If you are a beginning real estate investor, it can be tough to get started if you don’t have any money. Yes, you can buy houses with no money. You can also find deals without any money as well. But, what most people forget is that this is a business.
In order to run a successful business, you need a constant flow of leads. And the best way to get a constant flow of leads is through direct mail. But this costs money!
So in this article, I will show you how you can bird dog your way to profits (in the beginning), and be able to start making money in real estate in no time.
Then you can take that money and start marketing for more leads with it, which will allow you to consistently find wholesale deals and put larger checks in your pockets.
Different Sides of the Fence
There is a distinct difference between a bird dog and a wholesaler. A wholesaler will actually put an earnest money deposit down on a property, they will sign a contract, and they will sell their rights in the contract to a cash buyer or an “end user”.
A bird dog on the other hand, will scout a neighborhood for a property, they will take down the details on the property and then they will provide a qualified lead to a wholesaler or other type of real estate investor.
How to Become a Bird Dog?
Becoming a property scout is simple! All you have to do is call up the “We Buy Houses” ads that you see in the newspapers, on bandit signs, and on Craigslist.com, etc.
When you contact the investor, let them know that you have an interest in bringing leads to them. Find out if they are interested in doing business with you.
If they say yes, then you can find out the following from them:
- How much they are willing to pay per lead?
- What they are looking for?
- What areas (zip codes) are they currently looking for properties in?
This will help you when you start your search for properties.
When you are discussing how much they are willing to pay for leads, you can negotiate with them until you come to a price point that is comfortable for the both of you.
You also want to decide on what payment method you are most interest in, whether it’s pay per lead, pay per address, or pay per deal. Check the Property Scouts article here for an explanation of these methods.
If you are in need of fast cash, then you may want to consider pay per address or pay per lead. If it were up to me, I would shoot for the pay per lead method in the very beginning.
The reason I would shoot for this method is because you can make more money from a lead than an address. The reason this is possible is because, with the lead you will provide more information to the investor than if you were to give an address only. So basically, a qualified lead will eliminate some of the work for the investor, therefore the investor will pay more money for it.
Once you get the hang of things, you can really cash in by getting paid per deal. I would ask for a minimum of $500 per deal.
Once you get enough deals in the pipeline (let’s say 10 per month) you can be making upwards of $5,000 per month just from finding leads.
The Best Bird Dog Formula
The best formula to negotiate when you are bird dogging is to see if your investor is willing to pay per lead plus give you an extra bonus after they close the deal.
For example, let’s say you find a lead and you are able to make $5 up front on the lead. Before you accept the $5 for the lead, you’re able to negotiate an additional $250 payment once the buyer closes. Using this method, you can make money on the front end for the lead as well as the back end once the buyer closes the house. In turn, you’ll put more money in your pockets.
Scale it Up
Once you’ve negotiated a descent price point with the investor that you are doing business with, you can then create a business out of it.
What I would do is use the same formulas that I showed you in the property scout article, in order to find potential bird dogs and then offer them half of what you were able to negotiate as a payment for finding leads. Then you can simply train them on where to look for the properties and how to gather the information that you need in order to have a solid lead.
Once you do this you will have an official bird dogging service and you will be ahead of the other property scouting competition in your area.
The idea when it comes to having a bird dogging service, is to have a lot of different bird dogs working for you. This can benefit you in 2 different ways:
- You can sell these leads to other investors as a property scout
- You can take these leads for yourself and start creating real estate deals with them.
Either way, the more leads you have coming in, the more money you will make.
You can create a bird dogging system and make a descent living at it, or you can use it as a stepping stone in order to get started investing in real estate. Either way if you do it right you can make some descent cash.