Real estate bird dogs are usually brand new real estate investors that are looking for a way to generate some extra income without investing any of their own money. While I wouldn’t seek out these types of clients to work with, it is important to understand what they are wanting to do, how you could work with them, and how they might ultimately become clients for you.
As I describe in more detail in the other books in this trilogy, when you start and run a real estate investor group, you should teach classes that attract your personally preferred types of clients. But, no matter how narrowly you create your class content, you’re going to attract a few of the other types of investors that are not necessarily your ideal client. That’s OK. Having a few of these other types of investor clients will help round out and optimize your brokerage business. The easiest example for me to make to explain this is: while I don’t necessarily recommend that you focus on finding tired properties that need fixing up and working with all fixer upper real estate investors, having one or two as a client will allow you to sell the fixer upper properties you happen to stumble upon while you’re working with other clients. You don’t want 50 fixer upper investors, but 3, in addition to a bunch of Nomads, will add a few extra transactions per year to your bottom line. The same logic applies to the other types of investors as well; you’ll probably want a lot of your primary client type, and a few of each of the others.
Now, back to bird dogs.
What Bird Dogs Do
Bird dogs go out and try to find possible deals for real estate wholesalers, flippers, buy and hold investors, creative investors, and off-market real estate investors. Most of them do not have the capital to do any investing themselves. Often, they are bird dogging to make some money to be able to do investing on their own eventually. In some very rare cases, bird dogs do have some money to invest but are bird dogging to try to learn the market and the real estate investing business; this is the rare exception and not the rule.
Bird dogs identify possible deals both inside the MLS and outside the MLS through marketing and networking. When they find a deal they contact other investors that are looking for deals like the one they found, and, in exchange for a small finder’s fee, turn the deal over to the investor. While the fee (and how it is paid) is negotiable, it is not uncommon for it to be in the $500 range. As real estate agents, we have restrictions on being able to pay referral fees. Unlicensed real estate investors have far less restrictions. As an aside, if any real estate bird dogs are reading this and it has not yet occurred to you, you should know you might be much better off getting your own real estate license instead of bird dogging.
Back to us real estate agents, if you’re willing to sit down and meet with a bird dog, often you can show them the benefits of at least buying their own property with little or nothing down as their first property. I’ll usually talk to them about Nomading. Some will be able to qualify for loans and buy a property; many will not. Some are bird dogging as their full time job and won’t have the income to qualify for a loan. Some have spouses that are working and paying the bills while they bird dog and could qualify to buy a home with their spouse’s income.
Often bird dogs have not considered the Nomad strategy and once they understand it, are very interested in doing it in parallel with their bird dogging and, eventually, their other investing. Once you and your brokerage business helping real estate investors get really busy though, it becomes harder to make time for meeting with bird dogs; it is probably still worth doing, in my opinion.
Many real estate agents are reluctant to sit down with bird dogs at all… they feel, incorrectly, that since they are not the end buyer they are not going to be a buyer for them. While I agree that most of the time they’re correct that the bird dog will not be an immediate, direct buyer for them, there are some other advantages of developing relationships with bird dogs that you may want to consider.
For example, if you’re looking for deals yourself (and you probably should be buying at least a deal a year), you may want to be on the receiving end of the bird dog deal leads for your own purchases.
Another reason for working with bird dogs, is that not every deal they find for bird dogging is going to be good enough for their investors to be interested in. In other words, sometimes they will find a seller that wants or needs to sell their property for retail prices. You, as a real estate agent, are in the business of selling properties at retail prices, and could help those sellers.
While you can structure your relationship with bird dogs any way you choose, one possible way to work with bird dogs is to offer to send them comparable sales data or to chat with them about potential deals from time-to-time in exchange for them suggesting to sellers that want full retail to call you to list their properties. Some of you may even want the names and contact info of the sellers where the bird dog is unable to find an interested investor so you can aggressively follow up to get listings and convert sellers to possible buyer clients.
If you think about it, easily 9 out of 10 sellers that a bird dog might talk to will not be investor-grade deals. That means that 9 out of the 10 sellers a bird dog is going to talk to is a potential deal for you.
I have chosen not to directly pursue these seller leads in my business (even though I still get a few from bird dogs here and there) because I prefer fewer, better clients that buy more frequently than a larger number of clients that I have weaker bonds with. I’d rather go deep with fewer relationships than shallow with a larger number. The seller leads from bird dogs are that low quality ore I mentioned previously; folks that might buy a single property every 10 years with you. If you’re lucky you’ll get a sale and a purchase every 10 years, meaning that you get 1 transaction (1 commission) every 5 years on average. Compare that again to Nomads who might buy 10 over that same period. Sometimes you need to say no to good, to have the capacity to say yes to amazing.
Since bird dogs are often brand new investors just getting started you’ll find quite a few start and never stick it out. Don’t fault them; that’s human nature and you’ll find that a common theme among all investors, including Nomads. There are more Nomads that do 1 or 2 deals with you than those that will stick it out for a full 10. There are more folks that start law school or medical school than there are that become attorneys or doctors. That’s life. My philosophy is to attract and inspire my ideal investor clients and not to forcefully convince them. You could argue that if it is good for them (which I believe it is), you have a moral obligation to try to convince them. Maybe, but I find it easier to run away from my dog, whistling with a stick and have him chase me in the backyard than to try to herd my cat to take her to the vet. The dog will happily come to you ready to play; the cat not so much. So, stepping down off my soap box, if you plan to work with bird dogs, you may want to hold special bird dogging (and wholesaling, but more on that in a bit) classes to provide them information and resources on how to do it. Realize that only a very small few will be productive and go out there and take action. But how many bird dogs do you really need bringing you potential listings to move the needle on your income? The answer: not many.
