Most real estate investors like Robert and I are busy.  I’m guessing you are busy too.  If you are like us, you have a lot of opportunities to chase, and only a certain amount of hours in a day. 

When it comes to finding deals, I can use all the help I can get.  And one of the most under-rated methods for  finding deals that doesn’t cost you anything until you pay for the property – until you buy the property – is using the bird dog. 

Bird dogs can bring deals to you. They can put tons of thousands of dollars in your pocket. So, the question is, what is a bird dog? A bird dog in hunting is a dog who finds birds for hunters. It points right toward the bird to aid the hunter.  And the hunter will take it from there.  A bird dog in the real estate investing business is essentially the same thing.  He finds the opportunity for the investor and guess what, the investor takes it from there.

Bird dogs typically get paid when you buy the deal.  They don’t get paid just for sending you a list of 250 for sale by own properties.  That’s not the purpose.  The purpose of the bird dog is to find a deal that you actually like, right?  A cash flow property that you would actually buy. 

To put this system to action right away, you basically have to these steps. The first thing is you have to come up with an offer for the bird dogs.  In other words, how does the bird dog get paid?  They always want to know that.  They want to know how they are going to be paid.  The most common system in paying bird dogs is to give them $500 to $1,00 dollars for every  property that you buy. 

Step 2 is to actually go out and look for the bird dog.  By far and away the best way to find a bird dog, or a dog for that matter too, is to go to craigslist.  You know that you can place free ads on craigslist.com.  Go into the miscellaneous employment.  You know people that look in this section of craigslist are looking for ways of making a little bit of extra money. 

When I put up an ad like this, I usually get close to 100 replies within a few days.  You just need to reply back by email. 

Here is an example of an advertising that you can post up there.  You could say "Hi.  I buy houses in where ever you’re from.  I’m looking for someone to help me find more houses to buy.  Here’s the deal, I’ll train you to know what type of properties I’m looking to buy and all you have to do is tell me about houses that looks like that. If I end up buying that property I’ll pay you $___ dollars.  You don’t have to negotiate with the owner or anything like that.  No sales will be required.  All you have to do is find a deal for me, and I’ll take it there.  Call me at 5551212 or whatever your number is for more details."

That’s a simple ad you can put up in craigslist. You put it up there as many times as necessary to find your bird dogs.  And you will get multiple bird dogs from one ad. 

Step three is to put your bird dog to work.  Give them some ideas as to where to look for motivated sellers. 

They can scan the houses for sale on craigslist. One thing to really look for are ads in the real estate section where people are advertising real estate for sale.  Look for ads with all lower case, where people are not very careful about what they are tying. Misspelled words, poor grammar, and no photographs are a plus.  This is a clue that you’ve got a motivated seller there, or certainly someone who’s not very sophisticated.

Avoid properties that are listed by realtors, or ones that are clearly being sold by another investor. That’s  not something that’s going to be useful to you. 

Your bird dog can also  tell you about vacant properties they see. You know, the one with the grass are grown up, or for instance properties that have received a notice of violation from the city.  Give your bird dog a specific list of the types of properties and the types of deals that you’re looking for.  Tell them how they can find those properties. 

Have them email you the leads they get. 

And if you are wondering if this really works, Robert and I had a student in wealth school who started working with the bird dog and she made a real nice profit. Her bird dog brought her a deal that ended up making her $10,500 in seventeen days.  No rehab work was done.

You’ll find more about other ways to find great deals in www.replaceyourpaychecknow.com. 

Do me a favor and write in a comment about this article. 

This is a question that came in…

Question (Joe):  “How different is the process of buying a bank-owned (REO) four flex versus if you just buy it from the bank versus a single family?”

Answer (Mr. Cash Flow): “A bank selling a four flex and a bank selling a single family treat those sales almost exactly the same.

The seller is going to list it with the realtor. Is it a local bank or?”

Joe: “Yes it is a local bank.”

“I’ve talked to the realtor about what the rental rates are for that neighborhood are at that point, I was waiting for further direction. I don’t know what to do, where to go. I just don’t know. “

Mr. Cash Flow: “Okay. The next step is always to make an offer.

Joe: “For these types of properties how much do you offer? And on a commercial property, is it all based on credit?  If it’s all rented out it’s going to bring in $2,300 per month. The process of making an offer that’s going to be possible to me to buy. “

Mr. Cash Flow: "This type of property can be a great cash flow property.  The thing about this property and other type of property is you really need to have your financing lined up if you are planning to hold onto the property instead of flipping it. 

The best type of lender for this type of property is a local bank.  You can buy it with a hard money loan or a loan from the a private lender, but usually you have to go to a bank or mortgage company to an interest rate that is low enough to make a property like this cash flow." 

Here’s another question that just came in…

Question: "How do I deal with bank owned (REO) properties to get them when the price listed is higher than I’m offering? How do I make the sellers get motivated?"

Answer:

For starters, it’s pretty hard to motivate someone to do much of anything.  Let me give you the example of my 6-year old daughter. 

It would be just about impossible for me to get her to eat bolonia.   It doesn’t really matter if I offered her ice cream every day for the next month, she just plain wouldn’t eat the stuff.

It’s not much different with a seller who just is motivated to take one of your offers. 

So before you spend much effort on chasing the property, you must first know either the property is already priced close to where you think you want to be.

There is one notable exception. 

You may be able to force a motivation on the sellers.  You have to be careful how you do this, and I wouldn’t advise be deceiptful. 

You could in some way taint the property.  In other words, you create a problem in mind of the seller that may not have been there before. 

One example is mold.  Some investors will go to the trouble of doing mold testing on a property.  If they get a positive result for mold, they will present that to the seller.  That seller now has a duty to disclose that mold result to other potential buyers. 

Let’s say the seller is asking $100,000 for the property.  You want to buy the property for $50,000. 

What you can do is submit that $50,000 offer with evidence of  problems, like mold. 

What you are really after is not evidence of problems like roof leaks (i.e., it needs a new roof), but evidence of things that seller and that real estate broker have to tell other buyers.

A few examples of those might be evidence of foundation issues.  Or mold.  And then an estimate of what it’s going to cost to fix the problem. That’s one way to manufacture motivation in a seller." 

Why did we engage in this activity?  For starters, we wanted to take a look at some good deals that are always on the market.  Right now, there are plenty of bank owned properties coming onto the market. 

We also wanted our students to become more familiar with some of the neighborhoods.  We mainly focused on two areas. 

The first area was near NW 30 and Pennsylvania.  We took a look at several 2 bed, 1 bath houses.  Most of these properties didn’t need much work to get them rented.  The asking prices for these homes ranged from the high 20’s to the low 40’s. 

Our consensus was that these properties would rent for about $500 per month.  It was definitely worth putting an offer in all of the homes we looked at. 

The other area we checked out was in Bethany west of Rockwell and south of NW 10.  We identified two 4 bed 2 bath houses in that area.  Both properties we priced in the low 60’s.  We were interested because the properties would have comparables of about $120,000 once they were fixed up. 

One of the properties was a VA repo.  The property was in decent condition, but in my opinion not cheap enough yet to buy for a rental. 

My experience with VA properties is the VA is not very flexible on price.  It wasn’t an ideal rental because of the 2 upstairs bathrooms. 

The other property was in worse condition.  It backed up to a condominium development that has a very bad reputation.  I advised the class that this property would not make a good fix and flip because of the issue with neighborhood. 

However, as a rental at a much lower price, this property would make good sense. 

All in all, the REO tour was a success.  We look forward to having more in the future.