Bird-Dogging Provides a Way to Ease into Real Estate Investing
Since you’re reading this, you probably recognize that real estate investing is one of the best vehicles for making money and achieving long-term financial success. Many people, however, may not have the money, experience or confidence to become real estate investors. But there is still a way to become involved without taking on the same level of financial and legal risks as an active real estate investor. It’s known as bird-dogging, or wholesaling.
This method boils down to finding deals for investors and being paid a referral fee or a percentage of the sale price for each property you find. Wholesaling is a great way to make some money while gaining experience in the real estate industry, but can it turn into a profitable full-time business for you? The answer to this question will depend on number of considerations, but more often than not, the answer is “Yes!” Let’s look at some of the determining factors.
Location, Location, Location!
The first and most important consideration is whether you live in an area that is conducive to real estate investing. If you live in a small town, your opportunities to find good investment properties may be fairly limited. This does not, of course, completely restrict you from making a living by wholesaling, but it does mean that you’ll have to do the majority of your work in cities that are closest to you.
If, on the other hand, you live in a small to medium-sized city, you’re probably good to go. As long as foreclosures, owner sales and properties that need rehabbing are fairly common in your area, you’ll have a good pool of potential investment properties at your disposal. And even if this is the case, don’t discount the idea of expanding beyond your city. If there are other small cities or towns close to you, keep an eye on them as well. This gives you more chances to make money by increasing your operating area. Branching out may seem scary at first, but you’ll slowly get the hang of it. My team and I went through this when we expanded our flip operation from Atlanta to Charlotte. There was a steep learning curve, but once we found our groove, it got easier!
Buyers, Buyers, Buyers!
The next factor that will impact your wholesaling business is the quality of your buyers list. With even one real estate investor as a client, wholesaling can become a substantial source of side income. To turn it into a full-time business, however, you will need an extensive buyers list. This list should consist of all different types of real estate investors. You should have at least one investor who specializes in rehabbing and one who rents properties for passive income. Let’s not forget other wholesalers who have buyers with whom you can partner.
No matter what direction you take, make sure you always keep yourself alert for potential buyers. With a large list of buyers to whom you can market deals, you maximize the likelihood that someone will close on the deal and pay you your fee. A diverse group of buyers allows you to make money on almost any type of real estate deal, making you more versatile and adaptable to market conditions in your area.
Finding the Hidden Gems
The third factor that will determine your degree of success as a full-time wholesaler is your ability to find deals that no one else has yet discovered. In the information age we live in today, there are many wholesalers searching online listings for potential leads. Also, most of the time, property on the MLS has already been seen by every investor on your list. This means that deals that can’t be found by a simple online search are increasingly valuable. If you want to earn a reputation as a great wholesaler, you need to get out into neighborhoods and find the more elusive property deals. Look for signs in yards, seemingly abandoned houses and properties that look too run-down for any buyer’s interest.
If all of these factors come together in your favor, there’s a good chance you will be able to turn wholesaling into a full-time business that makes you a very sizable living. If not, though, don’t despair. Keep wholesaling for extra money part time and develop your business, and you may find yourself able to work around whatever obstacles stand between you and your goal of full-time wholesaling. Also, never forget that there is an entire world of real estate investing beyond wholesaling, and that real money lies in becoming an investor in your own right.
0 Comments