There are lucrative opportunities for real estate agents who think outside of the box. Many innovative and enterprising real estate agents managing rental property are already exploiting a possibly golden opportunity. However, buyer beware – work is involved, like anything worth doing.
Real estate agents should consider managing rental property because it can be a great source of side income. If closing deals is your main activity as an agent, your spare time can be spent managing property. Real estate agents managing rental property can earn 7-15% of the rent. At the low-mid end, managing a couple of properties could represent a few hundred extra dollars per month and at the top end, it could mean several thousand.
Agents already have the Contacts
One of the reasons why real estate agents should consider managing rental property is because it is a straightforward progression from closing deals. Agents have existing client bases and contacts. It only takes one contact to hire an agent as their property manager and the agent has a little side business with relatively low overhead.
It can be (Relatively) Easy
The reality is that whilst property management does require some tasks such as finding tenants, fixing leaks, managing payments and carrying our repairs etc., the hours spent on each property is somewhat limited. This means real estate agents managing rental property can still focus on closing deals. A real estate agent can dedicate some of their work hours a month on rental property matters without it distracting from their main activity, provided that their portfolio hasn’t grown in size too much. However, if you have a much larger portfolio, you’re also likely enjoying higher revenue numbers and can possibly bring on an assistant property manager to help with daily tasks.
It Complements Agents’ Existing Business
Real estate is about contacts. Real estate agents should manage rental property if they’re looking to expand their contact network. Every rental client is potentially a client when they come to choose to sell their property or buy another one. A broad client base means more sales and managing a property in a building is way to build contacts throughout the whole building. Managing an apartment or two can get you a reputation within the building and open doors for representing buyers and sellers. The real estate business is all about contacts and the cumulative effect of getting a foot in the door by managing rental property is potentially huge.
Another thing to consider here is that, being an agent, you already have part of the requirements behind you for becoming a licensed property manager. Keep in mind that in many states you must have a broker’s license or property managers license with varying requirements.
Managing Rental property Protects Agents during Property Downturns
Agents should consider managing rental property if they’re looking to protect themselves against property market downturns. Property markets are cyclical and there are inevitable periods when sales are slow. The rental market largely holds up even when property bubbles burst, meaning that real estate agents can have a reliable source of income when their main revenue stream is jeopardized. The savvy few real estate agents who chose to manage rental property saw themselves protected even when the credit crunch hit in 2007 and property prices dove. Diversity is a much underutilized concept in the real estate business.
It could be More Profitable than Closing Deals
Some real estate agents managing rental property find it more lucrative than representing buyers and sellers. Rental property management can be a serious business, and with a decent portfolio of rental clients it can provide more of an income than closing sales. Granted, this isn’t the case for all. It is hard work. Many real estate agents managing rental property may find themselves evolving into property managers and leaving real estate behind altogether – even if you’re committed to real estate, it certainly doesn’t hurt to give yourself that option.
It is Scalable to Suit your Needs
Agents should also consider managing rental property because it can be scalable and flexible to fit around the individual agent. Do you have time only to manage a couple of rental properties? Then no problem. If you have time to manage 10 or so, then you can do that as well. If you want to push the rental property business and scale down the buying and selling, that is an option for you – it is totally within your control so you can find the right balance for your particular situation. If your real estate activity slows down, you can ramp up marketing efforts on the rental side and realign your business efforts according to market conditions.
Ultimately, agents who manage rental property can enjoy extra income, which, depending on the properties and number of clients can be a very serious side business earning many thousands a month. But ultimately, the reason why real estate agents should consider managing rental property is because it complements their existing activity perfectly, and protects them when their primary source of income is threatened by the vagaries of the property market.
The 21st century real estate agent is one who profits from diversification and adds strings to his or her bow. Many real estate agents managing rental property may find themselves with new levels of profitability.