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If you have an eye for real estate but do not want to take on the role of a full-time real estate investor, there are solutions for you. Once you learn how to identify motivated sellers, you are capable of bird dogging or wholesaling property.
Bird dogs and wholesaling experts serve a very similar role in the world of real estate investing. Essentially, they seek out leads for investment properties before they hit the market and then provide those leads to qualified investors.
However, regardless of whether you are bird dogging or wholesaling, there are a few financial tricks you need to be aware of. So, in order to keep you on track we’d like to offer you a free strategy call. Simply click the link below to book yours today.
However, there are a few key differences you need to know.
What is Bird Dogging?
The term ‘bird dog’ comes from the practice of hunters using dogs to locate and retrieve birds more effectively. In real estate, it is a very similar process.
As a bird dog, you job is to go out and look for leads on undervalued properties with motivated sellers. These could be distressed properties that the owners are not equipped to care for, properties at risk of being repossessed if the owner defaults on their mortgage, or properties in an upcoming neighbourhood that has not started to experience the full appreciation it is going to in the near future.
Once you have found these leads, you are then tasked with bringing them to real estate investors who are ready to buy their next property. In return, the investor compensates you for your time and effort securing the lead.
Just make sure to remember that as a bird dog you cannot act as a real estate agent or broker unless you are property licensed. If you start overstepping your boundaries, you can run the risk of being met with legal action and potentially being charged with fraud.
How do Bird Dogs Get Paid?
Bird dogs are typically paid in one of two different ways. The primary method is through referral fees, this can either be a flat rate or a certain percentage of the deal amount. This method is very popular with investors because it can motivate bird dogs into finding higher quality deals in order to receive a higher payment. Some bird dogs who work with dedicated investors may receive an hourly wage for their work, but this is far less common.
What is Wholesaling?
Unlike bird dogging where all you need to do is find the leads and pass them on, wholesaling requires you to put the property under contract with the owner and then selling their equitable interest in that property to a third party at a higher price.
It is important to remember that as a wholesaling expert you are not selling and marketing the property itself, nor are you doing it as a representative of the current property owner. In Canada, you can legally sell and market your equitable interest in a property or the contract to purchase the property without a license, but as soon as you begin marketing the property itself, you require a license. So, unless you are licensed to sell and market properties, doing so puts you at risk of facing fraud charges.
As well, unlike bird dogging, wholesaling often requires some level of cash to potentially buy and hold onto properties in the event you cannot find an investor to take over the contract soon enough. Meanwhile, bird dogs are simply passing leads along, so they only require as much money as their lead generation methods cost to perform.
How Do Wholesalers Get Paid?
Wholesalers get paid the difference between the initial contracted price of the property and the price they sell their equitable interest for. This means that if a wholesaler contracts a property at $185,000, and then sells their interest in it at $200,000, the wholesaler receives $15,000 minus any fees they accrue during the process.
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What Tactics Can You Use to Find Leads?
While bird dogging and wholesaling are two different jobs, they often share the same lead generation methods. Some of the most popular methods that are used are:
Driving for Dollars
One of the most popular methods to find a potential property in a given area is driving for dollars. Essentially, what this means is you drive around a neighbourhood or set of neighbourhoods you believe will have undervalued properties that investors will be interested in and try to spot them. Then, you are able to leave notes, flyers or attempt to contact the property owner to gauge whether they are interested in selling their property.
Another tactic that can allow you to cover much more ground is by sending direct mail to property owners. These are letters or flyers expressing that if they are interested in selling their home, you are able to connect them with an interested buyer. (Or, in the case of wholesaling you can say that you are interested in buying the property and then focus on transferring the contract once you have the lead.)
Finally, as a bird dog or wholesaler you can employ the use of auto dialers and telemarketing services to call property owners and gauge their interest in selling their home in order for you to find leads.
Finding the Right Investors
On top of working hard to find leads, you also want to make sure that you are connecting with the right investors in order to ensure that you are able to complete the job and get paid at the end.
Fortunately for you, here at LendCity and the Canadian Real Estate Network, we work with plenty of motivated investors who are constantly on the hunt for their next lead. So, if you are interested in learning more about how you can succeed in real estate as a bird dog, a wholesaling expert or as an investor yourself, we are here to help you.