While the world waits for the next stock market correction, investing in real estate can seem like a much better deal. However, while buy and hold usually works for stocks over time, the purchase is key to making money in real estate. If you have little cash, you can sign up to do the legwork to find great buys.
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What is a bird dog in real estate?
A bird dog in the world of real estate is the person who scopes out the distressed properties in a neighborhood. They share this data with a company that flips properties, owns rentals, or resells properties to others who do the same. Bird dogs don’t get paid until the flipping company does, but the process can be quite lucrative.
How to Bird Dog Real Estate
To properly bird dog, it can help if you know a neighborhood. For example, you can keep an eye out for anyone:
- having multiple yard sales
- letting the grass grow
- letting trash pile up
- not maintaining the property
Because investors in real estate make their money in the buying process, it is important to get as many discounts as possible. A buyer might choose to discount or make a low offer based on
- bad landscaping
- broken windows
- trash left in the garage or house
- dirty conditions inside the house
- exterior repairs
- interior repairs
For best results, a bird dogger will get photos of these points. For example, a bird dogger will view the house from a distance and take photos of weed trees in the fence line, circulars piled on the porch, broken windows, and piles of trash around the garage.
If you choose to bird dog, be very careful not to step onto the property. The street, sidewalk, and alley are all fair game, but if you walk on the property, you may be trespassing and putting yourself at risk.
Read more: Can You Live Off of Real Estate Income?
You can also bird dog on the computer. For example, if you can get to the county property tax valuation listing, you can check a series of addresses and look for any properties that are markedly lower in value than those around them.
You can also view the MLS or multiple listing service for properties that
- have been on the market for a while
- are close to distressed properties
- are in neighborhoods that are facing economic distress
Additionally, you can look for properties that are in pending foreclosure status, also known as lis pendens. Many property owners would rather lose money in a sale than have a foreclosure on their record. A potential buyer could get an excellent deal on a property by buying it before foreclosure.
Read more: How to Make $50K Per Year From Your Home
A bird dog with great tech skills can also post “We Buy Houses” signs around city neighborhoods and set up an auto dialer to increase contacts or gather information. If you choose to make these calls, make sure that you have some bulletproof phone skills, as there are rental property owners out there who can respond with some hostility when they get the same call on the same property for days on end.
Bird doggers would also do well to check out houses for rent in their region. If a house has had a For Rent sign in front of it for more than a month, check out the local property tax listing and find a contact name or business name for the owner. They may be able to provide the investor with contact information for a landlord who is tired of dealing with rental properties and get the investor a good deal.
Driving for dollars
Driving for dollars means spending a lot of time behind the wheel. Again, what a bird dogger driving for dollars is looking for is neglect and financial distress. Keep an eye out for
- uncollected trash or overflowing bins
- broken blinds inside the house, or blankets over the windows
- broken windows
- tall grass and weedy flower beds
- tools, bikes and other outdoor gear left lying around
- tires and mattresses left outside
- broken down vehicles in the drive
A buyer in financial distress may be quite motivated to give an investor a deal to get out of a property they can no longer afford. Additionally, these buyers generally can get funding without a lot of inspections, so a property that needs some work is not a worry.
Read more: How to Become a Real Estate Appraiser
The pros and cons of being a bird dog
Pros:
1) You can make money on real estate even if you can’t qualify for a mortgage at this time.
2) You save the investors, especially house flippers, the time it would take to find properties on their own, which increases your value to them with each buy.
3) One bird dog can work for several different investors.
4) Once you sign up, all you need is a car and the camera on your phone.
Cons:
1) In a tight market, deals go quickly. Bird doggers have to work fast.
2) The occupants of a house may get hostile if they see you taking photos.
3) You may not always be working in the nicest neighborhoods.
4) This is a lucrative and popular side hustle. Be prepared for competition.
There are bird dogging seminars and webinars out there that suggest that you can make huge dollars for very little work. While real estate can be quite lucrative over time, it is not a quick way to build cash. As a bird dogger, you may have to put in a lot of miles before you get a payout. However, if you can wait for your money and are willing to put in the time, bird dogging can be a great way to build up your cash reserves and start building your own real estate portfolio.
