I have been a Realtor for over 10 years, and although I did not plan on Real Estate being my career, it has been very good to me. I struggled at the beginning of my career, like many agents, until I found my niche. One of the great things about making a career of Real Estate, is how many different options there are to make money. I have a naturally introverted personality, so marketing myself to clients was not easy for me. Once I learned to diversify myself into to different areas of Real Estate that fit me, my career took off.
Being a Realtor, has helped me tremendously in my own investing strategy. I have purchased 7 long-term rental properties and I am making at least 24% cash on cash returns on all of them. One of the reasons I am earning such high returns is because I am a Realtor and save thousands of dollars on each transaction. I also do many fix and flips a year and save thousands of dollars on each of those properties as well.
If you plan on buying more than one or two rental properties a year, get your Real Estate license! If you do nothing else with your license, except buy your own rental properties, it will save you thousands in commissions a year. On every rental property I buy, I save a ton of money because I get paid a commission as the buyer’s agent. It may be 2%, 2.5% or 3% per deal, but in the end that adds up to a lot of money. If you buy three houses a year, being a Realtor can save $7,500 to $9,000 a year if your average price is $100,000.
1. As an agent, you get access to MLS and can do your own searches for properties, without relying on an agent to find you the right deal. Having access to MLS gives investors a huge advantage, because they don’t have to wait for an agent to send them listings. I search for listings at least five times a day and I routinely make offers the same day a house is listed. An agent can also easily pull sold comparable information from MLS to calculate values on properties. Calculating accurate values is one of the most important things an investor needs to do in order to be successful.
2. As an agent, you can fraternize with other agents and people in the Real Estate business. The more people you know in the business, the more people you can tell you are looking for property. Sometimes the best deals are those that are brought to you, not the deals you find yourself. Let everyone you know you are looking for investment properties and you never know what will come up.
3. The IRS has limits on how much money you can deduct on rental properties if Real Estate is not your primary job. If Real Estate is your primary job, then you may be able to deduct many more expenses.
4. If you are an agent, chances are other agents will know who you are and if you are dependable. If you have a good reputation as an agent, then you may be able to get a deal just based on the fact the other agent knows you are serious and will deliver.
Making money as an agent
I may be biased, but I think being a Real Estate agent/Realtor is one of the best opportunities out there. There are many, many different forms of income in the Real Estate business. If you are motivated and dedicated to making it in the business, then you can make serious money. I won’t go into details in this blog, but here are some of the different areas that can generate income.
- Property Management
If you are going to be a serious investor you will want a property manager to handle your rental properties at some point. If you start your own property management business, you can manage your properties and other properties as well. Not only are you saving 10% per month on your rent coming in by doing your own management you can make extra cash, by managing other investors properties.
- Retail Sales
This the most common way to earn money as an agent. Retail sales involve listing houses for private sellers and selling homes to buyers. If you are dedicated and treat this as a real job, you can make a lot of money. Many agents make over 100k a year and the very best make much more than that.
- Commercial Sales Commercial real estate takes a lot more experience and knowledge than residential. It is difficult to break into commercial, unless you start with a commercial firm who can mentor you. Experienced and successful commercial agents can easily make hundreds of thousands of dollars a year.
- REO sales REO properties are homes that have been foreclosed on and gone back to the bank. REO agents list and manage these homes for the banks. Agents can make a very lucrative living if they work with the right banks. It can take years to build up your business and the supply is determined by how many foreclosed homes there are. REO agents are not allowed to buy their own listings as it is considered a conflict of interest.
- Short Sales
Short sales are homes that are listed for sale by private sellers, but the sellers are selling the home for less than they owe the bank. There is a huge market right now for short sales and many agents make a great living specializing in this field. It takes a lot of patience and diligence to close a short sale, since the banks have many requirements and can take months to approve a short sale.
- BPOs BPO stands for broker price opinion. A BPO is a one to three page report, used to determine value on properties, but is not an appraisal. Licensed agents can complete BPOs for various clients including banks and usually get paid between $30 and $80 per order. Some agents make a living only completing BPOs. It is a great way for agents to supplement their income while learning the business.
There are many other ways to make money as an agent. One of the best ways to get into the industry, is to become an assistant for another successful agent. You can get paid to learn the business and gain priceless knowledge. A few other ways to make money in Real Estate; start your own office and hire other agents, represent builders, fix and flip homes or concentrate on buying your own long-term investment properties! I currently specialize in REO sales, BPOs, fix and flips and long-term rental properties.