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What Is Bird Dogging In Real Estate? An Investor's Guide (2023)

real estate investing strategies real estate terms wholesale real estate Aug 20, 2023

Real estate investing is an exciting financial strategy for so many because it is a timeless and proven way to generate wealth in any economy. A 2021 PWC real estate study highlighted this confidence in the market, citing that almost 35% of current investors feel confident making long-term and strategic real estate decisions even in this uncertain environment. 

So it is no surprise that many seek opportunities to dive into the world of real estate investing and learn as quickly as they can. Real estate investments can be incredibly exciting and overwhelming at the same time, particularly for new investors trying to break into the industry.

Bird dogging in real estate is one strategy used by novice investors to learn their local markets while making money relatively quickly and easily compared to other investing strategies.

Many real estate wholesalers start out as bird dogs and progress into owning their own profitable wholesaling investing businesses as they gain skills, expand their networks and learn how the real estate business works.

Interested in learning more about bird dog real estate? Read on below!


Thinking about investing in real estate? Join Alex Martinez at his FREE training to learn how to get started with house flipping and wholesaling!


                                                                    

What Is Bird Dogging In Real Estate?

What Is Bird Dogging In Real Estate?

A bird dog in real estate is a nickname for someone who will go out and hunt for real estate deals. The nickname "bird dog" stems from the name given to traditional hunting dogs who are trained specifically to help a hunter find birds that the hunter successfully shoots. 

When real estate investors become extremely busy, it’s useful for them to hire out help. Bird dogs can assist the investor by performing lead generation and searching for distressed homes on the investor’s behalf.

This creates a win-win opportunity. By leveraging others, the investor frees up time to focus on specific transactions that are already in progress or attention towards putting together other deals. 

For the right person who is motivated, hungry, and driven, this is a great way to learn about distressed properties, motivated sellers, and putting together off-market real estate deals.

Some investors bird dog professionally and build up substantial revenue streams by dedicating full-time or part-time hours to it. Others will use bird dogging as a side hustle within their real estate businesses.

Successful investors who utilize bird dogs know that creating a wide network of potential bird dogs will increase their exposure in the market by casting a wider net.

                                                                    

How Bird Dogging Works In Real Estate

How Bird Dogging Works In Real Estate

A real estate bird dog will typically act on behalf of a real estate investor to search for and locate potential real estate deals. Bird dogs will use search criteria laid out for them by the investor who has hired them.

An advantage of becoming a bird dog is that it requires no money to start.

Examples of specific search criteria can be targeted locations or neighborhoods, housing types, or searching for signs of property distress or motivated sellers. An example of this would be searching for properties that appear to be abandoned or absentee-owned. 

Many property types or seller situations can lead to a potential real estate deal. Bird dogs can explore foreclosures, short sales, complicated probate or estate situations, abandoned, or absentee-owner houses.

The goal of the bird dog is to locate properties with substantial investment potential. Bird dogs can scout Craigslist or online ads to find motivated sellers or undervalued properties. 

The bird dog will search for potential properties that meet these criteria and present a list of addresses to the real estate investor. The investor can then conduct his or her own due diligence to determine if it is a property worth investing in.

 

Pros & Cons of Bird Dogging in Real Estate

Venturing into bird dogging in the real estate domain comes with its own set of advantages and challenges. Let’s dive into the pros and cons to help you gauge if this avenue aligns with your aspirations.

Pros:

  1. Minimal Risk & Commitment: Unlike traditional real estate investments, bird dogs don't buy properties, making it a low-risk venture. Once they've referred a potential property to an investor, their involvement typically ends, offering low commitment.
  2. Flexibility in Working Hours: Whether you fancy it as a side gig or a full-time profession, bird dogging offers flexibility, letting you dictate your hours.
  3. An Educational Gateway to Real Estate: As a bird dog, you'll gather hands-on insights about the real estate market, making it an excellent stepping stone for beginners.
  4. Potential for Profit: Since you're not investing your own money into properties, bird dogging can prove to be financially rewarding, especially with the right leads and connections.

Cons:

  1. Unpredictable Earnings: While you can earn between $500 - $1,000 or more per deal, the income can be sporadic. Market dynamics and investor preferences can affect your earning potential.
  2. Requires Real Estate Knowledge: Success in bird dogging isn't just about serendipity. It demands a grasp over market trends, niche specializations, and thorough neighborhood research to present valuable leads.
  3. Legal and Financial Risks: There's always the potential of facing legal disputes, especially if there are disagreements over commissions. Plus, you must strategize your taxes correctly to ensure you're compliant with tax obligations.

Read Also: What Is Driving For Dollars? The 5 Best Real Estate Apps In 2023

 

Bird Dogging Vs. Wholesaling

At first glance, bird dogging and wholesaling might seem like twin concepts within the realm of real estate, but a deeper dive reveals distinct differences between them.

  1. Mode of Operation: Wholesalers primarily operate by securing properties under contract. They then transfer these contracts to potential real estate investors. On the other hand, bird dogs function as information gatherers, spotting potential deals and passing on this information to investors. They never actually secure a property under contract.

  2. Earnings and Compensation: A wholesaler's profit comes post the sale of the property, typically as a predetermined percentage of the property's value or a set fee. In contrast, bird dogs earn their income for the leads they provide, regardless of whether a sale transpires or not.

  3. Level of Involvement: Wholesalers play a more active role in the real estate transaction since they have the properties under contract and handle the transfer to interested buyers. Bird dogs have a more hands-off approach, functioning mainly as intermediaries connecting potential opportunities to investors.

  4. Entry Barriers and Experience: Both wholesaling and bird dogging can serve as stepping stones for novices in the real estate sector. However, given the additional responsibilities associated with contract handling and negotiation, wholesaling might seem a tad more challenging to those entirely new to the industry.

In essence, while bird dogging and wholesaling share the common goal of identifying and capitalizing on undervalued property opportunities, the paths they take to achieve this end are markedly different. Choosing between them would depend on one's preference for involvement, risk appetite, and long-term goals in the real estate world.

                                                                    

Is Bird Dogging Real Estate Legal?

Bird dogging real estate for real estate investors is generally legal. Depending on the specific state, bird dogging for or by licensed real estate agents may be illegal or frowned upon.

It is also important that a bird dog doesn't represent him or herself as a licensed real estate professional (if they are not one). For example, a bird dog should not act as a licensed Realtor or give a misrepresentation to a property owner.

Additionally, some states may require specific licensing in order to solicit. In this case, you may see an age minimum of 16 or 18 to acquire the required licensing.

It is important for any individual who is interested in either becoming a bird dog or hiring one to consult with a local real estate attorney. This will help ensure compliance with your specific state. 

It is also important to have ethical and safe bird dogging practices. For example, soliciting via door-knocking may be a legal strategy, but if a bird dog approaches a door with a “No Soliciting” sign posted, he/she should respect that and move on to the next house.

Read Also: Virtual Real Estate Investing - The (Ultimate) Guide

                                                                    

What Is A Bird Dog Referral Fee?

Bird dogs are typically paid one of two ways: an hourly rate or a referral fee.

The referral fee method is used much more often over a flat hourly rate. 

Some investors choose to pay bird dogs a flat hourly rate to source and compile leads into a list. The drawback of this payment method is that the investor risks paying a predetermined flat rate which yields no results.

With an hourly rate, a bird dog gets paid regardless of if a deal actually closes. This is not ideal!

Other investors will pay bird dogs based on a referral fee. The referral fee can be paid in one of two ways: a percentage of the deal amount or a flat fee. With both a percentage or a flat fee, payment is only given to the bird dog when a deal actually closes.

Referral fees can be a great motivator for the bird dog to create a higher quality list of leads to ensure a greater chance of a closing actually happening! This is why the referral fee method is preferred and more widely used by real estate investors. 

                                                                    

How Much Does A Bird Dog Make?

Bird dog income varies significantly based on how much time a bird dog invests into the work and based on how much value they ultimately bring to the investor. Establishing relationships with productive and active investors and consistently bringing quality leads will ultimately impact your income. 

For referral fee-based arrangements, a typical bird dog fee can range from $500-$1,000 per closed deal.

For percentage-based arrangements, a bird dog fee can range from 2%-10% of the deal profits. 

At the end of the day, a particular bird dog’s income will be based on the quality of the potential deal presented, the relationship between the bird dog and investor, and the general state of the local market.  Many bird dogs ultimately become real estate wholesalers. Wholesalers also find and source deals. The key difference is the level of involvement around deal analysis.

Deal analysis involves running the investment numbers, the maximum allowable offer, the projected or potential cash flow, and a variety of other factors. A bird dog is typically only required to supply an owner name or a potential property address. The bird dog provides a tip that an investor can then go work off of to find a deal. 

A wholesaler will not only find the lead but will also conduct due diligence around it. This includes researching the property, talking to the property owners, running a deal analysis, and presenting the potential deal to interested investors.

Since the due diligence piece has been conducted, seasoned wholesalers can earn much more than bird dogs as they can charge higher finders fees! 

                                                                    

How To Bird Dog In Real Estate

How To Bird Dog In Real Estate

Becoming a successful bird dog in the realm of real estate is both a strategic and rewarding endeavor. Here's a streamlined guide to help you navigate this journey:

  1. Educate Yourself on Local Laws: Before diving in, familiarize yourself with the regulations in your region to ensure that all your actions are above board. Knowledge of these laws can protect you from unforeseen legal issues later.

  2. Mentorship Matters: Seek guidance from seasoned professionals. Join real estate-focused Facebook groups, LinkedIn networks, or attend local events tailored for real estate enthusiasts. The insights of a mentor who once started as a bird dog can fast-track your growth in this domain.

  3. Draft a Solid Contract: Before you step into the field, have a well-structured referral contract at your disposal. This is a pivotal tool to ensure that your efforts are recognized and adequately compensated.

  4. Network and Build Relationships: Simultaneously, cultivate relationships with potential investors and make connections within the real estate community. Attend investor meetings, such as REIA gatherings, and consistently engage with influential figures in the real estate circuit.

  5. Harness Digital Platforms: Enhance your presence online. Leveraging social media not only expands your network but also keeps you abreast of the latest trends and opportunities in the real estate market.

  6. Offer Value and Deliver Quality: The cornerstone of a successful bird dog's strategy is the ability to provide high-value properties and leads. When you consistently provide leads that lead to successful deals, you solidify your place in the investors' network.

  7. Commit to Continuous Learning: Remember, every property and investor you engage with is an opportunity to learn. Stay persistent, adaptable, and always be prepared to refine your strategies based on real-world experiences.

For those eager to delve deeper and master the nuances of bird dogging, aligning with investors willing to mentor and share best practices can be a game-changer. Whether you're a newbie or someone seeking to solidify their place in the real estate arena, it's all about perseverance, networking, and delivering unmatched value.

Ready to take your real estate journey to the next level? Join our free training course today and unlock the secrets to successful bird dogging!

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How Old Do You Have To Be To Bird Dog Real Estate?

Depending on which state you reside in, there may be age limits associated with bird dogging. This can be specific by state, so it is important for real estate investors to work with a local attorney to understand local child labor laws and regulations.

For example, if a state’s minimum working age requirement is 16 years old, a real estate investor should align his or her working practices with this and only consider bird dog applicants at or above this age. 

                                                                    

Where Can You Find Real Estate Investors Looking For Bird Dogs?

A great place to find real estate investors looking for bird dogs is a local real estate investing network group. These types of groups should be part of any real estate investor’s network.

While networking at these types of functions, it is important to locate the group members who are actually doing deals. It can be very common for wannabe or inexperienced investors to show up to these events.

Make every effort to connect with professionals who have real experience. It is also advantageous to network with real estate wholesalers and learn more about their wholesale deals.

Another way to find other real estate investors is to locate and follow up on bandit signs. These signs are typically on the sides of roads and say “we buy houses”.

Bandit signs are often put out by real estate investors searching for deals. You can reach out and pitch the investing company about becoming a scout for them.

                                                                    

Bird Dog Real Estate Contract

It's important for a bird dog to ensure proper language is written into a real estate contract. This ensures the bird dog is paid on time and correctly when the deal closes.

The following items should be included in a real estate contract: 

  1. Names Of Parties: Full and legal names should be included and accurately spelled.
  2. Bird Dog Referral Fee: The exact percentage or flat fee that will be paid by the end investor to the bird dog upon the deal completion.
  3. Length Of Contract: This refers to the closing timeline of the deal and exactly when the bird dog will be compensated. Additionally, if the bird dog and investor agree to an exclusive working relationship of any kind, this should be annotated and addressed here.
  4. Other Notable Terms, Conditions, Or Contingencies: If the investor and bird dog have worked out any special terms or conditions, these details can be described here.

As with any real estate contract, it’s a good idea to have it reviewed by a qualified real estate attorney in your state to ensure it meets all local requirements and guidelines. Many states actually require that a real estate closing take place through an attorney.

For more information on how a real estate attorney can help you with advice and purchasing, watch this short video:

                                                                    

What’s The Best Bird Dog Real Estate Software

Propstream is an incredible tool used by professional and novice real estate investors alike.

Started in 2007 by a group of investors, the software creates an aggregated data feed of potential and actual properties for investors to target market and source deals.

The dynamic feed can replace the driving for dollars strategy, saving time and money for investors.

Bird dogs can use Propstream to search for potential deals and follow up directly with homeowners in need. When used correctly, Propstream can serve as an effective method of vetting potential properties.

Try PropStream FREE For 7 Days and Find Your Next Deal Today!

 

DealMachine is a terrific bird dog real estate app that combines potential deal sourcing and direct marketing (including direct mail options).

Bird dogs can search for and create real estate lead lists based on driving for dollars proprietary software. This app software integrates a driving module to help hired drivers optimize a route, automatically locate properties that meet specific search criteria and notify the end investor seamlessly.

The app platform allows for convenience and ease of use for investors and bird dogs on the go.

Try the DealMachine App FREE For 7 Days!

                                                                    

Final Thoughts On Bird Dogging

While bird dogging in real estate requires effort and diligence, it offers budding investors a valuable introduction to the property market. Additionally, seasoned investors can benefit by saving time using this strategy. When done with dedication and expertise, bird dogging can establish mutually beneficial relationships for everyone involved. If you're intrigued and want to master the art of bird dogging, sign up for our FREE training and set your foundation in real estate investing. 


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