I’ve mentioned in previous posts that real estate is an area of investment that I recommend for folks that are looking to add more control to their personal financial portfolio. In this post I wanted to share how I got started in real estate many many years ago.
When it comes to real estate investing, most beginners find themselves with plenty of desire, a little bit of knowledge (from books or online sources) and in most cases they have little or no money to get started with. Does this sound like you? If so you are not alone. Not by a long shot. That was me back when I got started.
If you’ve spent any time online researching this topic you will have undoubtedly found a countless number of articles, books, courses and boot camps out there that all promote some super-duper “investing secret or technique” that will teach you everything you need to know to be successful…even if you have no money or experience in the business. Call me a “buzzkill”, but in my experience, these types of things are not very realistic. Having said that, I’m not saying that these super-secret secrets can’t produce success. I’m saying that for most normal people, the sophisticated & sometimes pushy techniques that are often touted by the “gurus” are simply not a viable option for them. The good news is that there are realistic and practical ways to get started as a real estate investor regardless of your experience level or the amount of cash you have on hand. In my humble opinion the best option is a process called Bird Dogging.
What Is Real Estate Investment Bird Dogging?
In the medical profession every doctor must complete an internship or residency before they are permitted to become a licensed practicing physician. In some cases that internship can take many years to complete. So….if you think about real estate investment as a business and not as a “hobby” or a little “side project” a smart question to ask is…”Does an internship for the real estate investment business make as much sense as it does in other fields?” I think the answer is yes, but take some time and think about it for yourself.
I believe that success in this business or any other business requires that you must first learn the basics and develop a firm knowledge of the rules of the game. There are plenty of methods you could use to learn the basics but I believe that the best way to acquire these much-needed essentials is out there in the real world, getting your hands dirty by actually studying the market and evaluating investment results first hand, and more importantly, doing so without risking your own money if possible.
This can be accomplished by becoming a Bird Dog. Bird dogging is an activity that anyone can do regardless of their age, experience, income or credit history and without having to spend large sums of money. Scouting opportunities for other investors; is a safe way to gather the knowledge that will ensure your success. As well as limit the risk of exposing your own personal money while you’re still trying to get your bearings in this business. A real estate investment bird dog is much like a consultant or research analyst, you find potential investment opportunities, do the research and analysis of the deal and then sell the information to other more senior investors for a fee. The fee structure can take many forms. In some cases it can be a flat fee and in other cases it can be a percentage of the purchase price. There are plenty of benefits to scouting which include:
- It’s completely risk free. Since you are not purchasing the property you have no need for financing or credit. Therefore you have no financial risk.
- Requires no prior experience. You will find some stink bomb deals in the beginning that you’re going to think are the greatest thing since central air conditioning. Don’t worry about that. It’s part of the learning process. The professional investors will tell you why the opportunities are no good. (Hint: This is how you learn.)
- As you learn, you will be able to transfer deals to other investors for cash. If you save the money you earn from bird dogging, you will eventually be able to finance your own deals.
- As you go about your merry way as a bird dog, you will develop relationships with investors, brokers and other real estate professionals. This will help you in the long run when you become a full-fledged investor yourself.
Whether your goal is to eventually renovate properties for profit or purchase rental properties for cash flow, getting started as a bird dog is in this guys’ opinion, the smartest, most realistic and lowest risk get started approach out there.