How to Make Money as a Real Estate Agent
Did you know, as reported by the Bureau of Labor Statistics, “the highest 10 percent [of real estate agents] earned more than $112,610 [annually in 2018]”? Most sales by a real estate agent are commission-based, which probably leaves you wondering how someone manages to sell that much in the course of one year.
The best answer is they likely don’t sell any more than the real estate agent that only makes the median average of $48,690. Instead, they focus on diversifying their methods for gaining a commission, as well as how they market themselves.
In this article, we will take a look at some of the different ways you can make money as a real estate agent. Plus, you will get an insightful look into how successful marketing can lead to more leads, and more revenue.
3 Ways to Make Money as a Real Estate Agent
There are many different ways that you can make money as a real estate agent, but it is critical you understand that joining the 10% doesn’t occur overnight. Each way we lay out below will be accompanied with some hard work and drive.
Can you handle it? Let’s find out.
Diversify Your Portfolio With Commercial Real Estate
It is not uncommon for a real estate agent to become an expert on not only houses and how to sell them but also commercial properties. There is a large market for selling office, retail and multifamily properties if you have the requirements to do so.
Possibly the most lucrative aspect of selling commercial properties is that you are more likely to make a consistent, monthly income as opposed to only making a commission-based income.
FitSmallBusiness outlines the following requirements for agents interested in pursuing a career path in commercial real estate:
- Minimum age: Most states allow individuals who are 18 years or older to apply for a real estate license; however, some states require you to be older before applying
- Residency: Many states require you to be a resident of the state in which you are applying for a license while some just require you to be a United States citizen
- Experience as a licensed salesperson: All states require prospective brokers to have at least one year of experience as a licensed real estate agent in the state, though many states require two years of relevant experience
- Prelicense real estate education: Applicants for the salesperson’s license and the broker’s license must take a set number of state-specific real estate education courses prior to taking the licensing exam
- Broker’s license exam: As with real estate salesperson licensing requirements, prospective brokers must take a written exam covering subjects like contracts, financing, and agency law
Much like getting your state real estate license, you will need to attend a number of courses and pass an exam to be officially qualified to sell commercial real estate properties.But after this bit of legwork, you will be set to make money as a real estate agent with a new source of income.
Take an Interest in Short-Term Rental Property Management
With the rise of renting websites like Airbnb, it is no surprise that another lucrative opportunity lies in short-term rental property management. Just like with diversifying your portfolio with commercial real estate properties, you will need to take some educational classes on property management, specifically for rentals, and become certified.
Once you do, you can make a nice side income by managing short-term rental properties, like those on Airbnb or any other short-term rental property you can tackle in your off-time.
That said, many hosts may not want to work with you unless you can (a) provide legitimacy and (b) show proof that their listings will rank. You can help short-term rental properties rank higher in rental databases by optimizing your listings and partnering with premium marketplaces.
It is also vitally important to have a great track record when it comes to efficiency. With a high turnover rate, considering these are “short-term” rentals, you will need to be prepared for continuous improvement of the properties you manage. These improvements will ensure that you actually make money as a real estate agent from your short-term rentals.
Invest in Flipping Houses
The idea behind flipping houses is to find a home you see a great ROI in and fix it up and sell it at a price that allows for a profit margin. Flipping houses can be a great, short-term project that can ultimately put a good chunk of change in your pocket.
There are even strategic ways to avoid high tax gains on your flipped homes. Logan Allec, CPA & Owner of Money Done Right, pointed out that “there is an exception in Section 121 of the income tax code that says if you live in a property for at least two out of the five years preceding the date of sale, you can exclude up to $250,000 of your gain on the property. This number doubles to $500,000 for married taxpayers filing jointly”. You can use this exception to your advantage, Allec explained in an article from FitSmallBusiness, by strategically renting out the home or even living in it yourself for two years prior to flipping it.
The Role Marketing Plays in Making Money as a Real Estate Agent
Something many new agents and even some experienced agents take for granted is their marketing. It’s easy to write a social media post and be done, but properly marketing yourself goes way beyond social media. That is why it is highly recommended, especially for new agents, to get in touch with a marketing firm that specializes in real estate marketing, as well as learn the ropes of what goes into successful marketing.
But how does marketing play a role in your annual income as a real estate agent? The answer is lead generation. With better marketing comes greater leads as more eyes will be on you and your brand or listings. Therefore, marketing yourself correctly is one of the best ways to make money as a real estate agent.
Marketing doesn’t only need to be digital. It is a common misconception, especially for millennial real estate agents, that the only way to get leads is through the internet. In fact, you can target your leads far more directly by putting up signage in the neighborhoods surrounding your listing.
Digital marketing comes in handy when you can’t reach your leads by stepping into a crowded conference room or hosting an open house event. You can use online targeting tools and online advertising to reach an audience you otherwise would never be able to get into contact with.
It ultimately comes down to who you have in your corner. Before you can ever start marketing yourself, you need a brand, and even before that, you need a strategy. That’s why we offer solutions that are directly related to lead generation and getting you sales. Everything we do -- top to bottom -- is focused on building you a foundation that won’t crumble, even under extreme scrutiny or pressure. We manage your reputation, your digital assets, and provide a level of expertise most agents don’t have the privilege of utilizing.