When promising investment properties are well-promoted, you can count on them drawing a crowd. Why wouldn’t they? Investment properties that perform well are like money machines: put in a quarter, get back a quarter and a nickel (and another nickel, and another, and another…). What’s not to like?
But not all investment properties are well-promoted. There can be any number of reasons why, but the bottom line is that some of the best ones are hard to sniff out. In that case, they may take a “Bird Dog” to discover.
Ask any hunter about the value of a good bird dog, and you’ll get an earful. Those canine sleuths use their highly-evolved senses to locate and retrieve the quarry—even when it is all but invisible to their human companions. Without a good bird dog, hunters would be the ones thrashing through swamp and forest to find supper.
In the world of investment properties, the counterpart is the real estate Bird Dog. Like the hunter, real estate investors highly prize a quality bird dog. They may not bring back a duck or pheasant, but the distressed and undervalued real estate that they locate can be orders of magnitude more lucrative.
If you’re thinking of scouting the promising investment properties, a few things about real estate Bird Dogs…and the “woods” they hunt in…may be of interest:
- Investopedia offers the most concise definition. It says that a Bird Dog (also known as a ‘deal scout’), finds distressed property deals for a real estate investor and gets paid a referral fee according to the terms of their agreement.
- One of the mistaken assumptions that first time investors frequently make is to believe that simply finding property on the local MLS is all that’s needed. Although that can be the case, since everyone else seeking investment properties also has access to MLS, the most promising listings usually draw a crowd of competitors. You need to be able to find deals that every other buyer isn’t privy to.
- Success can depend on understanding the historical criteria that have worked best for investment properties that fall within your budget range. Maybe you should target multi-unit properties, or maybe the most lucrative investment properties will be mid-range residential homes. Some investors should be looking for rundown properties to rehabilitate, whereas others might most usefully be scouting out investment properties that are in better condition but with motivated sellers.
For new investors or those with limited capital, thinking like a real estate Bird Dog will put you ahead in the hunt for the most lucrative investment properties. Even better is working with your own real estate bird dog who can source quality deals—and save you a lot of time!