Here's How Real Estate Can Make You Extra Cash on the Side

Real estate is a versatile field. There are many ways that you can make money through real estate. Here we’ll explore the different tactics you can try as a licensed agent or as a non-licensed person. Having your license is a plus, you can still reap some of the real estate’s benefits without a license as well.

Tactics to consider as a licensed agent:

Get your license and work as an agent part-time.
Become a buyer’s agent for a successful team or individual.
Represent yourself when you make your purchases.
Become a property manager.
Use your network to refer out the business to new agents and collect the referral fee.
Join a brokerage that gives you a referral commission for recruits and makes money off of new agent sales.

Tactics to consider as a non-licensed agent:

Purchase an owner-occupied multifamily unit.
Purchase a house in a popular area and rent to friends.
Upgrade with intention by renting your first home.
Try your hand at flipping a home in your area.

Let’s begin with the money-making strategies you can use as a real estate agent.

Get your license and work as an agent part-time. This is an awesome strategy if you are young and have a lot of energy to put into your business. Most days you will be working for 12 hours. The idea behind it is that most people want to see houses on nights and weekends. As an agent, you can take on one or two clients a month and go directly after work at 5 pm to show houses. This can be tiring but the payoff can increase your yearly salary. If you are using this strategy, I wouldn’t recommend paying for leads. With a full-time job, you will be constrained on time. You don’t want to be paying for leads coming in left and right and be able to answer the phone if you are you are busy at your first job. The best way to make this work is to have great communication with your boss and your clients. Let your boss know ahead of time if you have other engagements. Try your best to come in an hour early if you know you will have 5 or 6 showings in the afternoon. You should lean on your sphere of influence for leads and don’t take on too many clients or you will end up disappointing someone. This strategy is all about transparent communication and time management.

Become a buyer’s agent for a successful team or individual. There are agents out there that take on too many clients and they can’t show houses to everyone. These people usually look for a buyer’s agent to work under their brand. When you are a buyer’s agent for someone else you are a part of their team and you show houses on the agent’s behalf. The agent then negotiates on behalf of the buyer and handles the rest of the transaction. Essentially, you are a door opener but the good part is you get a percentage of the sale. You can work with the agent you are representing on either a flat rate or a specific percentage of the sale. Doing this can earn you a decent amount of money and you have the rest of the time to work somewhere else or take on clients of your own.

Represent yourself when you make your purchases. When you purchase any type of real estate, and you are an agent you have an option to represent yourself. This means the seller pays you a percentage go the purchase price to buy the home. You can use this bonus money to put down for your down payment or to furnish your new place.

Become a property manager. In most states if you have your real estate license you can become a property manager. Property managers can show and lease out buildings for owners. They take care of maintenance and collect rent. Read our article that goes into detail on what a property manager does day today here.

Use your network to refer out the business to new agents and collect the referral fee. If you have been in the business for a while, your referral network should be strong. If you are leaning toward retirement but still getting calls from your inner circle- use this to your advantage. Give the lead to a young agent in your office for a 50% referral back. Usually, the referral is 25% but with new agents, they usually just want the opportunity don’t mind the higher fee. This can be a good way to stay in business without working long hours, nights, and weekends.

Join a brokerage that gives you commission off of recruits. Some agencies, like EXP, have recruiting incentives. If you love being in a teaching role or you are ready to share your experience and knowledge with other people, then you should recruit real estate agents and become a mentor. You can trade your skills and experiences for a percentage of their first 5 sales. Agencies like this have incentives that allow you to make money from each recruit you bring on board. This is a great way to make passive income.

Here are the strategies for people who do not have their real estate license.

Purchase owner-occupied multifamily. You don’t have to be a real estate agent to make money off of owning property. A great way to get ahead of the game is to purchase a multi-family unit as your first home. At first, they seem intimidating, but if done correctly they can make you a lot of money. You will want to purchase this property as owner-occupied because you will have a lower down payment for the mortgage. Typically, a non-owner-occupied purchase can be as much as 25% down. Owner-occupied property is usually in between 3-7% down. Once you move in, rent the other side for more than your mortgage monthly payment. Then you are doing two things: first off, you are living for free. Secondly, your renter is paying off your mortgage that you can later sell at a profit! The only downside is that you are probably going to have to deal with all the costs of updating and maintaining both properties. Be prepared by having a reliable handyman that you can call for quick fixes and be ready for calls in the middle of the night about a leaky sink.

Purchase a house in a popular area and rent to friends. If you moved home from college and know everyone in your hometown, this is a great option for you. The strategy is to live with your parents for a few months to save up for a down payment and then purchase a 3 or 4 bedroom home in a popular area (or whatever you can afford) and have all your friends move in with you. Pick an area that is going to be enticing to them. They most likely won’t want to live way out in the suburbs when bars and other fun things are normally closer to the city. Have them pay a little bit below average rent for that area. 3 or 4 people paying $700-$800 a month is going to easily satisfy your mortgage. This way, you are enjoying living with friends but also living for free. Make sure to split utilities and Wi-Fi as well.

Upgrade with intention by renting your first home. This is a strategy that anyone and everyone can do. Couples or single people normally buy a smaller first home. Then, when they eventually need a yard or more bedrooms for their growing family, they upgrade. The usual course is that you sell your old home and move into your new one. Another option is to keep your old home and rent it out for above the mortgage price. If you bought the first home with a low-interest rate, this can be done with no sweat. Now you have a passive income that can help contribute to your new mortgage payments. It also allows you to hold the property longer so that the value appreciates. If the property is paid off, then the rent payments become a steady stream of income for you and your family.

Try your hand in flipping a home in your area. Flipping a home is a good option for people who have a decent amount of cash saved. You need cash to repair the house and to purchase it. Houses that need a lot of work usually won't qualify for a traditional loan. Having cash to purchase a rehab also helps get the price down because it is faster and there are less hoops to jump through versus processing a loan. The trick to a good flip is to pick the worst house on a nice street. The other houses on the street can be a great indication of how to renovate the house. The surrounding property values and pending transactions can also tell you how much you can get out of it once it’s renovated. The last thing you want to do is make a house too nice. You want to match the other houses in the area or there will be no comparable homes to justify the price. This could lead to a profit loss and that hurts.

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