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From Bird Dog to Billionaire: A Creative Guide to Real Estate Investing

If you’re an aspiring real estate investor, you may feel like you lack the capital, connections, and overall “know-how” to get started.

I don’t blame you.

Getting Started

Don’t get stuck at the starting line.

Unless you have piles of cash and tons of free time, buying a bunch of investment properties probably doesn’t seem very practical — or possible, for that matter.

Here’s some good news: You don’t necessarily have to “buy” homes to invest in real estate.

And even better, you don’t need to fork over $20,000 for some scammy class that teaches you the “secrets” of investing.

Everything you need to know about taking your first foray into real estate investing can be found right here in this article.

Yep — you can learn how to make millions as a real estate investor in the time it takes to pop a bag of popcorn (or do both at the same time).

Become a Bird Dog

If you lack investable cash and know next to nothing about the real estate industry, begin your investing journey by bird-dogging.
vacant house
What the heck does that mean?

Bird dogs are those who provide leads to investors. They pound the pavement in their local communities, searching for distressed or undervalued properties.

They listen to the gossip about who’s moving and who’s facing foreclosure — and they provide this vital intelligence to investors and firms across the country.

Many companies — mine included — happily pay bird dogs thousands of dollars each time an investment opportunity they delivered pans out.

As a bird dog, you’re accomplishing three key tasks:

  1. You’re making connections in the industry
  2. You’re learning about all the different ingredients that go into the investing process
  3. You’re making money you can put toward properties in the future

“Control” Your Destiny (No Money Down)

As I mentioned earlier, “buying” a property is just one way to invest in real estate. That’s the traditional route — one that requires upfront cash you may not have lying around.

Luckily, there’s a creative side to real estate investing that doesn’t have to require loans or down payments. Taking this route, you don’t technically “own” the properties you’re investing in. Rather, you have a “controlling interest” in them.

That’s the path I took as a 20-something with little cash to my name, and it helped me build a $300 million portfolio of more than 2,000 single-family homes. Sure, it’s highly illiquid — but…

  • I’m seeing cash flow
  • I’m shouldering much less risk, and
  • I don’t owe a single penny to the banks

Here are the three creative deals I used most when building my portfolio — they’ll allow any aspiring investor to get started today:

Lease Option to Save a Home From Foreclosure

If a homeowner loses his job, falls behind on his mortgage payments, and faces foreclosure, you can do him a huge favor by working out a lease option.
foreclosure notice
You agree to temporarily transfer the mortgage to your name, catch it up on its overdue payments, and charge the homeowner rent in the meantime.

Then, once he finds a new job and gets his finances back in order, the “option” part of the deal kicks in: He can “buy” his home back from you at a fair and predetermined mark-up.

Say, for example, a foreclosure-facing homeowner still owes $100,000 on a $200,000 property.

You can take over the mortgage, charge him a rent rate that equals the monthly payment, make the back payments yourself (which, for argument’s sake, we’ll say costs you $3,000), and then a few years later, sell the house back to him for $120,000.

All told, you get to pocket $20,000 on a $3,000 outlay — that’s a 500%+ return on investment, all while buying under market and selling under market and helping someone save the equity a bank would have taken!

Land Contracts

Land contracts are a creative way to get seller financing on investment properties — ones you ultimately flip for a profit. In this scenario, you’re dealing with people who own their home outright, but because of age or other circumstances, they can’t maintain it and need to move out.

They’re aiming for a specific price, but the house is currently very undervalued due to its condition. Here’s where you can swoop in and draw up a land contract that grants you control of the property.

You guarantee the owner you’ll sell the home by a certain date for the desired price, and from that day forward, he or she serves as your unofficial lender as you spruce the place up and elevate its price tag.

You agree on a time frame for the project and agree to swap your sweat and tears in work for some of the upside. For example, let’s say you guarantee a homeowner she’ll get $100,000 for her home, but you know it will be worth $150,000 after you install new carpets, bathroom, kitchen, landscape, and repaint all the walls.

Assuming the materials cost you $20,000 (plus some sweat equity, because you’re young and can DIY the labor), you’ll pocket $30,000 once the house sells!

“Subject-to” Deals

Here’s another great way to bail out homeowners who are on the verge of foreclosure and profit from your generosity. A subject-to deal officially transfers their deed to your name and allows them to walk away unscathed even if they have fallen behind.

You assume responsibility for everything — back payments, monthly payments, taxes, upkeep, and more — and they get to move on with their lives debt-free. Though the homeowners end up seeing no return whatsoever from their properties, often, they’ll happily pounce at an opportunity to avoid catastrophe and save their credit.

Subject-to deals can lead to big-time paydays for investors. When you take over a delinquent mortgage, you’re gaining control of an asset with no money down and no bank loans in your name.

Then, once you catch up on the back payments, you can create a great cash flow opportunity and control the potential upside of the property.

You Don’t Need Money to Make Money

Entering the realm of real estate investing won’t be the easiest thing you ever do, but it’s certainly not the exclusive “need money to make money” world you may have thought it was.

After earning your wings as a bird dog, take a creative path to investing that requires little cash and builds lots of equity.

I’ll see you at the top.

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About the Author...

An entrepreneur at heart, CEO Mike Kalis leads the team at MarketplaceHomes.com, a Detroit-based brokerage that specializes in new construction sales and property management.

Marketplace has sold more than $1.5 billion in new construction homes, gained a controlling interest in more than 2,000 single-family properties, and is a four-time Inc. 5000 list awardee.

In addition to his managing partner role at Marketplace, Mike is a venture capitalist and investor in ZipTours. The startup helps homebuyers and renters see a home with an agent streaming live to their smartphone. It has conducted tens of thousands of tours since March 2015.

Comments

  1. Cloyde Hudson says:

    Would like more information about Bird Dogging and getting started in finding and locating real estate here in Texas..

    • Benyman says:

      I would love to bird dog for you. But I do have a question. If a bird dog lays the foot work, how does he know his boss won’t circumvent him or her?

    • Tiger says:

      Cloyde,

      I’m interested in learning the art of bird dogging real estate. Do you have a training plan that you can pass on that will help. Finally, are you aware of tech tools I can use to find distressed properties?

      Thx in advance

  2. lawrence fuller says:

    I would like to know more about Bird dogging for your company.

  3. Richard Osborne says:

    Praise the Lord, I think bird dogging is a great way in making money to get started in making more money in real estate. I will like more information on Bird dogging and where to find investors at that allow bird dog to find them deals. I like to know where do I find investors at so I can pass a deal onto them?

  4. Shonnese Reed says:

    I know all the information that you have written to be true. I paid 15K for a real estate program 3 years ago and I still have not completed one wholesale deal. I currently live in a property that I have on contract for deed. I would really like someone to hold my hand a walk me thru a wholesale deal. I know its hard work and you have drive for dollars and or keep your eyes and ears open to what may become available. I’m in Louisville, KY

  5. Just like the person above. I need to have someone hold my hand and help me clsoe some deals. At the moment I am paying into a platform set up by Marc Imhof. But I am stuck like chuck. As I have to just cold call sellers as well as people sho are renting to see if they have an interest in selling. I got throgh to two sellers but need at least 5 home owners as well as 5 would be home owners who ar looking to rent. But I have deals
    coming in from other whole sellers that I would really like to co-sell with. As I am sitting on a goal mine with the whole sell leads pouring into my email box. Can you advise.

    Thanks,
    Eva
    songsofsolomoninc@yahoo.com

  6. Laura Ludwig says:

    very good information keep it up!

  7. Hilda says:

    I think that living in Kona, Hawaii offers a hidden gem in the real estate industry, and I would love the opportunity to be a “birddog” for your company!

  8. Eleanor says:

    Great information. I live in California and was wondering are you or do you know of someone who can assist me in either being a bird dog or flipping properties? I could use some hand holding as I work on removing the fear.

    be blessed

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