Can Real Estate Be a Side Hustle?

Can Real Estate Be a Side Hustle?

Have you ever thought about getting your real estate license as a side hustle?

I am going to share my journey after I obtained my real estate license in 2009 in Texas. There are plenty of ways to make money in real estate as a side hustle. I am going to focus on using your real estate license to do so. So, can real estate be a side hustle? I am doing it very successfully today, so absolutely! Whether you want to use your license as a part time Agent, buy and sell properties as an investor, or do Broker Price Opinions this can be a lucrative side gig. I will also run numbers as to why it makes sense to list your own home and buy your next home representing yourself as the Agent.

Why real estate can be a side hustle and what are the benefits of doing so.

Having a side hustle is a great way to supplement your income. Using your real estate license as a side hustle is great because it allows for flexibility in scheduling your time. Another benefit is just about everyone buys or sells a house at some point in their life creating opportunity to grow your side business. If you are representing a buyer or seller you have the opportunity to make high commissions. These are a few high level benefits of using your real estate license as a side hustle, but below are some more.

Use your real estate license to do Broker Price Opinions.

Around 2015 I discovered that I could make money doing Broker Price Opinions (BPO) on the side. It is easy to get started by signing up with companies that need Agents to do BPO’s for them. Generally banks or lenders hire companies to do home valuations for them, sometimes exterior and interior, but mainly exterior drive by home valuations. You need a real estate license to legally perform these services. With that, you also need to be a member of the local multiple listing service (MLS) to find comparable homes.

Most BPO companies will require that you find three homes that have sold in the past 6 months that are within 15-18% of the size of the subject home, and within close proximity of the subject home. You look for recent sales with like features of the subject home, and then adjustments are made for variations from the subject home.

What kind of income can you earn from BPO’s? While many companies have a set rate for each service, I have seen $50 for an exterior BPO as the going rate. Each company varies though. I am now only performing BPO’s for one company, Residential Real Estate Review (https://www.rrreview.com). RRR allows you to submit your pricing which I love. I am up to $75 for an exterior BPO and $90 for an interior BPO. They also will ask you to submit a quote for valuations that are a bit longer of a drive. For example, I will submit $150-$165 to do a BPO around 30-40 miles drive one-way.

The volume of BPO’s has slowed down quite a bit for me. I believe it is due to the high rise in home valuations over the past couple of years where they don’t need the valuation considering the fact all home prices are rising at a given percentage annually.

Work for a company like Redfin and get paid to show homes.

About 6 months ago I started working for Redfin part time as an Associate Agent (https://www.redfin.com/careers/real-estate/associate-agents). This was partly due to the above shortage of available BPO’s. As an Associate Agent I get to set my available hours. Considering I have a full time day job, this is a great benefit to me. I work from 5-8PM on some weekday nights, and also from 8AM-6PM on weekends. You can also just close off your schedule for things such as kids sporting events. You also have flexibility in where you choose to work as well. I generally only have a radius of about 20 miles set and as I get closer to the end of the day, I will narrow that radius to keep me closer to the house.

Redfin pays $60 for a one home tour. If I do a two home tour it is $60 for the first home and $20 for the second home. Any additional homes on a tour are $10 each. For example, if I do a four home tour I get $100 ($60+$20+$10+$10). I honestly will block off my calendar if a client adds a second home to a tour. In my opinion it results in diminishing returns on my time to add a home to show for $10 and after the second home is added, I want to circumvent them adding a third. Again, it is this flexibility that I love about it.

There are other companies that have similar business models but I have not tried them out. Open Door I believe pays $25 per hour to show homes. I make around $50 an hour with Redfin so I have not had any interest in them.

You can work part time and get paid commissions.

As previously mentioned, you can also simply find a broker who is willing to take Agents on a part time basis. I did this for years but found it to be a tough grind. When you close on a home with a client you do get paid well, but getting there can be time consuming. Finding clients is always an ongoing challenge as well. Representing a buyer you get paid according to what the Listing Agent and their client agreed to in the Listing Agreement. It is generally 2.5-3% on average which can amount to a healthy payout with today’s home prices. As the Listing Agent, you will negotiate your commission with the sellers. So let’s say it is 6% and then you determine what your split will be with the Buyer’s Agent (as a representative of their Broker).

Get your license when you want to buy or sell a home.

Think about the above payouts that you get as an Agent buying or selling a home. On top of using your license as a side hustle, why not represent yourself in a real estate transaction and either get paid as a Buyer’s Agent, or avoid paying a Listing Agent altogether. Keep in mind as a seller operating as a Listing Agent you would want to list the home with a commission payout to the Buyer’s Agent still. This will provide the greatest pool of buyers.

If you wanted to represent yourself as an investor this also applies as a great way to make commissions on your own business.

How do you become a Real Estate Agent?

Each state has their own specific requirements to becoming a Real Estate Agent. Texas has more stringent requirements than most states as I understand it. In general you need to accomplish the following steps:

You must meet the state pre licensing education requirements. You can do this online or attending classes in person.

Take and pass the state licensing exam.

Officially get your license by registering with the state real estate commission. This usually requires a background check.

Gain sponsorship with a Broker. Real Estate Agents cannot operate independently without sponsorship from a brokerage.

Join the local MLS board as mentioned above.

Concluding thoughts: can real estate be a side hustle?

Based on my prior analysis and explanation of benefits, I think getting your real estate license and making it a side hustle is very possible. I will make around $20-$25K this year on my real estate side hustle this year. Though it will take some time and money to get started, you can easily be up and running in six months. There are also ongoing expenses such as board dues, possible fees from a Broker, and gas expenses using your car. Being in real estate allows you to have the flexibility to work as much or as little as you like. This is what a side hustle should be about.

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