sobbing spotter/bird-dog battler tells all!!

I thought, that’s the kind of headline that will attracts reads…hehe!!!(ironic dig at television ‘journalism’ – and i use that term loosely)

I started to write this as a reply to another thread but thought I might start a new thread.

here goes.

Spotting is a humungous job. You cannot even begin to imagine. For about a month prior to when Leigh went over to NZ for 2.5 weeks, both of us were on the net looking for deals. Hundreds of them. All saved and snapshotted and emailed to eachother, whaddya think of this one? agents were phoned. (we just got a $1000 phone bill.) notes were taken and written up.

I even employed an assistant for a day to phone up and take notes on the hundred odd properties that looked good on the net. Ask about the street, the area, rental demand, condition, blah blah blah. Called lawyer and discussed legal implications, got document drawn up to assign properties etc.

calling Leigh every night to touch base. Planning trip and route.

So leigh went to NZ. 2.5 weeks, 2.5 k (accom, backpackers, car, airfare.) via sydney to do a ‘pre-brief’. He photographed 85 properties (looked at many more) in many different towns, narrowing it down to which ones we were going to put offers in on, or just doing it there and then on the spot. The first two deals which came through accepted, I prepared a data sheet with photos and emailed it to our clients.

*sat back, waited…*

a week went by.
UNDERWHELMED by the response!!

cut to
*sobbing bird dog, no make-up and spotty, freeze frame on crumpled face, bad lighting making pimple glow*

cut to
*commercial break*

Talking to Leigh. SHIVERS (no that’s not really the word I used) we should put the breaks on. If they’re not gonna go for 17.8 percent, what are they going to go for? No more offers for a bit!

Then, we had an email, ‘so how are you guys going, got any deals yet? Can’t wait…’

DRAT!!! realised that people either didn’t get the deals because they had been ‘bcc’d’ to others and their junk mail filters ate them, or they couldn’t view the document either cause they didn’t have quicktime, or adobe acrobat, or whatever…

these were the numbers on the first two deals we sent out….

“(address and town of property) $ 41,300 NZD
(All figures NZD)
Yield: 17.6 percent
Rented $140.00 per week
Tenants: Good tenants, been there 3-4 months

Tidy 3 bedroom home on elevated section. Excellent garaging. Double garage plus 3 bedrooms. Elevated sunny position. Large section.

my comments: These style of houses are ex-state house style, and were very solidly built. They should have heart rimu or matai floorboards (extremely desirable native woods, now scarce). This kind of house is very suitable for a rental property.

Vendor’s reason for selling: Agent says, busy farmer said ‘just get rid of it’. Was managing it himself and no time. When I asked the agent why the farmer didn’t just get it property managed, agent said ‘I think he just wanted to get the money out to do something else with it.’

What’s the area like?
Agent says (town) doesn’t really have good or bad areas, it’s all ‘medium’ with nicer houses and older houses all mixed up together. property is walking distance to town.

The other deal was an even cuter house, verandah, villa style, 35K rented for 120. 17.8 percent yield.

Leigh and I were beginning to panic. “if they don;t like 17.8 percent with a sitting tenant in a reasonable sized town with a solid home close to town, what DO they want?”

We don’t want to be stuck with contracts on properties we intended to flip, about to go unconditional, scrambling to figure out what to do at the last minute. We were worried our ‘serious buyers’ weren’t serious.

Then, I was approached by someone who wanted ‘mentoring’ who had PM’d me off the forums, so i agreed to do it. I met with this person and told him everything I could fit into a few hours, prior to his own trip to NZ to find properties for himself.

This is the person who ended up our first bird dog client. (maybe, he’d met me, he trusted me? may have had a lot to do with it.)

That is to say I’d bird-dogged about 5 properties prior, but on my own. This was the first of leigh and my clients.

I should just explain that I talked to a bird-dog today who charges 4400 fee, but that includes building report and LIM as well as other info. Well a builder;s report and LIM is worth about 450 in total so allowing for a ‘reasonable’ bird dog fee of 1000, that’s still about a 3k markup.

the way we so it is 1000 per property, up to about 60k, or 2 percent. That works out to about $1100 more for (say) a property in the 60’s. etc.

So this client also looked at a second property and did due diligence on three, (builder’s report) buying one. The other two fell over because he really was only ever gonna pick one, maybe two. by then it was too late to re-bird dog them as the time ran out.
we only got paid for one bird dog fee although the client did DD on three, because to cut a long story short, he forgot to read the part on the thing we sent out to clients which said, you accept the deal from us, our work is done, when you undertake due diligence. We can’t know whether you are going to be ‘happy with the builder;s report’ or not. Because he was doing DD on the properties we thought we;d bird dogged them to him. I guess he would have been unhappy – no – really really mad – if he’d wanted them and spent money on getting them inspected only to find we’d flipped them to someone else!!! I mean, you dont do a BR unless you have a contract on the property do you? No. and we did. So I was assuming that by doing his DD he’d taken on the contract. By this point the client was in NZ and it was all a bit rushed and by remote control.

At the end of all this, he didn;t think he should pay for three bird dog fees, only one. As we didn’t have the chance to flip to any one else we disagreed, but decided not to press the point, because he had spent a lot of money, taken one for sure, and we were just starting out and realised rules had to be laid down and our system tweaked.

So we let that one go, and we now have a happy customer with a great deal who wants us to find more.
OK.

Just a final note to part one of BIRDDOGS EXPOSED!!!! Unlike other bird dogs who only get paid when the property goes unconditional, we believed that was potentially a conflict of interest. The bird dog may co-erce (unwittingly? to preserve relationships with agents? to get paid?) the client into buying a property that the BR may make them want to pull out of. That is totally the client prerogative. I see it as the bird dog client steps into our shoes. When I see a property I like I put a contract on it subject to BR. Then I pay for the BR. If it’s good, I proceed. if not, I try to renegotiate or walk away. Then I wasted the price of a BR, and a client wastes the bird dog fee as well. Doing the BR upfront, just seemed we were carrying too much risk in the front, and would have had to charge at least double, which is why we decided just to simply find the deal, as well as we do for ourselves. let the client do the DD they need, and decide what it means to them.

I’ll write some more soon.

Message to everyone who has been PMing me – we don’t have any deals at the moment because they are all sold ! (yay!) but as soon as we have some more i will be in touch with them!!

The one that you could have all fought over if I’d got it was two renovated flats today, 52K rented for $100 per week each flat. = 20 percent return. Just sold yesterday to an unconditional offer for the asking price!! (and we never do unconditional offers anyway!!)

If you are keeping track of how much we are making, or rather not making yet, our first three deals or thereabouts will cover our startup costs and from then on we will make our first 500 bucks each. Total hours to date, for first deal sold, equivalent of about 2.5 weeks full time each.

(this comprised of for leigh, actual on the ground time, for me, hours and hours late at night preparing fact sheets, rental data, economic profile on area, pictures of town, scanning faxes of sales data and converting them to images to paste into documents to send out) endless, endless