The term ‘Bird Dogging’ may sound funny, but it can mean serious business and can get a real estate investor in Maryland some serious profits. This is how it works: the investor is the ‘bird dog’ here. He identifies real estate investment opening in Maryland that has potential but is currently distressed. He puts the property under contract and assigns the contract to another party who will fix the property and flip it and the bird dog gets the assignment fee.
Let’s understand this deal with an example. A bird dog identifies a property in Maryland and makes a contract with the owner to sell the property. He looks for a rehabber who would renovate the property and sell it for a profit. Here are the calculations they need to make:
Cost of the property: $ 100,000
Acquisition cost: $5,000
Cost of repairs: $10,000
Expense for holding the property (90 days): $4000
Misc. Expenses: $5000
Min estimated Profit (15%): $15,000
Closing cost: $5000
Selling Price: $ 144,000
The figures might alter depending on any unforeseen changes, but a rehabber must make these calculations and a bird dog has to keep it in mind while looking for a potential property in Maryland.
However, these are not the only considerations that a bird dog has to keep in mind. Finding the right rehabber is equally important. It is possible that you find a rehabber who might hand over the deal to another rehabber and this way there is hardly any profit for anyone in the deal. This leaves you with a deal that might never close and you never get the assigning amount you had planned to get. An experienced birddog also knows the importance of getting an experienced rehabber, who understands the importance of cost cutting.
Finally, a successful bird dog knows when to walk away. A real estate deal in Maryland can hardly have any profit if there are too many mediators involved or has been dragging for too long.
