Real estate agents often believe working with rental properties is not worth their time or effort. Those who appreciate working with rentals know they are a great way to fill income gaps between buy/sell transactions. Rental transactions close much faster, often within a week or two. The commission is slower, but with the right tools and relationships with renters and landlords, real estate agents can generate a steady income.
In the United States, 34% of the population, or 45,991,000 people, live in rental properties. Many renters wait until well into their 30s before they can or want to commit to purchasing a home.
Rental transactions can generate a steady income for agents
In 2022, about 4.8 million property sales took place in the U.S., according to the National Association of Realtors® (NAR). Divided by the 1.6 million agents and brokers registered with the organization, it would mean there are not too many buy/sell opportunities.
Even more so, we see a market slowdown in many regions in the U.S., with more inventory sitting for longer. According to Realtor.com®, the time on the market in October 2022 was 51 days. This is an increase of six days compared to September, showing a gradual slowdown in the buy/sell market.
On the other hand, the rental market has grown over the past couple of years in response to the shrinking inventory of available homes on the market, the record high asking prices, and stiff competition driving prices even higher.
This slowdown on the buy/sell side and increase on the rental side is the perfect formula for agents to earn a steady income by helping renters and landlords. Successfully representing and serving niche groups increases your options for clients.
How real estate agents can work with renters
In large cities like San Francisco, New York, and Chicago, becoming a rental real estate agent to list properties for landlords can be challenging due to the competition. However, there is usually no shortage of renters looking for their next home.
The typical rental commission is one month’s rent or a percentage. This is split with the broker. Agents can often do the work necessary to close a rental deal within a week. If they build up a renter clientele, they can close several rental transactions monthly.
Also, when you represent a renter, you can contact them and help them become buyers when they are ready. Renters not looking to buy can also be a source of referrals.
Many renters need help when it comes to renting a property. Agents can help them:
- Navigate competitive areas - When renting from landlords, renters often need a rental real estate agent to help find the right rental property. This is especially true in large cities like Los Angeles, Chicago, and San Francisco, where there is a lot of competition for rentals. Landlords in these areas often hire agents to fill their properties. For clients, finding a real estate agent who represents a landlord or can help navigate competitive areas is the key to finding a rental that fits their needs and wants.
- Finding apartments within their budget - Renters can often save hundreds of dollars per month by renting from an individual landlord rather than a large leasing company. Still, they might need a well-connected agent to find these properties. Agents know the best places to start looking. In many ways, searching for small rental properties is more like looking for a home to buy.
- Reviewing leases to ensure they get the best deal - When individual landlords rent their properties, agents can sometimes convince them to negotiate lease terms that benefit the renter. They could get the landlord to accept a larger security deposit if a renter has questionable credit, help get an agreement to allow pets for a fee, or possibly reduce up-front security deposits. They might even be able to negotiate month-to-month rent when the one-year lease has expired.
- Identifying rent-controlled units - According to the National Multifamily Housing Council, there are only seven states with rent-controlled properties: Oregon, Washington D.C, California, Maine, New Jersey, Maryland, and New York. Real estate agents know which properties are rent-controlled and which are not. They can help renters identify these properties and explain the rent-control caps for the area.
How real estate agents can work with landlords
Property management is full-time, especially if you own or manage five to 20 rental units. To facilitate real estate transactions involving the securing and enforcing of a lease, the property manager must own the property themselves or hold a real estate license. This is excellent news for real estate agents because they can help those struggling to manage due to time constraints, not having a license, or wanting to focus on growing their real estate business.
Real estate agents can work with landlords by using their:
- Marketing expertise - Agents have access to the proper tools for listing the property for rent and how to market it to gain attention from renters. Agents have enough practice with the buy/sell side that translates directly into leasing rentals.
- Existing networks - Real estate agents are in the business of creating relationships. Every agent has a network. When landlords have an agent on their team, they are connected to all the other agents in that brokerage who know about potential tenants, making filling a vacancy easier.
- Knowledge of competitive pricing - Rental rates can be challenging to keep up with, but if you’re familiar with the area and have the right tools, rent estimates are easy. Agents can quickly and effectively price rentals to be competitive and gain attention.
- Showing experience - Agents are experts at showing properties. They know how to lead showings so potential tenants see your property the best way possible.
- Experience facilitating paperwork - Rental paperwork is a headache for landlords. Agents will ensure the rental application covers all the landlord’s and tenant’s rights and responsibilities and does not violate any laws.
Real estate agents have access to proptech to help generate a steady income
A solid property technology (proptech) platform allows agents to handle any tasks a landlord or property manager wants. It also helps them grow the rental side of their business into a legitimate division that generates a steady income. With the right proptech platform, agents can:
- List rental properties.
- Advertise their services.
- Facilitate the payment of rent, security deposits, and other fees.
- Provide a secure online link to handle renters’ sensitive personal information as part of the application and tenant screening process.
Proptech solutions, like the Real Estate Agent tools from RentSpree, provide agents with a complete set of easy-to-use digital property and tenant management tools that simplify working with rentals. An additional benefit provided by RentSpree is hands-on training, which gives agents the necessary knowledge to work with rentals safely, effectively, and profitably.
To learn more about our research please check out our whitepaper The Untapped Money Potential of the Rental Market.
Work smarter with RentSpree’s real estate agent solutions; we offer robust tools to power your rental business.