Referrals are great for any business so why not use them in your real estate investing business? Word of mouth can generate great, steady income if it spreads to the right people. So how do you start using referrals in your real estate business?

In real estate investing, they are called "bird dogs". Bird dogs are people you have working for you who go out and find deals and bring them to you. You can choose to pay them per lead they bring you, or per deal.

If you pay them per lead, $5-$10 for each is a typical amount and if you pay them per deal, $1,000-$1,500 per deal is typical. You want to pay a fee high enough to keep the bird dogs working for you and coming back with more and more deals which mean more profit for you.

How and where to do you find bird dogs? You can put an ad in your local newspaper or on Craigslist. Your local REIA (Real Estate Investors Association) meetings are another great place to find bird dogs.

At most REIA meetings, there is a networking table where you are allowed to place flyers and advertisements. Simply make a flyer stating you are looking for people to bring you deals and that you pay referral fees.

Once you find your bird dogs, you will want to provide them with training. You will want to clearly explain to them what you are looking for and what you are not looking for.

If you really want to systemize your bird dog system, create a training manual outlining your process and what types of properties they should bring you. You may even want to include photos of houses that meet your criteria and houses that don't. Like the saying goes, a picture is worth a thousand words.

It is helpful to provide your bird dogs with tools as well. You may purchase them magnetic vehicle signs or t-shirts that say "I Buy Houses." That way, when your bird dogs are around town, they can attract homeowners with houses for sale. At that point, the bird dog takes the homeowner's information and passes it along to you.

When bird dog finds you a deal, you will do your research on the property and contact the seller. You are responsible for turning that lead into a deal.

Be careful of real estate laws. Some states do not allow individuals without a real estate license to receive referral fees for real estate. If this is a problem where you live, you will want to structure the payment in a different way that is not referral based.

Remember, just like your real estate investing business, your bird dog referral system needs to be consistently advertised. It is like a business within a business. You will need to continuously spread the word that you are looking for people to bring you deals so you can keep those deals coming.

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