Should I Use Bird Dogs?

First things first. What is a bird dog? A bird dog is someone you pay a finders fee to for bringing you a real estate deal. They typically don't get paid as much as wholesalers because they 1) Don't put the property under contract and never control the deal  2) Don't do as much due dilligence as a wholesaler would do.

Heck Yes!  You should use birddogs, property scouts, house hunters, or whatever you call them. A 100% commissioned sales force is a wonderful thing. You don't cut a check unless you are getting a check.

For Example: You offer to pay birddogs at least $3,000(yes...$3,000....I'll talk more about that later) for EVERY deal that you close. I base this on my average wholesale profit of $10,000 per deal, $50,000 per rehab, and 45% equity (or more) on properties that keep for cashflow.

If I pay $30,000 in bird dog fees for wholesale deals, that means that I have made a GROSS profit of $300,000 (based on average of $10,000 profit per wholesale deal) and a NET profit of $270,000 (after accounting for the bird dog fees).

It doens't cost you anything if your bird dogs don't produce any deals! Don't you wish all marketing was like that. That is the type of investment you like to make!

1. Call them something other than bird dogs...ANYTHING other than bird dogs. The name isn't flattering at all. House Hunters, Property Scouts, Property Locators, Property Researchers, Junior Partners, are all better alternatives. If you set low expections, you'll get what you expect. For the purpose of this discussion, I will call them "Property Scouts".

2. Pay AT LEAST $1,000 - $3,000 per deal. Stop being greedy!! It's not costing you anything. You are cutting checks out of profit only. No profit...No fee to pay! If there is a particularly slim wholesale deal where there isn't enough profit to pay the full finder fee, talk to your Property Scouts and tell them the situation and what you can pay them. I'm sure they will accept it. BE MORE THAN FAIR!

3. TRAINING, TRAINING, TRAINING. It doesn't have to cost you much money, but be prepared to spend time (which does ultimately equal money) training/motivating your Property Scouts. Put together a training packet that tells what you are looking for, how the lead should be delivered to you, the needed information for each lead, layouts for marketing flyers and post cards, various effective marketing techniques and tips for finding deals.

I suggest:
- Have weekly or bi-weekly conference calls
- Quarterly live events
- A message board
- Bonuses/prizes/additional incentives. I offered my Jaguar Convertible www.FromJagsToRiches.com !!!

NOTE: A very important thing to mention is that your primary purpose of using bird dogs isn't to teach them everything there is to know about real estate investing. Your main objective is to use Property Scouts to FIND DEALS. As a Property Scout progresses and gets good at finding deals, it is a great idea to give them additional training. Property Scouts that can't seem to implement any of the marketing techniques or that are just too lazy are not worthy of your time or effort.

4. Tell Property Scouts EXACTLY what you are looking for. If you don't, you may find yourself spending countless hours chasing dozens, or even hundreds of "deals" that aren't deals at all. Define a narrow criteria of the type of leads you are looking for.

5. Don't accept just anyone into your program! Screen them and make them show you that they are serious. Time=Money. Don't waste your time..or money by training and motivating someone who isn't serious.

6. Have a system set up to handle the leads you get. You'll lose your Property Scouts and they will get frustrated if it seems like you are not working the leads they are sending you.

7. Train your good bird dogs to manage other Property Scouts or recruit other Property Scouts. There are some good ideas that can be learned from multi-level marketing businesses.....just don't make up any cheesy charts that show a complex downline structure!!!!!

8. Offer buying/partnership opportunities. Some of your Property Scouts will have cash and/or credit, and the desire to own rental properties or do rehab projects. They can be your buyers or you can partner with them to keep the really great deals. Partnerships are a powerful tool!!

9. Set realistic expectations !!!! Make sure they know:

-They will need to spend money and/or time locating deals.

-Most leads are not going to be deals. They will improve their ratios as they get better at locating deals

-If they are consistent (even if they don't have large marketing budget), it could be 30 - 90 days before they find their first deal AND another 30 days before it closes. They will need to be patient. The first deal is the hardest. Make sure they know that they may NEVER find a deal if they are inconsistent.

BONUS: Using Property Scouts or bird dogs (I hate that word) to find properties (i.e. motivated sellers) isn't a new concept. However, have you thought of using these Property Scouts to find BUYERS! In a Buyer's market, it is not just good enough to have a bunch of motivated sellers, you also need buyers. You don't want to just put properties under contract....you want to actually go to closing! Have your Property Scouts place ads on craigs list, in the newspaper, pass out flyers looking for retail and wholesale buyers. Pay the Property Scout everytime the buyer that they find, buys or rents a property from you.

I'll See You In The Fast Lane,

Vernon Vaughan
The Wholesale Renegade