More and more people are realizing that now might be the perfect time to start getting into the business of flipping real estate. Usually this consists of taking older or rundown properties that won’t sell and fixing them up so they can be effectively listed and sold. With buyers being even more picky about the properties that they are interested in, sellers that need to sell fast and have a property that needs some work might be more inclined to accept a lower, all cash offer offer for their property, even if it is less than what they would like to sell for. This presents a golden opportunity if you are interested in flipping real estate.
Of course, getting into this type of property means that you will be taking on some risk also. What if the repair costs are more than you expect? What if it takes longer to repair than you estimated? What if the property doesn’t sell for the price you thought it would? What if it takes too long to sell? Due to these concerns, many potential real estate entrepreneurs may consider one of the many alternatives to flipping real estate as a way to get started while minimizing their risk. These alternatives can be a great way to simply get their feet wet and try the business out or as an addition to their real estate business.
Scouting out potential deals as a real estate birddog is one of the best ways to get started as a beginner with little money to invest. Quite simply, a bird dog is someone that finds potentially good deals for other investors, acting as their eyes and ears in the field.
When they scope out a good property, they let the investor know about it and if it turns out to be a good deal, then the birddog earns a fee. The amount earned depends on the market that you are in, how good a deal the property is, and how much information you are able to provide to the investor. But it is not uncommon to earn fees of around $1,000 or more for a lead on a good property.
The reason why birddogging is such an effective strategy for someone starting out is that it requires nearly zero cost other than your time. This is also an especially good option if you are in a job that requires you to be out driving around or walking around neighborhoods as part of your normal duties. But even office workers can vary their route to work, scope out neighborhoods during lunch, or spend a few hours on the weekends looking for potential deals. That makes birddogging a great part time business that anyone can get started with.
Wholesaling is another alternative that is one step up from being a birddog but carries with it a bit of additional risk. While birddogging is simply finding the property and letting another investor know about it, wholesaling is actually going one step further and getting the property under contract. Once the property is under contract, and as long as the contract is properly worded, that contract can be assigned (or sold) to another investor for a reasonable fee. Again, the actual amount will vary depending on the property, overall numbers and what market you are in, but it is quite common in some markets to have wholesale fees anywhere from $2000 to $20,000.
Why would another investor pay so much? Leverage! Many investors are simply too busy to find their own deals. It can be a lot of work to find a really good property and many investors rely on wholesalers and birddogs to help bring them the deals and they reward them handsomely for doing so.
The downside to wholesaling is that you actually have a property under contract so you need to know that you have other investors waiting in the wings that are serious buyers with the ability to close. This is why it is crucial as a wholesaler to network with other investors that would be interested in your services so you can get to know them prior to bringing them a property. It is also more important to remain in control of the deal so you can quickly correct course if your investor looks like they might not come through.
These are just two options that are attractive alternatives to actually flipping houses and they are two of the best options for new real estate entrepreneurs with a limited budget and have more time than money.