Newbie Real Estate Investors: The Path to Success Starts HERE

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In your trek to become a profitable Real Estate Investor, you will face many ups and downs.

A newbie must have a strong sense of purpose and perseverance in their DNA. These qualities will ensure that one does not get too high with success and does not get too low with failures. In a recent article I received a lot of feedback on where I believe all newbies should begin. This article Warning: Newbies Stop Wholesaling Now!!! triggered a response from numerous investors that started with wholesaling as their primary focus. The feedback was great. Today’s article will provide some clarity; why I believe bird-dogging is essential in building a strong foundation for your investment career.

Foundation is defined as the basis or groundwork of anything.

This word outlines the beginning of a thing as well as the strength of a thing. Since we are speaking relative to real estate, it is understood that the foundation of a building is directly correlated to the strength of the building. If the foundation is weak, then the structure is weak. This is so elementary that even one third of pigs know this to be true (you know the 3 little pigs, one house was built of brick). I want to take you on a quick journey of how to build a strong foundation as an investor bricks by brick.  NEWBIE: The Path to Success STARTS HERE  

Brick 1: Education

Education is a strong building block of success in any industry, many people spend thousands of dollars gaining an education to validate their expertise in a certain area. Some take the traditional route college, others gain their expertise via trade schools, and finally the best teacher of  all life.

Most investors have heard of analysis paralysis, simply put this is when someone takes too long to make a decision. I consider the most vital educational components for a newbie investor are : marketing strategy, target market(s), knowing comparable, estimating rehab cost, and having a bon-a-fide exit strategy. Although this may seem elementary, many newbies can not master these components. Time will not permit me to go in depth in each but bird dogging will provide you with a firm understanding on how to master each area.

Education is power… but without implementation, its just potential. (yeah you can Tweet that!)

Brick 2: Collaboration

Using the power of other people’s resources can take you to another level in your investing journey sooner that you may believe. Getting to know who the real players are in your investing community and generating a strategic alliance with them will help you get things done. In my previous article I spoke on how bringing deals to investors will help with your credibility, this is possible because investors understand how critical it is to have a steady deal flow. If you are able to consistently put deals in front of them they will know you have the understanding of how to evaluate a deal. This will help you build your portfolio of investors you can sell properties to when you are ready to begin wholesaling, or you may begin doing co-wholesaling or joint ventures together.

The power of other peoples resources is a great way to gain momentum.

Brick 3: Experience

During my high school days teachers loved commenting on my report card. The comment they always used was “he has a lot of potential” yes I did, but I still had a D average.

Potential means absolutely nothing if you do not activate it.

This brings me to the next brick “experience”. As a bird dog you will be able to gain a wealth of experience.  The experience you will receive is worth much more than education or collaboration alone. By learning from a seasoned investors you will be able to find out information you can not learn from a seminar alone.  Its not easy gaining the experience you need. Having a strong purpose and perseverance as stated prior will help during the times of failure. Many newbies start and give up because its not as easy as many say, and it shouldn’t be.  Investors will not be very forthcoming in the beginning, but after time and service you will be able to line your questions up and get them answered.

The experience is the on the job training. If you are like me you learn a lot more being hands on versus learning from a lecture or from a text book. Building alliances with professionals will gain you the job training you need. Many people say “well look at how much money you are loosing”, your response should be “look at how much I am learning while making money”.

A great example is negotiating, how much can you learn from reading a book on negotiating? Yes, you can learn something, but when you see it in action its completely different.  You evaluate the sender’s message, and how its received, and how the receiver responds. Negotiating is an art within itself and if you are able to learn under a master negotiator you have one leg up on the competition.

Related: How to Negotiate: 7 Real Estate Negotiation Tips

Finally, you have to use what you have to get where (not what) you want. Again, this is not about quick money its about sustainability, and having a strong foundation. If this is the approach you need to take to build a solid foundation brick by brick don’t let anyone discourage you.

If you have any other strong foundation bricks, or something I may have missed please share.

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About Author

Marcus Maloney G+ is the Executive Officer of 3rd Generation Management & Holding LLC, which is a family owned and operated real estate investment firm. The firm's goal is to provide affordable solutions in real estate while providing exceptional opportunities for community redevelopment for the residents of Phoenix, Arizona. You can follow Marcus on Twitter

16 Comments

  1. Marcus, I agree with everything that you wrote …. except …. I would add a brick (or perhaps some bedrock) of vision. The vision really has to come first.

  2. It is my opinion that “Wholesaling Only” is a mistake for rookies. Bird dogging can work if the Rehabber pays you, ethics is a must, get references of happy bird doggers.

    Hi Marcus,

    REIAs can be a source of bird dog trainers-mentors for newbies, Many senior REIs start a REIA to get “finders” so the big thing is to find people that are happy with the bird dog income and the ethics of the senior REI.

    I also find one of your “must knows”, estimating rehab costs, is very intimidating to many bird dogs. Its alot of work to learn, and can cause problems for all if done poorly.

    What else can newbies do? I think Low Equity Houses, with either sub2 purchase —> renting out or RTO or Lease Option purchase —-> Assign are easier, faster, and less risk for the newbie. Just MHO.

    • Brian,

      Hey man great points, estimating rehabs can be a thorn, I know J Scott had a wonderful book on how to estimate rehabs and I should have referenced in my article. This is very intimidating I often tell newbies to always estimate on the high side.

      Ethics is questionable some times in the industry and word of mouth is always great and to me that is the best form of honest marketing. I have found many bird dogs that receive a 1/3 of the wholesale fee. Bird dogging can pay hansomly if you structure your agreements with REI right.

      I just believe bird dogging is an awesome way to get a firm foundation.

      “Enjoying the Journey”

  3. Marcus nice points but I think you need to do an article explaining your vision of a bird dog.
    All the things you say here and in that previous post sound like things a Wholesaler will so.
    Seems like you have them search for deals, talk with sellers, and seek out buyers that they will bring them too.
    Seems like all a Wholesaler does different is get a contract on it so the investor buyer doesn’t even need to do that. Then they get paid much more.

    I assume I’m missing something.

    • Shaun,

      It is similar, however the REI have the cash buyers and if the property is being purchased off the MLS the investor signs all the contracts and puts up the EM. The reason this works well is because you are providing another stream of deals to the REI without him/her checking the MLS everyday. Its fairly easy for the bird dog to run comps (redfin), estimate repairs (a little more skill is needed there), generate offer and then the REI signs all contracts (docusign). If the REI notice its not a deal then they can back out via the inspection period. If you are workng with a good REI they will tell you why it was not a deal, now you have a mentor. It gives the bird dog another avenue to learn and make $.

      “Enjoying the Journey”

      • Yes I see the guys that will just see garbage on Zillow or Trulia or whatever site they like and send it to me.
        As of now it has always been 100% non-deals.
        Nobody is really going to be successful going through listed properties looking for deals for other people, unless they become an agent.
        I also have multiple agents that look for me (as well as being one myself so I have MLS access) so it isn’t that useful to have someone do the same job with poorer tools at their disposal.
        The one thing you are 100% correct about is that I don’t just ignore them or say no, I do tell them why it isn’t a deal. I do want to help them and in turn maybe have them actually send a real deal.

  4. Hi Marcus

    For someone who works full time and intends to keep working full time until able to build up passive income portfolio (rentals, duplexes, multi families).

    Would you suggest I find an apprenticeship with an REI and help out part time as a bird dog… or

    Save up.. buy first duplex and use that to learn about repairs, rehabs etc

    • Marcus Maloney

      C.L.

      I am a big advocate for bird-dogging I believe that experience is the best teacher. Even-though you are working full time you can still be a bird-dog part time and learn whats going on in the market. I would do both save money and learn your market and your area investors.

      “Enjoying the Journey”

    • Marcus Maloney

      Frankie,

      That is always a great start, some investors do not like starting out as birddogs but I believe it is a great way to learn hands-on. In my opinion paying a guru thousands of dollars to teach you something from a book or manual is not wise. The best teacher is experience.

      “Enjoying the Journey”

  5. Great article. Bird dogging sounds good. I just need to find a local rei to BD for i do have my first reia meeting this Thursday also i need avoid websites to go to to find distressed properties any ideas.

    • Marcus Maloney

      James,

      Great to hear that you are taking action, make sure you read my article on networking

      http://www.biggerpockets.com/renewsblog/2014/10/03/the-beginners-guide-to-highly-effective-real-estate-networking/

      This will help you when you go to your REIA meeting, make sure you have some leading questions ready. You are going to be in a large room with a lot of investors and you want to make sure you make the most out of each conversation.

      The REAI is a great place to find REIs you can birddog for, be honest and let them know you are just getting started and you would like to be a source of leads for them. That will get their attention. You can also go to all the “we buy houses” websites and call the number and the wholesalers will call you back and let them know what you are doing and they will tell you what they are looking for.

      That should be a good start for you, I would love to hear your progress make sure you add me as a connection and feel free to share.

      Good Luck

      “Enjoying the Journey”

  6. sounds great. Thanks for your fast reply. I am anxious to get started. I have read blogs, books, heard podcast and so on . I am a hands on person though. don’t get me wrong I have learned a huge amount in my reading the books and blogs here it has been invaluable. their are 35 people going to the meeting Thursday wow. I will set u up as a colleague if that ok. oh one more ? is the foreclosures site you get to through the resources tab a separate website or is it part of BP.

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