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What Does a Bird Dog Do in Real Estate?


Jul 09, 2020 by Barbara Zito

A bird dog in real estate is a person who acts as a property scout for an experienced real estate investor. The bird dog hunts for and identifies distressed and underpriced properties that have strong investment potential, then takes the leads to an experienced real estate investor. If the investor decides to buy the property and the sale goes through, the bird dog gets a finder’s fee or commission.

The term bird dog refers to an actual hunting practice, in which a dog will point at or retrieve a fallen bird for the human. In this case, the "bird" is an investment opportunity. Some bird dogs are agents or brokers looking to get into the investor side of the industry, although one does not need to have a real estate license in order to work as a bird dog.

What does a bird dog do?

The job of a real estate bird dog is to identify real estate deals that will turn a good profit for an experienced real estate investor. In general, a bird dog will search for foreclosures and bank-owned properties, also known as distressed properties, that can be acquired for a good price. Other opportunities include underpriced properties that need considerable work but have the potential to command a good profit as a rental or a flipped property once the renovation is complete.

It's important to note that a bird dog actually does the legwork involved in scouting properties. Anyone with access to the MLS can see what's available on the market. However, a bird dog is actually looking at homes and vetting the deals to bring back to the investors so that they can make an educated decision as to whether to submit a purchase offer.

Driving for dollars

Driving for dollars is real estate investing term used for the research done by earnest bird dogs. It involves literally driving (or walking) around town in search of properties that have substantial investment potential.

In the digital age, driving for dollars might seem a bit antiquated, but it is a practice that many a successful bird dog will swear by. At the very least, driving for dollars allows a bird dog to get a feel for a certain neighborhood. But a successful drive for dollars could also turn up motivated seller leads for an investor or broker -- which will in turn rack up commissions for the bird dog once the real estate deals are secured.

Bird dogging vs. wholesaling

You’ve likely seen signs in a neighborhood that say things like "We Buy Houses" or "Cash for Houses." This is an example of wholesaling, not bird dogging. Real estate wholesalers will purchase distressed properties from motivated owners for as low a price as they can get, then sell them to investors for a higher price and keep the profit. So, wholesalers purchase the distressed properties while bird doggers simply refer the viable property leads to potential investors.

There is great potential to make money in real estate wholesaling, but it's not for the risk averse. It's possible that a wholesaler won't be able to find an investor to take the property, or if they do, they might have to lower the price, which will eat into any profits they had hoped for.

For those looking for a way to get some hands-on experience in real estate investing without using their own money, bird dogging is the safer bet. This is because bird dogs are simply the property hunters; they have no money involved in the transaction. If a real estate lead doesn't pan out for the bird dog's investor, then there's no commission earned, but the bird dog doesn't lose any money.

The pros and cons of being a bird dog

There are advantages and disadvantages to bird dogging. Consider both before you start driving for dollars.

Pro: You can get involved in investing without the risk. The real estate industry has huge income potential but also a lot of risk. As a bird dog, you're scouting property deals for others, not yourself, to assume the risk. It's not uncommon for bird dogs to eventually become investors themselves, but at least at the start of their careers, bird dogs are doing the hunting, not the investing.

Pro: You'll learn quickly about what works in real estate investing. The best education is experience. You will learn which distressed properties are good deals -- you'll need to if you ever expect to get paid for viable leads. If you enjoy the thrill of the hunt, then stick with it to grow your investor network or build up funds for your own investment property. If you find the work to be too difficult, boring, or simply not worth your time, then you can find another low-risk way of getting involved in real estate, perhaps by investing in REITs.

Pro: You can grow your own real estate business. When you get started as a bird dog, chances are good that you'll be bringing real estate leads to one investor. But as you start to grow and establish your reputation as a good bird dog, you'll find that you may be working with numerous investors. This will actually make your work easier, as you'll be able to search for different properties that you can then take back to the interested parties. For example, you might get started in residential real estate, bringing single-family leads to one investor. But as you grow, you might stay in the residential sector, but instead of only concentrating on single-family homes, you might bring a multifamily rental opportunity to another investor. By building your investor network, you can more easily match investment leads with the right investor. And if you're able to make enough money, you'll be able to start making investments of your own.

Con: It's not easy work. Sure, there are some bird dogs who make it look easy. But for every viable lead on a distressed property or foreclosure, there are many you have to scrap. The payoff could be rather big for a successful bird dog when they find a deal for an investor -- but they won't get paid a dime until that happens. Plus, it's unlikely that you're the only bird dog in town -- there are probably other property scouts working for different investors, so there will be competition.

Con: It carries its own risk as a commission-only job. You're not losing any money with bird dogging, but if you don't bring back viable leads to your broker or investor, you're not getting a finder's fee for your work, either. A regular salaried position might not seem as exciting or lucrative as one that offers big commissions, but there is a lot to be said for stability. With bird dogging, you only get paid when the deal goes through. This means that there could be a lot of waiting and nail-biting until the deal happens -- and even if it does, it could take even longer for you to see a paycheck. Make sure you get your payment terms in writing. Bird dogging may have its benefits as a part-time gig or side hustle, but there's also a lot of uncertainty involved if you're thinking of making this a full-time job.

Con: You could fall prey to a scam. If something seems too good to be true, it very likely is. Do your research and make sure that any investor you agree to work with has a good track record of actually making deals once properties are found. Do not seal any deals with a handshake -- get it in writing. While you're not investing your own funds, you are investing your time, and time is money. If you spend hours upon hours searching for deals only to come up empty handed or not get paid your finder's fee, then you're ultimately losing money because you're working for free.

The bottom line

A bird dog's relationship with an investor can be mutually beneficial. However, as with all real estate transactions, there is some risk involved. As a bird dog, you risk losing out on a commission if the leads you bring to the real estate investor don't pan out -- though this is not the same risk as an investor who has poured money into a fix-and-flip investment and then doesn't recoup the investment.

Whether you're thinking of working as a bird dog or you're an investor considering work with a bird dog, make sure you have a contract and are clear about expectations for leads and commissions on deals that are secured.

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