Today’s REI Classroom Lesson
Michael Blank explains how bird dogging for multi-family deals can be a great way to start out and bring in decent money.
REI Classroom Summary
Michael Blank explains that to be a good bird dog, you’ll need to be able to analyze the deals and at least start negotiating towards an analyzed price.
Listen to this REI Classroom Lesson
Real Estate Investing Classroom Show Transcripts:
Mike: Welcome back to the flipnerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Michael: Hey, and welcome to the REI Classroom. My name is Michael Blank and I’ll be your instructor today. Today, I want to talk to you about how you can get paid to bird dog multi-family deals.
Mike: This show is sponsored by passiverental.com.
Michael: So, a lot of you guys are watching this video because you believe real estate is a kind of way to generate passive income, long-term wealth, and maybe quit your job, and multi-family is actually the best way to do that. The challenge with multi-family is that it requires, relatively speaking, a long time to be successful, and I talk about the importance of the first deal. But clearly, if you want to show success, buying a single-family house rental is much better, of course. But much harder to retire from a single-family house, which is why multi-family is a lot better, much more scalable.
But, here’s the thing with that, is a lot of people just don’t think the strategy is right for them. Too hard, too long, whatever, okay? In a previous episode I talked about, “Hey, you know, if you don’t want to do a large multi-family deal right out the gate, then do a duplex.” And for some people, even that is a little bit too much. They just can’t see themselves actually raising money or having the money, and the whole thing’s overwhelming to them. But many people really like the idea of wholesaling or bird dogging deals, and you can do the same thing for multi-families. So, I’m going to talk about that here today because it’s a great way to get in the game without actually risking anything, and all you do is you put a bunch of time in.
All right, so this is why I want to talk about bird dogging here. So, the alternative, really, is to refer deals to somebody else. You know, I had a student who brought me a deal in Columbus, Ohio. And he found it, he analyzed it, he started negotiating the deal, and he was starting to negotiate around a number that started to make sense and that’s when he called me up. And we figured out how to split the deal a little bit. I was going to pay him a portion of the acquisition fee, so we agreed on a $45,000 payment for this deal, which is pretty cool because if the deal closes there’s really no risk for the bird dogger, for you. You’re getting paid $45,000, which is really nice, and you can actually say that you’ve done a deal. So, it’s a really, really good bonus and, for me, it’s great because someone else found a deal that works for me. So, everybody kind of makes money and everybody’s kind of happy.
So, in this environment where it’s hard to find multi-family deals, it’s a little bit of a hot market right now. Deals are still out there but they’re not going to fall on your lap. You’re going to have to work for it. But in this kind of environment where it’s hard to find deals, if someone brings you a pre-negotiated, pre-qualified deal, there’s value in that, okay? Because it’s not easy to find. You’ve just got to find the right person who’s looking for the deal, who’s willing to take that deal off your hand. But if you have that, there’s a lot of value in that.
But here’s the thing, it’s not difficult to get started. You have to have certain skills, okay? You have to know how to find deals, so you’ve got to create deal flow, you’ve got to talk to brokers, you have to appear credible to the brokers so they take you seriously and send you deals. Then you have to be able to make credible offers, right? You have to be able to learn how to analyze deals, that’s the thing. You’ve got to know what the ultimate buyer is going to look for, what their criteria are in how to underwrite deals.
So, these are all learnable skills and I teach those skills all the time, but they’re very learnable skills. What you don’t need, necessarily, is you don’t need to know how to raise money. You don’t necessarily need to know how to build a team, how to perform due diligence, how to close a deal, how to add value, right? Those are useful because it raises your confidence and you overall expertise, it’s good to know those things, but you don’t need to do that, which is the advantage of bird dogging and wholesaling.
Now, here’s a key to referring deals to others, okay? I get this all the time. “Hey, Michael. Attached is a 25-unit in Orlando. Let me know what you think.” That’s ridiculous, right? Because there’s no value in someone sending me a marketing package that, number one, is probably a readily available listing somewhere, but number two, it doesn’t cut down on the level of analysis that I have to do, right? So, don’t be that bird dogger. There’s no value in that, you’re wasting time, and you’re just going to tick people off. So in other words, in order for you to be able to monetize this activity, your time, analyzing deals, you have to of course find a deal, right?
And then, you have to analyze the deal, meaning you have to know, “Hey, what price is actually a good purchase price?” And you have to be able to learn to underwrite this deal properly. And then, you have to start a negotiating process. The farther along a negotiation process, the more valuable the deal is. So, at a minimum, you should have a verbal agreement on a number that makes sense, or at least maybe a negotiating towards a number that makes sense, and you see it, you know, you’re maybe a couple days away and you start making that first call. But really, you don’t want to call that ultimate buyer until at least that’s in place. Because otherwise, you haven’t underwritten a deal, it’s not pre-qualified, it’s not pre-negotiated, there’s really no value in what you’re doing at all.
So, that’s the keys to bird dogging, is those few things. Find it, analyze it and start pre-negotiating. If you have a signed letter of intent in place, that’s even better. If you have a signed contract in place, there’s a lot of value in that, and that’s true wholesaling. That’s a little hard to do sometimes for someone who doesn’t have a track-record, try to get it under contract, but if you can do that that has a lot of value. Because then, you can really build in the spread, right? Obviously, as you know, wholesaling.
So, that is a great way to get into the multi-family investing game before you sit on the side-lines, and again, these equities, these marketing fees, these bird dog fees can be substantial. You know, much more than $1,000 for a single-family house or whatever else, because these can be larger deals. So, if the ultimate buyer can easily pay you $30,000 to $50,000 on deals like that. So, hope you found that useful, it gives you something else to think about to try to get into the multi-family investing game. All right, I’ll talk to you later. Catch you in the next episode.
Mike: Passiverental.com is your source for turnkey, done-for-you rental properties. If you’d like to be an investor and not a landlord, please visit passiverental.com to learn how to purchase cash-flowing, professionally-managed rental properties in the hottest rental markets across the country. We can also help connect you with financing for your next property. Invest the easy way today and get started by visiting passiverental.com.
Please note, the views and opinions expressed by the individuals in this program do not necessarily reflect those of flipnerd.com or any of its partners, advertisers or affiliates. Please consult professionals before making any investment or tax decisions, as real estate investing can be risky.
Are you a member yet of flipnerd.com, the hottest real estate investing, social community online? If not, you can join for free in less than 30 seconds and get access to hundreds of off-market deals, vendors in your market to help you and your business, and you can start networking with thousands of other investors just like you. Get your free account now at fliperd.com.
Please check out the FlipNerd family of real estate investing shows, where you can access hundreds of expert interviews, quick tips and lessons from leaders across the real estate investing industry. They’re available at flipnerd.com/shows, or simply search for FlipNerd in the iTunes store.
Michael: Hey, and welcome to the REI Classroom. My name is Michael Blank and I’ll be your instructor today. Today, I want to talk to you about how you can get paid to bird dog multi-family deals.
Mike: This show is sponsored by passiverental.com.
Michael: So, a lot of you guys are watching this video because you believe real estate is a kind of way to generate passive income, long-term wealth, and maybe quit your job, and multi-family is actually the best way to do that. The challenge with multi-family is that it requires, relatively speaking, a long time to be successful, and I talk about the importance of the first deal. But clearly, if you want to show success, buying a single-family house rental is much better, of course. But much harder to retire from a single-family house, which is why multi-family is a lot better, much more scalable.
But, here’s the thing with that, is a lot of people just don’t think the strategy is right for them. Too hard, too long, whatever, okay? In a previous episode I talked about, “Hey, you know, if you don’t want to do a large multi-family deal right out the gate, then do a duplex.” And for some people, even that is a little bit too much. They just can’t see themselves actually raising money or having the money, and the whole thing’s overwhelming to them. But many people really like the idea of wholesaling or bird dogging deals, and you can do the same thing for multi-families. So, I’m going to talk about that here today because it’s a great way to get in the game without actually risking anything, and all you do is you put a bunch of time in.
All right, so this is why I want to talk about bird dogging here. So, the alternative, really, is to refer deals to somebody else. You know, I had a student who brought me a deal in Columbus, Ohio. And he found it, he analyzed it, he started negotiating the deal, and he was starting to negotiate around a number that started to make sense and that’s when he called me up. And we figured out how to split the deal a little bit. I was going to pay him a portion of the acquisition fee, so we agreed on a $45,000 payment for this deal, which is pretty cool because if the deal closes there’s really no risk for the bird dogger, for you. You’re getting paid $45,000, which is really nice, and you can actually say that you’ve done a deal. So, it’s a really, really good bonus and, for me, it’s great because someone else found a deal that works for me. So, everybody kind of makes money and everybody’s kind of happy.
So, in this environment where it’s hard to find multi-family deals, it’s a little bit of a hot market right now. Deals are still out there but they’re not going to fall on your lap. You’re going to have to work for it. But in this kind of environment where it’s hard to find deals, if someone brings you a pre-negotiated, pre-qualified deal, there’s value in that, okay? Because it’s not easy to find. You’ve just got to find the right person who’s looking for the deal, who’s willing to take that deal off your hand. But if you have that, there’s a lot of value in that.
But here’s the thing, it’s not difficult to get started. You have to have certain skills, okay? You have to know how to find deals, so you’ve got to create deal flow, you’ve got to talk to brokers, you have to appear credible to the brokers so they take you seriously and send you deals. Then you have to be able to make credible offers, right? You have to be able to learn how to analyze deals, that’s the thing. You’ve got to know what the ultimate buyer is going to look for, what their criteria are in how to underwrite deals.
So, these are all learnable skills and I teach those skills all the time, but they’re very learnable skills. What you don’t need, necessarily, is you don’t need to know how to raise money. You don’t necessarily need to know how to build a team, how to perform due diligence, how to close a deal, how to add value, right? Those are useful because it raises your confidence and you overall expertise, it’s good to know those things, but you don’t need to do that, which is the advantage of bird dogging and wholesaling.
Now, here’s a key to referring deals to others, okay? I get this all the time. “Hey, Michael. Attached is a 25-unit in Orlando. Let me know what you think.” That’s ridiculous, right? Because there’s no value in someone sending me a marketing package that, number one, is probably a readily available listing somewhere, but number two, it doesn’t cut down on the level of analysis that I have to do, right? So, don’t be that bird dogger. There’s no value in that, you’re wasting time, and you’re just going to tick people off. So in other words, in order for you to be able to monetize this activity, your time, analyzing deals, you have to of course find a deal, right?
And then, you have to analyze the deal, meaning you have to know, “Hey, what price is actually a good purchase price?” And you have to be able to learn to underwrite this deal properly. And then, you have to start a negotiating process. The farther along a negotiation process, the more valuable the deal is. So, at a minimum, you should have a verbal agreement on a number that makes sense, or at least maybe a negotiating towards a number that makes sense, and you see it, you know, you’re maybe a couple days away and you start making that first call. But really, you don’t want to call that ultimate buyer until at least that’s in place. Because otherwise, you haven’t underwritten a deal, it’s not pre-qualified, it’s not pre-negotiated, there’s really no value in what you’re doing at all.
So, that’s the keys to bird dogging, is those few things. Find it, analyze it and start pre-negotiating. If you have a signed letter of intent in place, that’s even better. If you have a signed contract in place, there’s a lot of value in that, and that’s true wholesaling. That’s a little hard to do sometimes for someone who doesn’t have a track-record, try to get it under contract, but if you can do that that has a lot of value. Because then, you can really build in the spread, right? Obviously, as you know, wholesaling.
So, that is a great way to get into the multi-family investing game before you sit on the side-lines, and again, these equities, these marketing fees, these bird dog fees can be substantial. You know, much more than $1,000 for a single-family house or whatever else, because these can be larger deals. So, if the ultimate buyer can easily pay you $30,000 to $50,000 on deals like that. So, hope you found that useful, it gives you something else to think about to try to get into the multi-family investing game. All right, I’ll talk to you later. Catch you in the next episode.
Mike: Passiverental.com is your source for turnkey, done-for-you rental properties. If you’d like to be an investor and not a landlord, please visit passiverental.com to learn how to purchase cash-flowing, professionally-managed rental properties in the hottest rental markets across the country. We can also help connect you with financing for your next property. Invest the easy way today and get started by visiting passiverental.com.
Please note, the views and opinions expressed by the individuals in this program do not necessarily reflect those of flipnerd.com or any of its partners, advertisers or affiliates. Please consult professionals before making any investment or tax decisions, as real estate investing can be risky.
Are you a member yet of flipnerd.com, the hottest real estate investing, social community online? If not, you can join for free in less than 30 seconds and get access to hundreds of off-market deals, vendors in your market to help you and your business, and you can start networking with thousands of other investors just like you. Get your free account now at fliperd.com.
Please check out the FlipNerd family of real estate investing shows, where you can access hundreds of expert interviews, quick tips and lessons from leaders across the real estate investing industry. They’re available at flipnerd.com/shows, or simply search for FlipNerd in the iTunes store.
