Birdoging

[kimesha]

How do you setup a birdoging deal?And how do you prevent getting scammed once you find a deal?Can you do this without putting a contract under assignment?

[ARamirez]

kimesha,

Birdogging is ok and you will learn in doing so, but don't get too comfortable or satisfied with it. Try to learn to put deals under contract and wholesale the houses.

[eager2learn]

Hi mgerchow,

I have just learned something....I didn't know that birdogging was considered illegal in some states.
How can I find out if it's illegal in mine? I live in New Jersey.

Also that statement about birdoggers not being sure they will ever get paid?   When you refer a potential deal to a rehabber, don't you sign some sort of contract letting it be known that this contract is being transferred for a fee.  Initially the contract is between you and the seller. Then you transfer this or sell this contract for a fee....don't you?

Bear with me  , I'm still new at this.
eager2learn

[WilsonTaylor]

eager2learn,

I believe that you are getting confused between birddogging and wholesaling.  

A birddog does not sign the contract.  He/she merely finds a property that they think the investor might be interested in and gives the investor the information.  There is no contract between the seller and the birddog and usually no written contract between the birddog and the investor.  The contract is between the seller and the investor.  The birddog has to trust the investor to do what he/she said that he/she would do.  FYI, birddogging is not legal in most states, but it is real hard to prosecute because there are no written contracts.

A wholesaler signs a contract with the seller to buy the property.  He/she then finds an investor that will pay him/her more for the property than what has been offered on the contract and either assigns the contract to the investor or buys the property and sells it to the investor.  Wholesaling is legal in all states.

HTH

Wilson

[eager2learn]

Thanks Wilson,

I was confused.....but I understand now. How can I find out if it is legal in New Jersey?

Also....there must be some way that a birdogger can guarantee getting paid by an investor...isn't there?

eager2learn

[mgerchow]

contract guarantees payment when joining bird dog business.

[WilsonTaylor]

eager2learn,

If you find a true investor, you shouldn't really have to worry about not getting paid.  If you think of the hunter analogy, a dog that points out the bird and then flushes them on command would get pats and a doggie bisquit.  The only time the hunter would shoot the dog was if the hunter was not going to hunt again.  In birddogging, an investor wants the birddog to bring them properties that they want to buy.  It is cheaper for them to pay the bird dog than to have to do it themselves.  If they don't pay the birddog (shoot it) the birddog is not going to hunt for them anymore and they will have to do the legwork themselves.  I assure you that if you do the legwork to find a property and your investor decides not to pay you for your work, you won't send him any more deals.  

As far as finding out if birddogging is illegal in your state.you can probably find out on the state real estate commission site if you are really interested.  My suggestion would be for you to get paid by your investor for "information" rather than getting paid to facilitate the sale of real estate.  It is legal in all states to sell information.  Or another way to get around the legality of birddogging is to forget about birddogging and start wholesaling.

Wilson

[sean1]

I am finally making good on my threat of years ago to start in this business, have been a successful contractor for 20 years. Last time I started (5 yers ago) looking into foreclosures there was an enormous amount of competition. My question is : If you pay the bird dog, pay the investor, and wholesale whom then retails, how can there be enough money. It is mind bogeling.

Sean 8)

[Roger J]

Sean,

I may be a little confused by your question, but there is enough money in the deal because you make sure that there is enough.

Birddogs usually only make $500-1000 per successfully closed deals.  To earn more money, the deal has to be truly great.  Remember, birddogs only point out the potential deals.  It is the investor's job to actually work and close that deal.

In this scenerio, you would be the investor, so the only investor to pay would be yourself.  You make sure that you make money by sticking to whatever guidelines that you have made to buy properties.  An example would be a rehabber's guide of only buying at 70% of ARV.  To make sure that your birddogs only offer you deals that you want, you need to train them on what you want them to hunt.

If you're planning on wholesaling, then it's important to learn what your investors guidelines are so that you aren't wasting their or your time.  Example, if your investor will buy properties at 80% of ARV, then you know that you need to find them for less in order for you to make money.  It's also good to point out here that you want to leave as much money as possible in the deal to the retail investor.  For example, if you get a property under contract for 50% of ARV, and you're investor will accept 80% of ARV, doesn't mean that you should charge him the 30% difference.  Most wholesalers have a fixed markup on their inventory, like $5K over their purchase price.  As the spread gets bigger, they might increase that number alittle because the deal is so good, but they never get greedy.  Wholesalers work on volume.


Roger

[sean1]

Roger

Thank you, that makes sense. Since I am starting out with little capital (Tied up elsewhere), I need to focus on what I do best....assessing the best properties and getting them rehabbed. I detest the thought of bird dogging, so whom does that for me?, Also I need an investor to carry the deal during rehab and through to close at retail, whom might that be?
Thanks for your help.
Sean

[Roger J]

Sean,

I think that there is some confusion here.  If what you do best is assessing the best properties to rehab, or in other words finding properties to buy for rehab, then you are your own birddog.  It doesn't sound like you need a birddog to find your deals.  Afterall, birddogs aren't a requirement to be a RE investor.

IF you are the person buying, rehabbing and selling the properties, then YOU are the investor.  What it sounds like you need is a lender.  There are tons of options for you to get financing for your transactions depending on your credit, debt, income, and business sense.  A good, preferrably referred, mortgage broker will be able to find several conventional and non-comforming type loans that may suit your needs.  You could also go with a hard money lender.  While their fees and interest rates are high, the money is easy to get.  Lastly, if you can sell yourself and your business, private financing may be a good way to go.  The trick here is finding people that have the $$$, but not the time and/or the knowledge to put that money to good use.

hope it helps,

Roger

[sean1]

Roger
Excellanta!!! Thank you. It helps alot. I really need to do some private financing deals with people with money, how can I find them??? Any idea's
Thanks for all your help to everyone on this board, you know your stuff. I am fairly well seasoned especially when it comes to value, and rehab, some of the questions people ask here scare the heck out me....thinking they are in over thier heads...but then again maybe I sound that way.
Thanks again.
Sean 8)

[DBS]

Barry Grimes has written a wonderful course on birddogging.  I'm an agent doing lead generation and qualification for investors.  Personally, I have a written contract with my investors which details what I will do for them and the price I will be paid for that service.  I scope the deal, analyze it indepth and come up with a recommended offer based on equity.  My goal is to present a profitable deal to an investor that is so well analyzed that all he has to do is close it.  Barry Grimes course material outlined it all very succinctly and at a beginner's level so I was able to understand and quickly apply it.  So far, its working.

[sean1]

Right on i will look into it. Hopefully it will take all of the "things i can't stand out of it".

Maybe its the rejection I can't handle? Some pyschosis of one strain or another.

Sean 8)

[Roger J]

Actually, you can get the free version of Barry Grimes book here at reiclub.com.  Just look on the free investing books link.

If you decide that you want the more indepth, printed version, you can order thru the website as well.

John Locke also has a very good ebook on the subject as well.


Roger