Real estate agents are busy enough as it is. From marketing to speaking to clients to scheduling open houses, it can be hard to find enough time to slow down and get organized. But if they had a passive income source, they’d be able to earn a paycheck while they build their business.
How Real Estate Agents Can Earn Extra Income On the Side
Agents have plenty of skills that can help them earn passive income, especially if they have an active network of suppliers and lawyers. Here are 7 great passive income strategies you can try.
1. Try Out Rental Property Investing
Real estate investing is a natural passive income strategy for most real estate agents. Since you already understand your local market, you can use your strong referral network to make a deal that’s suitable for you. Plus, you’ll have access to MLS data and a bigger pool of tenants.
Rental property investing doesn’t require a lot of time and energy—most agents spend 5 hours per month self-managing their homes and apartment buildings. Consider speaking to a fellow agent who specializes in investment properties if you want more insight into the process.
2. Create a Real Estate Blog
A lot of real estate agents started their own blogs while working from home during the pandemic. Blogs are still a fantastic way to earn some passive income once you’ve set it up. If you create a blog that focuses on real estate topics, you can promote yourself in the process.
If you don’t consider yourself a good writer or you’re unfamiliar with SEO, you could hire a copywriter who can help your articles rank. Once you’ve monetized your blog with ads and affiliate links, you’ll receive a bit of money every time a person visits or clicks on certain links.
3. Give Referrals to New Agents
Newer, out-of-town agents often have a hard time finding clients. You can be their knight in shining armor anytime you hear that a client in your area is moving away. Simply post online that you have connections with local agents. Then, refer them to other agents you trust.
It’s essential for real estate agents to approach lead generation with an open mind, as it can be hard to find your first few clients for new agents. However, once you build up credibility, you can start connecting with agents who are willing to split their commission with you for the referral.
4. Invest in Real Estate Partnerships
A real estate partnership normally requires a 50/50 split between builders and investors, but you don’t have to set it up that way. You can take a passive approach by supplying the builder and/or developers with money or advice. Then, you can sit back and watch the money come in.
As a limited partner (someone who acts as a passive investor), you aren’t responsible for the end result of the project. The general partner is the person who actually completes and manages the project once it’s finished. This arrangement is also called “real estate syndication.”
5. Consider Real Estate Crowdfunding
Crowdfunding is a great way for agents to dip their toes into real estate investing because it doesn’t require the investor to own or manage the properties. Plus, crowdfunding exists entirely online, meaning you’ll have many options to choose from, either within or outside the US.
You’ll find everything from houses to apartments to shopping centers on crowdfunding websites, and you don’t even have to spend tens of thousands of dollars to start.
6. Make Affiliated Business Arrangements
Instead of doing referrals for out-of-town agents, try making affiliated business agreements, specifically with title insurance companies. Anytime you send a client to a specific insurance company, you’ll receive a kickback. The amount you receive changes based on the agency.
By law, you have to disclose this relationship with your clients and follow the rules outlined in your contract. There are regulations (RESPA requirements) and a lot of hoops you have to jump through to utilize this passion income option. Still, it’s a great source of passive income.
7. Become a Real Estate Lender
If you know a bit about lending and have the appropriate licenses, you could become a hard money lender. Flippers who need a short-term loan to fund their activities are willing to pay high-interest rates, but you need to protect your loan with enough equity (or margin of safety).
Returns can be high, as much as 10%, but you’re taking on a lot of risk and potential credit fallout. Even with security, there’s always a chance your borrower could default and run away with your money. Still, if you trust the borrower, there’s a lot of money to be made here.
Understanding the real estate market allows agents to invest in passive income streams that see high returns. This can make lending, affiliate marketing, and referrals hassle-free income sources, which can be used to generate money for your real estate or broker career.