Get Started in Real Estate as a Bird Dog

First-time real estate investors often have a difficult time finding, negotiating, and closing their first investment purchase. Often, new investors have questions and doubts such as “am I taking too much risk with this purchase?”, “will the expected repairs exceed my budget?”, “will the marketing time be too long, consuming my cash with carrying costs?”, and so on.



In addition, first-time investors often have limited available capital for their initial investment. Some new investors are attracted to real estate investment with the lure of big easy profits from “no money down” televangelists. These “newbies” are often shocked when they realize that their first real investment will require thousands of dollars in down payment, closing costs, reserves for repairs and carrying costs.



So how does an ambitious new real estate investor solve the problems of limited real estate knowledge and limited investment capital?



Enter the Bird Dog



Like hunting bird dogs that are trained to scout out game birds for their hunter owners, real estate investment bird dogs are trained to hunt out qualified investment deals for their mentors.



Simply put, a senior, well-heeled real estate investor trains his bird dogs to seek out new investments that meet the senior investor’s criteria. Through the bird dogging process, the senior investor receives qualified investment deals, and the bird dogs receive training, mentoring, and cash for their services.



The following three steps outline the process of how to get started earning finder’s fees and gaining knowledge and experience as a real estate investment bird dog.



Step 1 - Find a Mentor



The first step in becoming a bird dog is to find an experienced real estate investor that you would like to work with. Talk to the different investors and vendors at your local real estate investor association monthly meetings to try to find a mentor match for your investment interests. Find a mentor that is already working in your targeted geographic area and is actively doing the type of deals that you are interested in (such as buy and hold, rehabs, quick flips, development opportunities, and so on). Beyond your local real estate investor association, you can find mentors by placing an advertisement in local newspapers or on real estate investment web sites.



Step 2 - Establish Investment Criteria and Compensation Agreement



After finding an experienced mentor, the next step to becoming a successful bird dog is to establish your mentor’s investment criteria. Working with your mentor, you should come to a (hopefully) written agreement that defines the qualifying investment opportunities that the mentor investor is seeking. Be sure that these criteria are interesting to you, too. Otherwise, you’ll find your motivation slipping away. Here are just some examples of successful investment criteria:

· Find all apartment buildings in zip code 331XX with 10 or more units with a cap rate of 10

· Find condos in South Beach in original condition that can be purchased for 15% below market

· Pre-qualify For Sale By Owner sellers to find those that would consider a cash offer of 10% less than what they are currently asking or market value, which ever is less.

· Visit pre-foreclosure owners and set up phone calls and meetings for your mentor.



Whatever the criteria, documenting the exact expectations for a successful deal will avoid confusion, disappointment, and wasted time for both you and your mentor.



After you and your mentor have agreed on the investment criteria, the two of you should determine your compensation for finding deals that meet the mentor’s criteria. Primarily, bird dog compensation comes in the form of a fixed or percentage based finder’s fee paid when a deal closes. However, the agreement can also include other incentives for successful performance. For example, you could earn a fee for every vacant property that you identify in a specific neighborhood; or a fee for every pre-foreclosure meeting that you set up for your mentor.



Step 3 - Find Deals for Your Mentor



After you’ve found a mentor and set up your investment criteria and compensation agreement, it’s time to start finding deals! Your search process could involve any number of techniques, including searching MLS-based Web sites, driving around looking for vacant properties, calling landlords, talking to local merchants, working notices of default, and so on. There are dozens of good books and web sites that can introduce you to all sorts of creative techniques for finding qualified investment deals. Not to mention learning from the speakers and week-end events offered by your local real estate investor association.



Look to your mentor to train you in different methods of finding deals that meet his or her investment criteria. Your mentor should know what has worked for him/her in the past, and probably has some new ideas and methods to explore that may produce results. You should learn as much as you can from your mentor during this step of the process. The techniques, experience, and knowledge you gain from finding deals with your mentor will be invaluable when you are out on your own, scouting deals for yourself.



Knowledge + Money + Hard Work + Relationships = Success



Through your hard work as a bird dog for an experienced investor, you’ll gain the knowledge and experience required to pre-qualify your own investment deals. The finder’s fee compensation you earn will help you build an initial capital base that will allow you to confidently make your first few investment deals. And, the relationship and partnership you build with your mentor will bring returns in the form of coaching, camaraderie, introductions to other investors, partnerships on large deals, and more.