Bird Dogging 101: A Guide For Real Estate Investors

There are numerous ways to break into real estate investing: becoming a real estate agent, flipping houses, and even bird dogging. Each of these paths represents an opportunity to bolster your finances and connect with real estate professionals in your area. These positions can even be a great place to start your real estate investing business. In this guide, I will show you how to successfully find and present your first bird dog contract

Between these options, bird dogging is unique in that it takes no money to get started. However, it will demand rigorous research and networking to be successful. You can use bird dogging to earn enough capital (and connections) to land your first investment property with the proper diligence. Keep reading to learn more about real estate bird dog opportunities.

What Is A Bird Dog?

A bird dog in real estate is someone who researches off-market or undervalued properties and presents them to real estate investors in exchange for a flat fee or percentage of the net profit from the deal. Bird dogs are not licensed real estate agents, and instead, get started by working with other bird dogs or simply building a network in their market. The name bird dog comes from hunting, where trained dogs find fallen birds for hunters. It is now commonly used in real estate, as “bird dogs” find investment properties for other real estate professionals.

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How Bird Dogging Works

Bird dogging involves a lot of market research and the ability to find undervalued properties consistently. Bird dogs will typically search for foreclosures, bank-owned properties, and distressed homes. They can rely on the multiple listing service (MLS), direct mail campaigns, bandit signs, public records searches, or simply driving around to find properties. Bird dogs must gather as much information as possible about the property before presenting the opportunity to an interested investor. The bulk of a bird dog’s time will be spent identifying potential properties within their market area.

After finding suitable leads, bird dogs will briefly analyze the deal’s potential profitability before reaching out to an investor. At that point, they can present the property and information. Bird dogs earn money when investors decide to buy the property and can earn either a fee or percentage of the profits for their services. Bird dogs must work to constantly expand their network of investors to ensure they can pass any suitable properties along and earn money for their research. A bird dog’s success ultimately depends on their ability to find properties and convince investors of their potential.

What Is A Bird Dog Referral Fee?

A bird dog referral fee is one of the two main methods a bird dog is paid. The other method is an hourly rate. In the instance of the referral fee method, the investor will pay a bird dog any time they close a deal that came at that bird dog’s referral. The fee is typically a flat fee, or a percentage of the deal amount. Most investors prefer the referral fee, because it can help motivate bird dogs to produce a high-quality list of leads. They are equally as incentivized for the investor to close a great deal because their profit depends on it.

How Much Does A Bird Dog Make?

For flat rate referrals, a bird dog typically charges roughly $100 to $500 per closed deal on their bird dog contract. For percentage-based referrals, bird dogs can charge anywhere from 2 to 10 percent of the profit. A bird dog’s fee policy typically depends on their level of experience, number of hours they put into bringing in leads, and the quality of leads they produce.

Is Bird Dogging Legal?

Bird dogging is legal if the person identifying the deals does not get involved in the actual transaction, though laws vary depending on the locality. There is a thin line between acceptable responsibilities and illegal actions when it comes to bird dogging. Bird dogs must be careful not to act as agents or brokers at any point in time, as they are not trained or licensed to do so. For this reason, you should always consult the laws in your area to learn exactly what you can and cannot do. If you overstep your bounds as a bird dog, there could be legal consequences. Further, it could harm your reputation in the real estate industry, making it more difficult for you to become a real estate investor.

Bird Dogging Pros

There are numerous perks associated with successful this method. Not only could this profession bring you financial gain, but it can also set you up with several other benefits:

• Networking Opportunities: Bird dogging will require you to build up a network of motivated sellers, real estate investors, and more in your market area. If you take time to form relationships with these clients, you could find yourself with valuable connections later on in your career.

• Hands On Real Estate Experience: Experience is crucial to any profession, but especially in real estate. The more properties you work with, the better you will get at spotting and securing great deals. This method offers an excellent beginner-friendly way to learn the ropes of real estate.

• Low Start-Up Costs: It does not cost any money up front to begin researching properties and contacting investors. While you will need to consider the value of your time, it can be a great way to break into the industry without a lot of capital.

Bird Dogging Cons

There are some potential downsides to consider before you jump into this role in the real estate industry. Here are a few cons to think about as you learn more:

• No Guaranteed Income: As a bird dog, you are not on anyone’s payroll, meaning you will only earn money when you successfully connect investors to properties through your bird dog contract. If you get busy with other commitments or fail to refer properties consistently, then your income will decrease accordingly.

• Time Is Money: The research required to be a successful bird dog will take some time. You will likely refine your lead generation techniques over several months, and it will take time to build relationships with investors. Depending on your schedule, it can take weeks or months to accomplish your first referral.

• Research Intensive: The most challenging part of your job as a bird dog will be learning to differentiate between viable leads and properties that are not a good use of your time. Be careful of any opportunities that sound too good to be true, as they could take up your time and ultimately fall through.

Bird Dogging Vs. Wholesaling

Bird dogging and wholesaling are somewhat similar, but there are not exactly the same. Wholesalers earn money by getting properties under contract and then handing those contracts over to interested real estate investors. They make money when the property is purchased and are paid a percentage of the property’s cost. Wholesaling involves similar responsibilities compared to bird dogging: both are tasked with identifying undervalued homes and presenting those opportunities to qualified real estate investors.

However, the key difference is the level of involvement they have in the transaction. Wholesalers acquire properties under contract (though they are never official owners). Bird dogs simply hand over information to investors without ever securing the property with the potential seller. Both opportunities are great springboards into the real estate industry, as they can help beginners earn income to invest in real estate eventually. Generally speaking, there is more responsibility involved with wholesaling, and for that reason, this method can be more open to those without any experience.

How To Bird Dog In Real Estate

Learning how to bird dog in real estate will take a lot of initiative on your part, but with dedication, you can turn it into an excellent source of cash flow. The absolute first step you should take is to look up the relevant laws in your area. Familiarize yourself with what you are allowed to do to avoid any problems when you start referring properties to investors. Another great step as you get started is to find a mentor in your area. Research real estate Facebook groups, LinkedIn pages, or even local events to find other investors who got started by bird dogging. It may take some time to find the right mentor, but their advice will be invaluable.

Once you have a solid place to start, put together a sample contract for your future referrals. The only way to guarantee you are paid for your time and work is to get it down in writing, so make sure you have a contract ready to go when you start searching for properties. From there, you can start looking for potential leads. There are several ways to find distressed properties in your area, and you will likely need to employ a few techniques to find undervalued properties. As you start your search, remember to build relationships with potential investors in your area simultaneously. This will help make sure you know exactly who to bring each deal to.

Remember, it will take time to build a network and get familiar with the market area. Don’t be too hard on yourself if your setup process takes a while to complete; that is to be expected when it comes to bird dogging. You will learn more with each property you refer and each investor you work with. The most important things to keep in mind throughout this process are staying within the local laws and protecting yourself through contracts.

Bird Dog Contract In Real Estate

If you’re considering acting as a bird dog in real estate, you’ll want to protect yourself by creating a real estate contract. Such a contract will make sure that you’re paid in a proper and timely manner any time a deal closes. Because contracts are legal in nature, it’s highly advised to have it reviewed by a real estate attorney and ensure that it will hold up in court if necessary.

Be sure to include the following information in your contract:

• Full and legal names of all parties involved

• Specify the percentage or flat referral fee that the investor will pay you once the deal closes.

• Include verbiage on the timing at which you should be compensated during closing.

• Address any exclusive working relationship between yourself and the investor, if applicable.

• Include any other terms, conditions and contingencies that you may have negotiated with the investor.

The Best Bird Dog Real Estate Software

Last but not least, don’t hesitate to add technology to your bird dog arsenal. There are some great pieces of software, such as Propstream, which aggregates possible and actual properties to target. DealMachine is a real estate application that offers a combination of deal sourcing and direct marketing, making a bird dog’s job much easier. It even includes a feature that maps out optimal driving route when driving for dollars.

Summary

Real estate investing requires capital, and that can be hard to obtain as a beginner. Luckily, there are numerous strategies — such as the selling of abird dog contract — that provide an excellent way to build up your finances and connections at the same time. Remember to consult the laws in your local area before doing anything and think about whether this opportunity is right for you. Bird dogging will require time and patience to become successful. When done right, it can provide you with the funds to eventually purchase your own investment properties.

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