Chris Smith, full-time real estate investor, is on the hunt for deals, steering his Mercury Cougar along the quiet residential streets of Lochearn at 15 miles per hour so he can see any hints of vacancy or financial hardship: Tall grass. Overgrown or thick vines. Curled shingles.
But in a year of searching, he's bought one bargain for himself - and passed more than 40 possibilities along to other investors.
It's not cold feet. It's bird-dogging.
In this hot housing market, there are uncounted but apparently growing numbers of people like Smith who ferret out potential buys for someone else. The reward ranges wildly - anywhere from 10 bucks for a photo of a house in bad shape to thousands of dollars for detailed sleuthing work on a deal that makes it to settlement.
Bird dogs - so dubbed because their work is akin to the canines who flush out prey for hunters - are usually new to investing and want to learn the ropes without risk. Some, like Smith, are also looking for themselves.
"Bird-dogging gets your foot on the ladder," said Alan Chantker, president of the Mid-Atlantic Real Estate Investors Association, based in Pikesville.
No one seems to know when investors first began using bird dogs, though the idea of a commissioned deal-finder is probably as old as commerce. But with low interest rates and quickly rising home prices drumming up interest in real estate, more and more people are trying it. The Mid-Atlantic association is even offering a bird-dogging class at 6:30 p.m. Wednesday at the Pikesville Hilton - taught by Smith.
Investors who use these one-person referral services say it's worth paying a fee to get a deal, especially in a market where buyers are routinely getting into bidding wars for homes. Bird dogs often hunt for properties that aren't listed with a real estate agent.
Jo Lovitt, president of Alexandria, Va.-based real estate investment company Succession Inc., has about half-a-dozen bird dogs on staff for small commissions - mostly retirees and college students working part-time, driving through neighborhoods armed with cameras - and she also does business with "independents" like Smith.
"We're constantly trying to grow our bird-dog sales force," said Lovitt, who focuses on rent-to-own real estate. "We look to try to buy at least one property a week, so you need somebody out there looking for these properties all day long."
The work appeals because these deal-finders don't need lines of credit or cash for down payments, and they can do their digging in the evenings or on weekends if they don't want - or can't afford - to quit their day job. But people who think they're going to get rich quick as a bird dog will probably be disappointed.
'Haven't made a living'
"I haven't made a living ... off of this yet," said Smith, 46, a Columbia resident. "You've got to be realistic. You're building a small business."
Smith worked for 25 years as an engineer, most recently for Corvis Corp., a Columbia company that produced fiber-optics equipment and taught him that a 9-to-5 job isn't a guarantee of financial stability.
He was there for the spectacular ride up as the company ballooned in size in the heady days before the dot-com crash, and he held on afterward during the waves of layoffs - until the end of September, that is, when his position was eliminated. The company has since changed its name to Broadwing Corp. and provides telecommunications services.
When his job disappeared, Smith, who was already several months into the hunt for real estate, decided to do it full time. He had three months' salary in severance to cushion him, and he'd been interested in investing for years.
He bird-dogs because he's "very particular" about houses he would buy. He doesn't want rental property, he doesn't want homes that need super-expensive overhauls and he doesn't want to buy in the city, which is tricky ground for people who aren't familiar with the neighborhoods on a block-by-block basis. In general he's looking for relatively modest residences at relatively modest prices with relatively modest problems, and anything of value that doesn't fit the bill is passed on to other investors.
Lovitt calls him a "full-service bird dog" because his referrals are more fully researched than typical, which means he gets a bigger fee if they pan out.
"He does everything - negotiating, everything," she said.
Smith's one investment property, purchased in May, is an eastern Howard County rancher on 1.2 acres that he's rehabbing - attacking the mold, replacing the drywall and erasing other signs of long vacancy. It cost him $205,000 to buy, the fixes will probably add up to about $50,000 and he figures he'll end up with a nice profit when it's sold.
That's where the money is, he figures - not in bird-dogging. But right now, what he's made in real estate has come from bird-dog referral fees - all $10,000 of it. It's a small amount because he gets paid only if the deal closes, and so far just three have.
"Some work out and some don't, and that's not always the fault of the bird dog," said Beth Marsie-Hazen, a Northern Virginia investor who buys property in the area.
Smith, who's married and has a 16-year-old daughter, seriously thought about going back to the 9-to-5 grind after his severance and unemployment insurance ran out. He had two offers. But he loves working for himself, and he figures he can afford to wait for a bigger real estate payday because he expects his rehab property will hit the market at the end of next month.
His wife supports his decision to stick with it.
"I started a music school so I realized that there would be challenges upfront, but I think he's really well-suited for this," said Tina Smith, director of Piano Perspectives School of Music in Ellicott City. "He's extremely well-organized."
He studies values closely so he knows how much properties are worth and what it would cost to fix problems. Sends out waves of postcards with his contact information. Places classified ads. Drives around in search of possible deals, then tracks down the owners, sends them letters and follows up with a telephone call. Looks for homes being auctioned off by the U.S. Department of Housing and Urban Development.
He also has "Chris Buys Homes" business cards he passes out wherever he goes, including gas stations; "Chris Buys Homes" signs on his car (and his wife's car, to her dismay); and "Chris Buys Homes" posters for telephone poles, though he hasn't put any up lately because many counties are cracking down on the practice. All that marketing material includes a cartoon drawing of him - big smile, big glasses, big mustache - that he hopes will personalize his efforts.
So far, he's investigated more than 2,500 possibilities in the region. Many of the homeowners he contacts say "thanks, but we're not interested," though some refer him to others who might be.
Smith says he spends as many hours on real estate as he would at a full-time job.
"You have to do a lot of work and [find] a lot of leads until you cull it down to something that will pay," he said. "Probably the biggest expense is the gas."
On a recent drive to Baltimore County, he pointed out one of his first referrals - a rancher overlooking U.S. 29 that still hasn't sold - and spent about an hour wending his way past the pretty Cape Cods and Colonials of Lochearn in Baltimore County with a notepad and pen in his lap.
"This house might be vacant," he said, slowing to a crawl at a two-story house with a stone facade. "I don't see any curtains; there's no barbecue, there's no lawn furniture out."
A few doors down: "You've got vines growing up," he pointed out, scrawling down the address. "And see the paint on the windows?"
A few streets over: "My guess is that's probably a $60-$70,000 rehab," he said, looking at a big house with sheets over the windows, peeling paint and an overgrown yard. That's more than he would want to spend, which makes it a referral possibility.
Lots of competition
He passed by several near-misses, homes he tried to purchase himself but lost to higher bidders. And he passed by several "We Buy Houses" signs, which are just as frustrating to see. "Look!" he said in exasperation at the third one. "Boy - do I have competition or what?"
Debbie C. Williams knows how it is. The Burtonsville resident tried bird-dogging on the side and never made any money off it because her referrals didn't close. Then she got her real estate license in September so she could try another way of helping investors find property for a fee, but that hasn't worked out much better. It's such a hot market that everyone seems to be getting top dollar for their homes - more than her investors are bidding.
"When it becomes a buyer's market again, there will be more stuff available and people will be more willing to take a lower price, but right now, it's just not that way," said Williams, who earns a living as a purchasing manager in Washington.
Though he doesn't have a day job to see him through the dry times, Smith remains optimistic. He figures he needs to buy and rehab just two homes a year to get by.
If that works out, bird-dogging would simply be icing.
"The thing is, you've got to ask yourself at the end of the day, do you enjoy doing it?" he said. "And I do."
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