal as he paid $3500 for it a year earlier and it was used.
Get all the info you can especially the motivation to sell and always ask what is your bottom dollar. Some will say make me an offer and some will say give you there lowest price right off the bat.
I have another question. If you are bird dogging for more than 1 investor should you send them the same leads in cases where they are looking for the same types of properties?
I love to answer a question with a question. Why wouldn’t you send them the same leads? I would not limit myself like that unless one investor bought every lead I generated and did it in hours.
Wallmart puts all their wares on the self for all to see and does not hold back stuff for a select few. When they run out then that is it unless they get more in. The same as real estate deals. It is not bad business or unethical. Realtors list in the MLS but do keep the ones that are bargains. I suggest show all your deals to as many that will look unless you are on retainer or an employee of a rehabber or some special agreement.
I was a little fuzzy on exactly where the bird dog’s work would stop without crossing into being a “wholesaler.” It would be nice to have everything set up for the investor so all they have to do is say, “Yes. Let’s do it.” But that’s obviously not possible if you don’t have a definite selling price and you can’t have that without some kind of contract or agreement.