We’re going to talk about real estate side hustles, side jobs, things that you can do on the side that can complement your real estate portfolio. I’ve narrowed down the list to three key roles that you will want to consider regarding real estate investing.
Real Estate Broker
The first one that I have on the list is becoming a real estate broker. There’s a rule in real estate that goes like this, and you always make money in the buy. What happens when you become a real estate broker? Every time you have a deal, let’s say, for example, you find a house for $100,000 that you liked, and you want to go ahead and buy it. The seller will pay 5% or 7%, whatever the rate is, to the real estate agent or investor representing the seller.
If you had a real estate broker license, that means you get to get part of that 5%. Let’s say, for example, for simplicity purposes, the real estate agent that represents the seller receives 5% of the deal, but because you happen to be in the picture. You’re also a licensed real estate broker. In this case, you guys will share the profits, three, two. Right from the get-go, you’re already getting 2% just by becoming a real estate broker and representing yourself.
The same thing goes the other way. Let’s say you are a flipper, you finished transforming the house, and it’s ready for the market. You go ahead, and you sell it. As the seller, you will typically have to pay a real estate agent unless you sell the house yourself. If you’re going to sell the house yourself, you might as well just become a real estate broker.
If the roles were reversed, let’s say you are the seller. Rather than paying somebody 5% of the deal, you get to either save or pay yourself, depending on your business structure. A nice hustle to have around. Now you might be wondering, why a broker and not a real estate agent? If you are a broker, you can be independent. By independent, you don’t have to work for anybody. You don’t have to depend on anybody because you will have to work under a broker if you are a real estate agent.
The beauty of this is if you become a real estate broker, you can hire real estate agents. The way the structure is going to work, let’s say you are a real estate broker, and then you hire agents A, B, and C. Every time these people make a sale and make money, they have to pay you a percentage of whatever they earn.
The same thing here, they have to give you money. You are still making money on the buy. You represent yourself in your deals, making money or saving money depending on the situation. These people that work under you will ultimately have to give you a certain fee or a percentage of whatever they earn.
You’re making more money actively in one way because if you take care of your deals, you will be active, but then you will have a team of people giving you income as well in a passive way because you don’t have to go ahead and sell it, they are making the sales for you. That’s one.
Depending on how you want to call it, the next career or side hustle is by becoming a mortgage broker. Before this post, I even created another one on the differences between a lender and a broker.
What can you do as a mortgage broker? First, you want to become a mortgage broker because you get to be independent. You get to work from home, where you can use that time to find other deals.
Let’s say you have a deal come your way, and you’re looking for funding. You can now reach out to multiple lenders in your network because you have hopefully built them throughout the years in this career. Now you get to choose from lender A, B, C, and at the same time, save money on brokerage fees because, on average, these brokers tend to make somewhere between 1% to 3% of the mortgage closing amount.
For example, you have a deal for $1 million. If you were not a broker and have to hire one to help you find funding, a bank that is willing to give you $1 million will have to pay this person on average 3%, that’s $30,000.
Imagine if you were a broker yourself, you’re going to get to save $30,000 right from the get-go from a deal like this. Guess what, if you’re that good, and you can get funding for up to $1 million, sometimes even more, other investors are going to come your way. For every mortgage that you can help them get approved, that’s $30,000 in your pocket. Imagine that you get four people to come your way, automatically becoming $120,000 a month, just by helping other investors close on their mortgages.
Now, you always have to check the local regulations and see whether you need a license or not. I’m going to give you the link down below to check those out if you were to go down this route.
Finally, the last career that I will recommend is that you become an insurance broker. This goes specifically to homeowners insurance, or any real estate insurance, or life insurance. Why would you want to do that? For example, I created an episode a couple of months ago on becoming your private banking. Life insurance will give you the possibility to do something like that.
Let’s say you issue a policy as a life insurance broker. You will be exposed to people who tend to be financially savvy or tend to be investors because they are using this life insurance as a vehicle. That’s for becoming their bank, so they don’t have to go to actual traditional banks to get funding for their investments. You’re improving your network of people because, remember, your network is your network. You also get to make money in the way.
For example, for a life insurance premium policy, you can quickly get something for $700. Those interested in buying a life insurance policy that allows for cash accumulation. If you don’t know what I’m talking about, here’s the link so that you can check out the video.
Going back to the $700. Let’s assume that this person is paying $700, 12 months in a year, that means you’re automatically making $8,400 in premium. Out of those $8,400, you actually get to keep 2% or 8% of this life insurance premium.
A similar concept is applicable for home insurance or real estate insurance, you get to keep a percentage of the annual premium that these investors are paying for the insurance policy, call it live, call at home. You might be wondering, “That’s minimal for what I’m doing.” You have to look at it this way. One, it’s increasing your network. Two, you get passive income out of this as well, because what’s going to happen?
Yes, you get 2% to 8% and pay for the institutions’ premiums to collect from the insurance holder. What happens when the expiration day comes, and then they decide to renew with the same company? Once they renew for another year, let’s say for another $8,400, you’re getting 1% to 2% for a relationship that you already built years ago.
As long as these people keep renewing with the same insurance company, you’re going to continue to receive more and more passive income over the way. That will allow you to accumulate enough capital, so you can go ahead and invest in more real estate deals. Guess what’s going to happen as a side effect of all of this? More and more investors will come your way, you’re going to have them as a client, and you’re also going to have them as a connection.
All of a sudden, when you least expect it, everyone around your network is all of a sudden a real estate investor. What better people to surround yourself with because you’re all like-minded individuals, you get to learn, you get to have fun, and you also get to make money along the way as you’re doing all of this.