25 Dec Real Estate Side Hustles :: License Or No License
Real estate is a massive industry. After all, everyone needs a place to live. There are dozens of professions that focus on the real estate industry and there are all sorts of opportunities for real estate side hustles as well.
Some of the activities in the real estate industry require you to have a real estate license. The licensing process changes from state to state in the US, although most of the laws and rules are similar wherever you go.
The licensing laws in your state are important to understand because you DO NOT want to be performing activities that require a license if you don’t have one. The penalties are big fines and possible jail time.
Additionally, you want to be sure you aren’t putting your real estate license at risk by breaking state laws. The laws have all been crafted with consumer protection in mind and there are all sorts of ways where sloppy or unethical behavior can land you in hot water.
The penalties if you have a license and break a real estate law are frequently TOUGHER than the penalties you would receive as an unlicensed person. The general philosophy is that if you have a license, you should know better and be held to a higher standard.
With that in mind, here are some real estate side hustles that might be worth exploring. It’s not a comprehensive list, but it’s a good start.
Unlicensed Real Estate Side Hustles
This is a funny term when you first hear it. The concept is modeled after the way bird dogs behave.
For those who love cats and don’t pay much attention to dogs, bird dogs are dogs who are trained to retrieve birds for hunters. A hunter shoots a duck or a goose or whatever and the dog is sent to retrieve the bird wherever it falls. When the dogs retrieve the birds, they get treats and pats.
In real estate, bird dogs have a slightly different (and less deathy) function. They work for real estate investors by bringing them potential deals. The deals in this case are people who would like to talk about selling their houses to those real estate investors.
The bird dog’s function is to initiate contact with the potential seller, have a conversation with them and introduce them to the investor when they have shown sufficient interest in selling. When the investor purchases a property that was brought to them by the bird dog, the bird dog gets a doggy treat (in the form of a fat check). The fees for bird dogs are always negotiable, but it’s fairly common for the fees to be in the $3000-$5000 range. That seems to be the general range even in modestly-priced markets. Because the investors who use bird dogs are buying properties at a steep discount, the $3000-$5000 number is easy for them to justify.
Food for thought: How many of those would you need to find every month in order to make this a worthwhile real estate side hustle? One? Two? Ten?
I am not exaggerating when I say there is no limit to the money you can make doing this job. There are always, always, always real estate investors looking for new deals to consider. If you or someone you know has a real estate deal that you’re having trouble unloading, please get in touch with me. Or text me at 720-605-1063. For real. I have a massive network of investor friends in the US and I’ll be able to point you in the right direction.
A different way to think about it is to think of bird dogs as the middle-men or middle-women in these transactions. They do the work of identifying potential sellers and getting the deal started, then getting out of the way and collecting a fee for making the introduction to the end-buyer (the investor).
Put another way, it’s a financial reward for being involved in putting a real estate deal together and it doesn’t require a real estate license.
One of the best ways to provide value to real estate professionals–investors or agents–is to knock on the doors of strangers to see if they want to talk about buying, selling or investing. Door knocking is incredibly effective and incredibly lucrative even if you’re an average performer. Hands down, it beats phone calls, emails, postcards, open houses, Facebook ads, networking, etc. It’s the best way to generate immediate business.
As you can imagine, many people in the world have no interest in knocking on the doors of strangers all day. Those who can do it well and not get jaded by rejection will have no financial problems. There will always be lucrative work for you and you can start tomorrow.
Investor support–marketing and advertising
You’ve probably see those signs around town that look a little ghetto. “We buy houses for cash” or “sell your house fast” and various related phrases. They’re typically found at busy intersections and sometimes they are written on a piece of poster board with a Sharpie.
Those are called “bandit signs” and they are a favorite tool of real estate investors to get potential sellers to call them. Bandit signs are designed to look cheap and unprofessional, but don’t be fooled. The people on the other end of the telephone are very sophisticated and they are looking for steeply discounted properties.
By aiming their marketing at those who need to sell fast, they are trolling for desperate people in distressed situations (like pre-foreclosure) or distressed properties (like a house that needs major repairs but the owners can’t afford to fix it). Those situations provide opportunities for investors to buy properties at a steep discount by quickly solving the problems of the owners with cash.
The side hustle opportunities here are to use your marketing and advertising skills to generate seller leads for investors. Creating and placing bandit signs around town is a part-time job by itself because the signs are removed on a regular basis. In many cases, the signs are on property where they are not legally allowed (public sidewalks, utility poles, etc.) I have only heard of a few cases where a city has levied fines for improper sign placement, but it’s always a possibility. That’s why this work is best left to bandits.
You can apply the bandit sign approach to marketing and advertising in other places as well–classified ads, online ads, postcards and so on. With a little effort, you should be able to find investors in your area who will pay you to handle their marketing for them. You may even be able to get paid twice if you handle the marketing AND you are getting paid as a bird dog for houses the investors purchase. Double-dipping side hustles are pretty great.
Investor or landlord
The real estate side hustle opportunities on the investor side of the business are plentiful as well. The easiest one is to become a landlord yourself, or invest in a rental property with a few friends. You don’t need a license to be a landlord and getting a mortgage for an investment property is a straightforward process.
There are all sorts of horror stories about landlords who have tenants from hell or properties that require constant repairs, so do your homework here. Just because a property is inexpensive doesn’t mean it’s a good deal.
Also, there isn’t much good advice about being a landlord from people who have never been a landlord. Well-meaning friends, colleagues and family members will often repeat common misconceptions about being a landlord like, “I would never be a landlord because don’t want to fix broken toilets.” Plumbers are available for rental properties just like they are for your primary residence. It’s not hard to figure out.
I will do another post that focuses solely on being a landlord. The general idea is to buy a property that generates enough rental income to cover all the monthly expenses, and leaves some extra cash in your bank account every month.
Real Estate Side Hustles That MIGHT Require A License
Some of these real estate side hustles require real estate licenses. It depends where you live and the specific nuances of your state’s laws. Many people who pursue these gigs decide to get a real estate license anyway (even if it isn’t required) because it gives them the ability to charge more money for their services.
Real estate transactions are very paperwork intensive. There are forms and disclosures for dozens of things and the files seem to get thicker every year as the list of disclosures continues to grow.
Most people who are drawn to the real estate sales business enjoy working with people, but they usually don’t enjoy completing paperwork. The paperwork is necessary and the salespeople are happy to pay someone else to manage it for them. If you are organized and detail-oriented, being a transaction coordinator is a great real estate side hustle. The fee is usually a few hundred dollars per transaction.
Much like being a door knocker, this gig isn’t for everyone. It takes a special kind of person to enjoy this work and do it well. You’ll need to be comfortable with constant rejection and be able to build rapport very quickly with strangers over the phone.
There is always work for people who are good at cold calling. Many of the most successful real estate agents in the world have taught themselves to make dozens of cold calls every day, even if they hate it. They do it because it works! You can command big compensation if you have the ability to generate sales leads or investor leads by pounding the phone all day.
Some states limit the types of things you can discuss with potential clients if you don’t have a license, so check you local laws before diving into this one.
Short-term rental management is a specialized form of property management. Again, check your local laws to see what sort of property management you’re allowed to do without a license.
This gig is easiest for people who live in areas where there are lots of vacation rentals. Out-of-area landlords are inclined to hire people to manage the vacation rental bookings, but locals tend to manage their short-term rentals themselves.
Much of this work is time-sensitive. There will be situations where a guest is leaving at 11am and the next guest is arriving at 2pm, so you’ll have three hours to clean the place, swap the towels and sheets, etc. It helps to employ some cleaners who are reliable and can move fast.
The compensation is a percentage of the rental fee and the exact percentage varies. I usually see the fees in the 10-20% range, but it depends on the competition in the area and the services you provide.
Real Estate Side Hustles That Require A License
Referral fees are an interesting opportunity the real estate industry. There’s one catch: You have to be licensed in order to receive them.
Your real estate license can be in any of the 50 US states (which all have different licensing laws and licensing authorities). Every US state has an agreement with every other US state that allows their licensees to share fees across borders.
When you have a client who needs to buy or sell property in a market where you are not licensed, you can refer that client to another real estate licensee in exchange for a percentage of the commission.
There’s no “standard” commission percentage, but most of the time in my experience it has been between 20% and 30% of the commission earned.
Example: I live in Denver and have a client who is moving to Chicago. I know some great real estate agents in Chicago. When my client asks me who I know in Chicago that could help her find a house there, I call an agent in Chicago and describe the situation. I ask if that agent would pay me 25% of the commission she earns when my client buys a house in Chicago. My agent friend says yes, we sign a simple agreement and I introduce my client to my Chicago agent friend. My client buys a house a few months later and my agent friend sends me a check. Easy as pie.
The rental side of the real estate business is ignored by most real estate agents in the world. The fees are much smaller than they are on the sales side of the business and renters are notorious for not being loyal to any one agent. I don’t blame the renters.
Most landlords are not interested in paying real estate agents to find tenants for them and they don’t list their properties in the MLS. That means the properties that match the renters’ needs the best may not earn the agents any commission.
The people who specialize in finding apartments for renters can do very well. It’s a specific niche and having good inventory is key to the entire process. Once you get good at explaining your value to the apartment hunters, you can require them to pay you a fee for your services. This is an ideal situation because you can show them all the properties on the market, not just the ones where landlords are willing to pay you a fee.
Open house host
Most people in the US and Canada are familiar with open houses. Open houses are marketing techniques for real estate agents who are trying to sell a house and trying to meet new buyers in the market. They are typically held on Saturdays and Sundays (because that’s when most of the potential buyers are not at work and have time to leisurely tour houses).
Just like paperwork, most experienced real estate agents would prefer not to do open houses. They are happy to hire people that want to do that work. If you don’t mind working on the weekends, this is a pretty low-maintenance real estate side hustle.
Part-time real estate agent
Dirty little secret: Many real estate agents you know are part-time agents.
They won’t SAY they’re part-time agents, but they are. Many agents make a respectable annual income and work part-time hours. Or even a fraction of what a normal person would consider “part-time hours.”
With the current real estate agent compensation setup in the US and Canada, agents can work part-time and no one is the wiser. I can’t blame them, though. If you can hit your financial goals with part-time work, why try harder?
The opportunity here is for you is to become a part-time real estate agent yourself! You either work the system or the system works you. Which do you prefer?
In order to become a real estate agent, you’ll need to get licensed. Licensing is state-by-state and the process is simple. This is a list of online real estate schools in your area. All the classes are online and you can move at your own pace, which is nice.
Do you have some real estate side hustle ideas we should add to the list? If so, please leave them in the comments below.