By 
Let’s be honest. There are many people who would really like to start earning some money on their own, in addition to working a regular JOB (Definition: Just Over Broke). However, they do not have the STARTING CASH or cannot spend the time away from their regular JOB. I think most of the Formulas we’ve been giving you allow you to try them on your “Out of Office” time. If you give these formulas a real chance, you’ll find that DO work – that’s if you pair them WITH your work. However, you should give them a “real” chance. The more you try, the more experienced and confident you will become.
Also, remember to find yourself a mentor, if you can. Check out Real Estate Investing Groups in your area. You can look them up online. Search Google for “Real Estate Investment Groups.” You will find all the states listed. Click on your state to locate the different groups (clubs, associations, etc.) I find 12 groups listed in Texas. Visiting and joining one of these groups will expose you to all kinds of Real Estate experiences.
Anyway, let’s go back (or start) to today’s formula, “Being a bird dog.” You know the function of a Bird Dog, right? Find and mark the birds (quail, doves, pheasants, etc.) for the hunter. For his efforts, Bird Dog is rewarded with treats, love and tender care.
Being a real estate bird dog is somewhat similar. You, as Bird Dog, find good Real Estate deals and point them out to the Investor or Rehabber who ultimately buys the good deal, and gets your gift: $$$ – without having to put up your own money. Let me give you a couple of examples of how it works.
We will use an example with the work with Rehabbers. These are people who are looking for properties that need fixing up and fixing up so that they are ready to sell. Many times you will find them empty and generally in poor condition. The Rehabber does the “Rehab” and puts the house or other property back on the market at a substantially higher price.
These Rehabbers really need to do the repair work instead of looking for more projects. This is where you come in as Bird Dog. You get to know the Rehabbers in your area. One way to find Rehabbers is to place an ad in your local newspapers, under Real Estate – Houses for sale. Place an ad such as “Handyman Special” or “Fixer-Upper.” This should get you some calls from Rehabbers. Another way is to ask real estate agents in your area, or go to the contractor area at Home Depot or Lowe’s. They will be there buying materials early in the morning.
My personal experience has been in the area of rehabilitation. Several years ago, a partner and I were buying “distressed” properties; fix them up and resell them. Many of our offerings were brought to us by a “Bird Dog”.
So finally, here is Example #1.
1. You find a house that obviously needs fixing. The house is vacant and has a sign in the yard, “For Sale By Owner.” Note: If there is no sign, you can find out who owns it by going to the County Public Records).
2. Do you do your research to determine how much the house will sell for AFTER it is fixed up? You’ll find this by reviewing Comparable Sales in the area for the past year. How do you do this?
A. Talk to appraisers in the area who will have this information.
b. Find a real estate agent who will get this information. to you from Multiple Listing Sales (MLS).
vs. Look for other homes for sale in the area that don’t need fixing up and find out the asking price.
Suppose you discover that the AVERAGE sales price over the last year indicates that this house should sell for $100,000 after fixing it up.
3. Next, determine how much it will cost to fix up the house and make it “Ready to Sell”. How do you do this?
A. Once again, meet some Rehabbers. Ask them to give you an estimate of rehab costs. Some will do this in hopes of getting the rehab job or maybe even getting the house for themselves; to fix it up and resell it.
b. Try to develop a relationship with an Appraiser or two. Most of these people, with a bit of experience, know a fair bit about repair costs.
Let’s say the high estimate to do the rehab is $15,000 (you can get a lot of rehab for $15,000)
4. Next: You need to make a profit for the eventual buyer (The Rehabber in this case) Let’s say $15,000.
5. Your Bird Dog Fee = $5,000
6. Miscellaneous and administration (there will always be unexpected costs, trust me). = 10% or $10,000.
7. OK – Now you offer the owner $55,000 for the property, AS IS. You can do this with a simple “Purchase and Sale Agreement,” available at many office supply stores; Office Depot, Office Max, etc. You write the contract – With you “AND/OR Assigns”, as buyer. This “AND/OR assigns” is fundamental. Gives you the right to assign the contract to another party. Now, I have said that I would need No Cash to make this Formula. I may have lied a bit. It would be a good idea to give the seller of the house some “Earnest Money”, perhaps $100, when you get the contract. It could be more or less, it could be a check, but the point is that it strengthens your contract when consideration is given.
8. Now, with a contract in hand, you visit your Rehabbers and offer to assign them your contract for $5,000. If you find a taker, you’re out of the deal with $5,000 in your pocket.
Let’s recap the deal:
Eventual Sales Price of the House $100,000
Purchase Price to Seller $55,000
Rehab & Fix-Up Costs $15,000
Misc. & Administration $10,000*TOTAL - $80,000
Gross Profit $20,000
Bird Dog Fee - $5,000
Profit To Rehabber $15,000
* If the miscellaneous costs are less, more profit for Rehabber.
Summary: Everybody WINS – That’s the main key to making deals and establishing a good reputation – Everybody WINS.
Remember: if you can solve a problem, you can win $$$. In this example, you solved 3 problems:
#1 AND MOST importantly, you solved the homeowners problem by selling their house.
#2 You solved the Rehabber’s problem by finding him a house to rehab.
#3 You partially solved your problem by generating $5,000 with little to no cash outlay.
These publications are the opinion of the author who is not engaged in rendering legal, accounting or investment advice. If such advice is required or desired, the services of competent professionals should be sought.