What should you do when you can’t pay your bills on your real estate income alone? How do you keep your businesses afloat? Think about these options.
Are you struggling to make ends meet with your real estate commission checks? You’re not alone. Many agents don’t make it, and a common culprit for failure is a lack of sustainable income.
Commission-only careers require careful financial management. Even so, there might be times when your commission income just simply isn’t enough. New real estate agents are particularly at risk because they don’t yet have client testimonials or any referral business. But veterans can also experience a drought for many different reasons.
So what should you do when you can’t pay your bills on your real estate income alone? How do you keep your businesses afloat? Think about these options:
Commit to spending more time prospecting
This may sound obvious, but spending additional time prospecting is the best place to start. To increase your commission, you need to close more deals. To close more deals, you need more qualified buyers and sellers. And to find those buyers and sellers, you need to spend more time prospecting.
It’s largely a numbers game. The more people you reach, the greater your odds of finding qualified clients, closing the deal and getting paid.
Get creative with your prospecting
Of course, it’s not enough to work hard. You also need to work smart.
With the ever-evolving world of technology, marketing practices are constantly changing. If your current methods of prospecting aren’t working, change them.
Here’s what’s happening today:
- Instagram is in. Snapchat is out.
- Facebook Live videos are gaining in popularity and effectiveness. Twitter is losing.
- Agents are starting to realize that blogging is the secret weapon in increasing their online profiles. If you want search engines to recommend you to the many buyers and sellers searching for real estate agents online, you need to start a real estate agent blog.
Don’t get a part-time job
But what if you’re nervous about your new prospecting strategy taking effect in time? What if you want a backup income just in case your prospecting strategy takes longer than you can afford?
Many agents in this situation think a part-time job is the answer. They think they can work the Starbucks early morning shift, then work real estate the rest of the day.
But this doesn’t work. It never has, and it never will.
Part-time jobs just eat all the time and energy you should be applying to your real estate business. Resist the urge to apply this Band-Aid solution.
Consider adding a relevant income stream to your real estate business
If you want a solid, long-term solution to weathering slow periods in your real estate business, consider adding a relevant (but entirely separate) income stream to your business.
This income stream should serve the same market as your real estate practice, be launched quickly and inexpensively, and be easily managed alongside your real estate business.
Here are just a few ideas for income streams you could add to your business:
1. New home photo shoots
Millennials want to document their lives. They want engagement photos, pregnancy photos and now — new home photos.
If you know your way around a camera and some basic editing software, this can be a great income stream. You could even offer your colleagues a referral fee to pass your contact information along to their new buyers.
2. Property tax appeals services
Property tax appeals are a lucrative, albeit unsexy, way to make money in a down housing market. Taxes should drop when housing values drop, but most counties only lower the taxes when a property tax appeal is filed. All you need to do is run comparables (comps) for a comparative market analysis (CMA) to show the county that the property value is lower than the tax bill indicates.
Because most homeowners don’t have experience in creating CMAs or presenting the results, they’ll gladly pay a professional to handle this for them.
You could charge a flat fee upfront, or you could charge a commission on the tax savings so the clients don’t have to pay anything out of pocket.
3. Property management services
If your office doesn’t already have a property management department, consider adding it. Finding and screening tenants for property owners can be a great way to make quick money.
And because the rental market typically improves when the housing market is in decline, you can use property management to effectively recession-proof your business.
Broker price opinion, BPO for short, are somewhat like appraisals, but they’re brokers’ opinions of a property’s value. Typically, banks hire brokers to do BPOs to better understand the value of short sales or foreclosure properties.
Brandon Doyle suggested, in his Inman article, “5 side hustles for real estate agents looking to stash extra cash,” that if you’re not a broker, just ask your broker if BPOs are something you could do on the side for some extra dough.
5. Teach real estate classes
According to Doyle’s article, teaching real estate is another excellent way for real estate agents to supplement income. Simply google real estate schools that are looking for help. Also, check out Indeed and Monster.com to find real estate companies looking for instructors.
But first, check to see what requirements need to be met with your state to become a real estate instructor.
Doyle also suggests fixing-and-flipping and wholesaling to make extra cash.
Regardless of what you choose — hang in there. It won’t be easy, but with some hard work and perseverance, you can establish, and maintain, a successful real estate career.