3 Payment Structures for Your DealFinders™
DealFinders™, also known as “bird dogs,” are people you can pay to find real estate deals for you.
People fail at using DealFinders™ for two main reasons: 1) they don’t think they have enough money to pay someone, or 2) they use the wrong payment structure.
Someone actually used the wrong payment structure on me when I was starting out. Here’s what happened:
The first time I ever went to a real estate meetup somebody said “Hey, you’re new. I’ll pay you $500 if you send me a property that looks run down and I close on it.”
I thought “Wow, how easy! Of course I’ll do that!”
I sent him a couple properties later the next day. I got a “thank you” back, and then heard crickets. I started to doubt if this was worth my time, so I didn’t send him any more properties.
After becoming an investor myself and learning from our 2000+ DealMachine members that use DealFinders™, I've been exposed to the best DealFinder™ teams in the United States.
In the last 4 months, my own DealFinders™ have submitted over 4000 properties to me personally in Indianapolis!
The key to success was a combination of recruiting the right person, using the right payment structure, and finding the right real estate investor software.
Here are three main payment structures we recommend for DealFinders™, along with who should use each of them:
1. Quickly Leverage Your Time and Pay Nothing up Front
When you’re starting out, you don’t have extra money to spend.
This “nothing up front” payment structure is great when you haven’t done a deal yet and don’t have a lot of money to spend.
The way this usually works is when you close a deal, you give the person who referred it to you a $500-$1000 bonus. In this structure, DealFinders only make money when you make money.
Important: only use this structure with family and friends. Choose people who are close to you.
Avoid people you don’t know well for this payment structure, because closing a deal takes time. Unless they already know you, DealFinders working for weeks without pay will likely get bored and fizzle out.
All you need to get your friends and family started is send them this text, and then add them to your DealMachine account.
The “nothing up front” structure is your main option while you’re looking for your first deals.
2. Find Deals Consistently by Paying an Hourly Fee
Once you’ve done 3 deals, an hourly fee structure will help you do deals consistently.
I used to have trouble with people from craigslist because they would fizzle out. I’d pay $1 per deal, so they could have made $100+ per day! Even though they could have made a lot of money, they doubted they could find that many houses.
People on craigslist respond better to a predictable payment structure in my experience.
Now I pay $15 per hour and my driver has been with me for 4 months.
My driver loves working with me because the pay is more predictable than driving Uber. She doesn’t have to wait for a rider - she can just hop in her car and start adding properties.
She gets paid as long as she finds 12 homes per hour that meet my criteria.
I can see how many properties each DealFinder adds inside DealMachine.
With the hourly payment structure, you should expect to spend $1000-$1500 to find one deal. That is based on the distressed formula (200 houses, mailed 3x each) and that includes mail cost and your driver’s hourly fees.
3. Get Notified About “Random Finds” by Paying Per Lead
Random finds have been my best deals.
They are usually the worst looking house in A-class or B-class neighborhoods.
These hidden gems are not usually in a “hot investor area,” so I can get an awesome price with no other investors aware of the deal.
Certain types of DealFinders can bring you excellent “random finds.”
Think about people who drive random routes every day: property managers, your plumber, your landscaper, your general contractor, local truck drivers, substitute mailmen who have a different route every day, and anyone local in the home-service industry.
Approaching them about looking for properties can seem daunting. In reality it can take 30 seconds. Here is a video of me asking a mail man on the street to find properties for me.
I offered the mail man $5 per house that he found, and you might think that is high. Keep in mind that these professionals are busy with their regular jobs, so you’ll want to make the pay worth their time. It will pay itself back for you because they’re going to bring you the best deals!
Keep Your Deals Coming In with the Right Payment Structure
There are three types of payment structures we recommend. Each one has benefits for beginner and advanced investors. It’s important to identify the right structure for you, as well as the type of person you’re going to recruit.
After you’ve done 3 deals and want to scale, let the DealMachine system onboard, train, and manage your DealFinders for you. Talk to Josh about the Enterprise plan today.
About David Lecko
David Lecko is the CEO of DealMachine. DealMachine helps real estate investors get more deals for less money with software for lead generation, lead filtering and targeting, marketing and outreach, and acquisitions and dispositions.