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Bird Dogging Real Estate vs Wholesaling, How to Determine ARV and more (Q&A) - YouTube
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Hey everybody, we're gonna change it up a little聽
bit today, people have been emailing me some聽聽
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questions about real estate deals they're working聽
on and just some general real estate investing聽聽
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questions. So we're going to actually read them聽
off to you today, printed them off from my email聽聽
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and give you some answers via YouTube. My name is聽
April Crossley welcome to my channel. I'm a real聽聽
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estate investor in Berks County, Pennsylvania, I聽
flip houses here, buy and hold rental properties聽聽
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and do some private money lending. And we're聽
going to answer some of your email questions聽聽
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this afternoon. So let's get to it. Thanks for聽
tuning in. So I got an email question from Mary,聽聽
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who said, first, let's cover the most important聽
part of the email first, I've been watching聽聽
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your YouTube videos, and I absolutely love your聽
strategies. Thanks, Mary. We love your strategies,聽聽
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too. And thanks for sending us a question. So make聽
sure you subscribe guys, because I've got good聽聽
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strategies. Okay, Mary's email, she's looking to聽
buy a four unit, which is amazeballs. And I don't聽聽
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know if she's house hacking yet or not. Because聽
Mary, I can't tell from your email. But it sounds聽聽
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like you have a four Plex that's at a really good聽
price in your area. And you want to buy it and you聽聽
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gave me the gross income. And $75,000 For four聽
Plex, that's good girl, John, one that jumped聽聽
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on that. And you might finance it with a bank,聽
or you might buy with private money, but you're聽聽
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not sure and you want it to know if you should聽
get an inspection and an appraisal done first,聽聽
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or should you put the private money deal together聽
a while, what I would do is I would lay out the聽聽
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income and the expenses on the property and what聽
you think it's worth, watch some of our videos,聽聽
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the ones on seller financing, and the ones on how聽
we buy properties with none of our own money. So聽聽
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you can back into make sure that your purchase聽
price works, and the property still cash flows.聽聽
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And I would put all those numbers together and聽
then email them out to your private lender. If聽聽
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you have a private lender already. You can do聽
that while simultaneously getting inspected聽聽
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and having an appraisal done. Or you can do the聽
inspection and the appraisal first, just know聽聽
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that if you don't follow through that money is out聽
of pocket for your inspection and your appraisal,聽聽
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which in the grand scheme of things isn't that聽
much. And I think your concern in your email is聽聽
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how do you come up with the value of the property聽
because you said there's not a lot of comps, it's聽聽
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a four unit, you can't find a lot of comps, you聽
really need to connect with an agent in your area,聽聽
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it's on the MLS, you've said that already.聽
So whoever your agent is, should be giving聽聽
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you comps even though comps are hard to find, they聽
still should be able to pull four unit properties聽聽
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in your area. When an appraiser looks at this,聽
they're actually going to look at the value two聽聽
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ways. They're gonna run comps, which your agent聽
can do. And they're also going to run an income聽聽
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and expense evaluation which we've done a lot聽
of videos on our YouTube channel that run those聽聽
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numbers. So they're going to take your income聽
minus your expenses, and they're going to figure聽聽
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out what your net operating income is. And they're聽
going to take that divided by the cap rate of your聽聽
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area to figure out the value. So an appraisers聽
on a four Plex is likely going to give you the聽聽
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value based on comps and the value based on what聽
I call the income and expense or cash flow method.聽聽
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So get comps from your agent, run your income聽
and expenses and make sure that your property聽聽
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cash flows. And then look at what those two聽
values come up with. They come out at based on聽聽
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cap rate and your agent should be able to tell聽
you about what the cap rate is in your area.聽聽
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So then you'll have an idea of value. Okay, so I聽
hope that helps you. You're gonna one want to run聽聽
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your numbers two ways. Thank you, Mary for that聽
question. Next question. Email says this is a聽聽
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couple of questions within a question. So says I'm聽
a fan of yours and follow me on social media. You聽聽
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guys can follow us on Instagram at April Crossley聽
or Facebook leads your real estate investing. And聽聽
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wondering if you can give some answers on some聽
real estate questions. These are some kind of聽聽
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like starter real estate investing questions. So聽
her first question is do you need a pin number聽聽
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to access the property liens and judgments with聽
the recorder of deeds office? So a pin number
聽
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recorder of deeds offices, often, obviously聽
the office that records the deeds so anytime a聽聽
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property is bought or sold, they're recording that聽
deed. liens are money that's owed on the property聽聽
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or judgments against the property. So if you have聽
a $50,000 mortgage, that's a lien on the property聽聽
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that $50,000 So she's asking if she needs a pin聽
number to access that information on the road.聽聽
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quarter a deeds website. And I love giving聽
straightforward answers you guys know no BS,聽聽
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can't give you a straightforward answer on that聽
every recorder of deeds website is different.聽聽
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So you want to go down to the actual courthouse聽
in your area and talk to someone at the recorder聽聽
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of deeds office and ask them my recorder of聽
deeds website, we don't need a PIN number.聽聽
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Everything's just kind of like, out there for聽
everyone to see. And we can log in and see it聽聽
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in your area, you might need a PIN number,聽
so double check with them. She also asks,
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Israel state messing considered a business and聽
do we need to report our earnings to the IRS?聽聽
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Unfortunately, yes, it is a business, you got to聽
pay taxes, you got to report your earnings to the聽聽
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IRS. And you need a really good accountant that聽
understands real estate investing, or it can get聽聽
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a little messy. So it's definitely a business.聽
When you get into this. A lot of people usually聽聽
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don't know that. But it is you're starting a small聽
business. It's a huge undertaking. So you do have聽聽
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to report your earnings to the IRS. She's asking聽
how can we vet buyers? I'm assuming buyers for聽聽
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like wholesale deals like if you're wholesaling.聽
Is it okay to ask them for earnest money up front.聽聽
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So I don't do a ton of wholesaling. I work with聽
wholesalers, when I have a deal that I don't want聽聽
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to buy myself, I'll usually send it to one of my聽
wholesalers. She's amazing. And you might meet her聽聽
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someday on one of my YouTube videos. But I don't聽
like as a buyer, when people ask me for money up聽聽
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front, I wouldn't give anyone money up front,聽
I wouldn't mind if they gave me a letter from聽聽
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their private money lender showing that they have聽
funds to back their offer. Or if they gave me a聽聽
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copy of a bank account statement. Obviously with聽
their number bank account number blacked out still聽聽
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showing their name to show that they actually聽
have money to buy the deal, because that is a big聽聽
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concern people that say they can buy the deal, but聽
then they don't actually have the money to buy the聽聽
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deal. So I wouldn't ask them for money up front.聽
I just know for me as a buyer, when wholesaler聽聽
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asked me for money upfront, it's a huge turnoff. I聽
don't like to work with them. Okay. And she asked,聽聽
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Can we use anyone's purchase and sale agreement聽
contract legal document, you can like in our聽聽
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course at lazygirlrei.com. I give my students a聽
contract for purchase they can use with sellers,聽聽
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but I always tell them to have it checked聽
by a real estate attorney. So along with聽聽
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your accountant, you're going to need a good real聽
estate attorney because every state is different.聽聽
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So you really want to have that contract checked聽
by your attorney to make sure it's good for your聽聽
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state. Okay. And you asked Who do you hire to do聽
that and it's an attorney, you definitely need聽聽
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a good attorney. So girl, go get yourself a good聽
real estate accountant and go get yourself a good聽聽
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real estate attorney. Okay. Our last question I聽
got the email was what's the difference between聽聽
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a bird dog fee and a wholesale fee? Like why do聽
some people get paper dog fees and some people聽聽
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get paid wholesale fees. So burden fees are when聽
you just send someone an address, and you get paid聽聽
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for that. Let me rephrase that you don't get paid聽
for just sending an address because people will be聽聽
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sending me addresses all day long and expecting聽
to get paid. That would be really sweet. I'd be聽聽
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sending people addresses just to get paid. But聽
bird dogging is when you're driving around just聽聽
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looking for houses that kind of look, let go a聽
little let go. And you're sending a real estate聽聽
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investor the address, hey, I drove past 123聽
Main Street today and it was all overgrown.聽聽
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Here's the address for you. Let me know how聽
you make out. When someone sends me an address,聽聽
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I start marketing right away to that property. So聽
I'm sending letters, postcards, I'm door knocking,聽聽
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I'm cold calling, trying to get a hold of that聽
seller. If I buy the property, I send you a bird聽聽
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dog fee for dog fees, usually $500 or $1,000. Just聽
for sending me an address, it's all you have to聽聽
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do. And I have to close on that address. So I聽
have to buy that property to send you the fee.聽聽
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That's a bird dog fee. A wholesale fee is usually聽
a little more and a wholesale fee is basically the聽聽
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more work you do the more money you get paid. So a聽
bird dog fee is just when you send me the address.聽聽
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A wholesale fee is when you drive past that house,聽
it's overgrown with shrubs, and you go out and you聽聽
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do the marketing and you contact the seller and聽
you get the property under contract. And then聽聽
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you bring me the contract and say Hey, George,聽
has this crappy house have this property under聽聽
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contract? Here's the contract. Do you want to聽
buy it from me for a wholesale fee? So basically,聽聽
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you do all the work for me, and I'm paying you聽
a bigger fee. And I know the next question is聽聽
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going to be how much is the wholesale fee that's聽
really up to the wholesaler. I don't care what聽聽
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the person's wholesale fee is, as long as the聽
deal works for me. So if you put that deal under聽聽
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contract and you're under contract for 100,000 and聽
you're selling it to me For 110,000 and I look at聽聽
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the house and the contract and I say I'd love聽
to pay 110,000 for this house, and you as the聽聽
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wholesaler make $10,000 I don't care. As long as聽
the deal works for me and the deal works for you.聽聽
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You could make 20 grand on it, you can make five聽
grand on it, you just have to make sure the deal聽聽
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works for the investor. And the deal works for you聽
as the wholesaler. So bird dog is when you just聽聽
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send an address, and I do all the work wholesale聽
fee is when you take that address and you do all聽聽
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the work and get it under contract, and then聽
suddenly the contract. So basically, wholesale聽聽
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fees are more you can make more money, but you're聽
doing a lot more work and you have expense because聽聽
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you're the one doing the marketing, but it聽
is a good way to make more than what a bird聽聽
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dog fee would be. So that's the difference.聽
That's our emailing questions for today.
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You guys can email more of your questions聽
to [email protected] You can follow us聽聽
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at www.lazygirlrei.com Follow us on Facebook Lazy聽
Girl Real Estate Investing or follow us on YouTube聽聽
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April Crossley. Thanks for joining us today.
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