Real Estate Investing Basics

Do You Need a Real Estate License to Flip Houses? Nope. Here’s Why

Expertise: Real Estate Investing Basics, Personal Development, Landlording & Rental Properties, Real Estate News & Commentary, Business Management, Flipping Houses, Real Estate Deal Analysis & Advice, Personal Finance, Real Estate Marketing
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Having a real estate license isn't as necessary as many people think it to be. In fact, look at the market and you'll find thousands of successful real estate investors who don't have a license. But if you search online, nine out of ten sites will tell you to take that test.

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They're wrong—especially for investors. Do you need a real estate license to flip houses? What about wholesale, or for buy-and-hold investing? Absolutely not. If you haven't applied for a license or are wondering whether it's really that important, here are a few reasons to look the other way.

Related: Quit Your Day Job and Find Financial Freedom: Here’s How to Become a Real Estate Investor (Full-Time!)

Real Estate Is a Full-Time Job

Do you want to be an investor? Or do you want to be a real estate agent? Because if you get a real estate license, you pretty much have a job—selling other people's properties. That will be all you do. You'll prospect for someone who wants to list their house. You'll list their house. Then you'll work with buyers and lenders to sell their house—and then you'll make a commission.

You'll also have to abide by someone else's rules and regulations—most likely, the broker. If you want to be a real estate agent, none of these restrictions cause trouble. But savvy investors will likely find them cumbersome.

Brokerage Restrictions

Just because you have a real estate license doesn’t mean you can simply do every real estate deal by yourself. Many states require you to work under a brokerage firm or broker until you earn your brokerage license.

Unlicensed, you can buy property from any brokerage. Things aren’t so simple with a license: You must inform your broker before purchase.

Laws and regulations exist, and they stink. You aren’t free to conduct business in the way that you want to conduct business. There will be restrictions to what you can and cannot do.

On top of that, every brokerage office has its own set of rules. Some require training hours; others mandate calling potential clients or holding open houses. Brokers also charge real estate agents a fee, depending on their organization and setup.

Commissions Savings Aren’t that Great

People who are focused on investing—serious investors like fix-and-flippers with the goal to flip 10 or 12 houses a year or rental investors who are trying to have 10, 20, or 50 rentals—might think they'd save so much on commissions if only they had their license. That's not true.

Let’s look at a standard six percent commission. In a transaction, three percent of the commission is for the agent who represents the seller and three percent is for the agent who represents the buyer. So when you calculate how much you might save as an investor, you only save on one side of the transaction. Nothing to sniff at, sure—but does it really balance the other expenses?

Related: The Investor’s Guide to the BRRRR Method: Buy, Rehab, Rent, Refinance, and Repeat

Disclosure Problems

A real estate license comes with added responsibilities. First, you’ll need to disclose to your buyers or sellers that you are a licensed agent—and many investor real estate agents have found, to their dismay, that this negatively impacts their business and personal portfolio growth.

Licensing Isn’t Easy

You can’t just call the state licensing commission and have them add you to a list. The process is lengthy and time consuming. In fact, if we break it down, you would need to put in about a 100 hours of coursework and plenty of studying before you take the exam—which only qualifies you for a license. Once you are pre-licensed, your brokerage may request you take additional courses, too.

Expensive Licensing Process

The process requires a lot of money, too—from prep courses to exam fees. Depending on the state, you’ll spend four weeks to three months listening to someone preach about how you should be a good salesman rather than teaching you anything about real estate. You’re going to spend about three months—and probably around $1,500 to $2,000—to get your real estate license.

And once you're licensed, the brokerage will require more of your time and money. Additional costs also include license maintenance fees, board memberships, multiple listing service (MLS) fees and subscriptions, ongoing training, errors and omissions insurance, internet data exchange (IDX) subscriptions, and local and real estate agent board fees.

Some may say the money spent is worth it because you build your agent network—but that's just an excuse. Investors automatically mingle. The best return on investment I've ever had is buying folks a $3 coffee.

…And Even More Surprise Costs

Now that you’re the real estate agent, all the things your agent once covered, like marketing and listing your house, are your responsibility. Now you have to pay for lockboxes (the centralized ones are about $300), signs, professional photography, and staging.

See? There’s no easy, “Oh, I’m going to keep all this commission!”

If your goal is to be a flipper or have a lot of rentals, being an agent will take away time you could otherwise spend concentrating on your investing business.

And there are so many administrative tasks in real estate deals. Most agents hire a transaction manager or a transaction coordinator to help, which costs even more money. Yes, you can do them yourself, but do you want to be stuck doing a $10 per hour job when you really need to be focused on finding your next rehab deal?

Paperwork Overload

Ask licensed real estate agents, and they’ll tell you all about dedicating half the week to paperwork. It’s frustrating! As a licensed real estate agent, you write your own offers and submit forms to lawyers, brokers, and agents—and don’t forget the MLS.

Yes, you can hire assistants—but that’s another cost. Plus, you may not be entirely pleased with the results because they aren’t under your complete control.

MLS Access Isn’t All That

Ask any licensed investor, and they’ll likely say MLS access is the biggest payoff. But remember: Simply having a real estate license won’t suffice. You also need to join the local board and a brokerage and pay any associated fees for access. Yes, the database holds a substantial amount of information—but you can find it from real estate search engines too, minus the fee. Plus, many deals on the MLS are expensive or expired.

So, Should I Get My Real Estate License?

A real estate license offers some benefits. There are good listings on the MLS, and it may help you form better relationships with other agents. You even can take commissions on deals. Most importantly, you enjoy the status of being a "licensed real estate agent," which not many have. You've worked hard for that title!
However, having a license doesn’t qualify you as a real estate professional for the IRS. It is your work—the quality and the number of hours—that help you gain that status.

When you look at the most successful real estate investors, you’ll find an interesting trend: Most aren’t licensed. Their single-minded focus on the work they do well—investing in real estate—drives their success.

Are you planning to commit to real estate as a career? What do you actually want from your license: financial freedom or a sales job? Because time is money. You want to be in your office hammering out phone calls, emails, and buying and selling properties to grow your real estate empire—not working for someone else and making them richer.

I know this is a controversial one, and I’m looking forward to the heat.

Bring it on below! I’ll take it, and I’ll give it back.

Engelo Rumora, a.k.a."the Real Estate Dingo," quit school at the age of 14 and played professional soccer at the age of 18. From there, he began to invest in real estate. He now owns real estate al...
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    Joshua Saunders Real Estate Agent from Chesapeake, VA
    Replied over 1 year ago
    I don’t agree. It did cost me $1500-2000 to get my license, but I did the classes completely online. I took the licensing test and passed. I joined a brokerage that doesn’t have a great split, but they have an entire team in place to do whatever I need. I pay no admin fees, tech fees, desk fees, etc. And as far as Post-License Education and Continuing Education, Moseley Real Estate schools offers both of those online for free, so I’m not sure where the $2000 cost for continuing education came from. I’m also just starting out in investing. I see being an agent as a great way to make some side income to invest myself while also helping and getting to know other investors. Investors that I could potentially do deals with in the future. Just my two cents.
    Paul Ezan Accountant from Houston, TX
    Replied over 1 year ago
    Loved the article! thanks a lot for your insight, it will speak to alike minds and won’t to others. I’m starting my journey and was thinking about getting a real estate license, because I do not really know where to start and what to do. At least with your article, I’m sure of what I do not want. Thanks for sharing
    Engelo Rumora Specialist from Toledo, OH
    Replied over 1 year ago
    Thanks for your comment and kind words Paul. I wish you much success with your endeavors.
    Engelo Rumora Specialist from Toledo, OH
    Replied over 1 year ago
    Thanks for your comment and kind words Paul. I wish you much success with your endeavors.
    Tess Elkins from Highlands, New Jersey
    Replied over 1 year ago
    Many of the points of this article I’ve found to be untrue. 1. Re: “The Job Problem”, in what state or situation are you required to sell other people’s properties? You aren’t. I’ve had my license for two years (in NJ) and haven’t done any other business but my own transactions. If there are other states or circumstances that demand you do the business of buying and selling for other people I’d like to hear about them. My agency offers classes but no one is required to attend. And I’m certainly not glued to my phone, except for when I am fielding rental appointments. Even then they can leave me a message. 2. “Trouble with the Law” – yes, it’s a highly regulated industry. I was previously in the retail brokerage sector and it’s also highly regulated. That shouldn’t scare anyone away. I found that it’s much better to be educated, even if you don’t want to get your license. It’s essential to know about any industry you’re getting into, including all the regulations. That’s one of the reasons I got my license – if I was going to become involved in a new industry – licensed or not – I wanted to know all about the laws and regulations. The course that I took was not about sales at all, but about the industry. Yes you can learn these things without a license. I found that I learned way more than I could (or would have thought to) dig up on my own. Huge advantage IMO. 3. “It’s Costly” – I’m currently recalculating my costs ($99 for continuing education courses every 2 years, Supra lockbox fees, local RE association fees, etc.) vs the commissions I’ve earned buying my own properties, and may decide whether or not to continue my license based on that. I was advised early on to find a small firm that doesn’t charge desk fees, and the gazillion other fees that the larger agencies charge. The small firm I chose has an 85/15 split and leaves me alone for the most part, though they can be a huge pain at times and aren’t very helpful when I do need information. As an investor I’m not their ideal agent. But I don’t pay anywhere near the amount this article describes. I’m not required to go to conferences, seminars, lectures, etc. Anyone who is needs to look for another firm. Bottom line – if you want to be more educated and informed about the industry, and have more control over the properties you buy without having to deal with a buyer’s agent (who may or may not show up or is otherwise unprofessional), then consider becoming licensed. It’s certainly not essential. But this article, in my opinion, should not sway anyone as most of the statements, in my experience, are way off base. It’s unfortunate that some will read this and make their decision without further, much needed, research.
    Joe Scaparra Investor from Austin, TX
    Replied over 1 year ago
    Listen up people. The author is talking to the bell curve, not the ends of the curve. Yes for most people getting a license they buy books, they attend courses in class or online, they invest hours of their time getting the license. Nothing wrong with that but for most, there is a cost of more than $99. If you’re not interested in working with clients to make a living in real estate then I do see the authors point of view. Yeah, there might be slightly more access to the MLS if your licensed, but big deal. I can get most of what I need as an MLS substitute using Zillow, Realtor.com, Redfin, and Hotpads.com. And, with so many realtors chasing the almight $$$ there are MANY who will give you there login to the MLS to do your own search. Lets keep it real, ok. The real estate career is one of the most fractured simply because of the LOW barrier of entry into the field. Although there are many regulations, a LOT OF part time realtors don’t know heads from tails. They give the industry a bad name. s I absolutely don’t see how a real estate license gets you an advantage buying property. I can get the price of a listing as cheap as you can even with your 3% paid back to you. I can also get my same like offer selected over a licensed realtor most every time. So I don’t see where your advantage lies in buying. I can approach someone as a pure investor to buy their non-MLS property. I can work my best deal in my interest only. However, in Texas, if I’m a licensed realtor, I have to disclose that to the potential seller. Unless I get something in writing by the seller that clearly states that I am not working in his best interest, I open myself up to a lawsuit simply because I’m licensed. Later the selling party realizes he sold the property too low, he might find some angle to come back on a licensed real estate agent, not so much on a pure investor. Lastly, the author’s title “3 Reasons You Should Forgo Your Real Estate License”, should only expect the reader to see supporting evidence of the title. I am sure there easily could be an article titled “3 Reasons You Should Get Your Real Estate License”. I own 19 rental units consisting of duplexes and one four-plex. I manage another 6 units for my kids. I consider myself an expert in duplex investing in Central Texas. I don’t need a realtor license to get a better deal than someone who is licensed. Sorry, but if I’m willing to pay what a licensed real estate investor is paying on an MLS property I will get the deal over the agent simply because money talks. I can CREAT the conflict of interest that works in my favor and because I’m not licensed there is no legal issue with me.
    Robert Haney Investor from Sugar Land, TX
    Replied 3 months ago
    Well said. I don't want a license due to the potential additional liabilities you mentioned. Yes, its easy to get access to the MLS which is very helpful for running comps for buying and selling. I'm on house 66 in 5 years and have not bought a single one from the MLS or using an agent. I flat list the properties to sell to avoid the 3% listing fee which saves more than being a real estate agent! That's right. 98% of the agents reading this pay more to list than me! They NEVER teach that in the agent's courses. Learning about "the industry" from real estate training is surprising to hear from someone above. I've learned a ton from investors, but almost nothing from agents. If their book training was so valuable it would seem it would be the opposite. I've spent more time helping agents than vice-versa, and I've just been at this for 5 years.
    Engelo Rumora Specialist from Toledo, OH
    Replied over 1 year ago
    Thanks for your detailed comment Joe and much agreed. Glad that you got the point. Much success.
    Joe Scaparra Investor from Austin, TX
    Replied over 1 year ago
    Listen up people. The author is talking to the bell curve, not the ends of the curve. Yes for most people getting a license they buy books, they attend courses in class or online, they invest hours of their time getting the license. Nothing wrong with that but for most, there is a cost of more than $99. If you’re not interested in working with clients to make a living in real estate then I do see the authors point of view. Yeah, there might be slightly more access to the MLS if your licensed, but big deal. I can get most of what I need as an MLS substitute using Zillow, Realtor.com, Redfin, and Hotpads.com. And, with so many realtors chasing the almight $$$ there are MANY who will give you there login to the MLS to do your own search. Lets keep it real, ok. The real estate career is one of the most fractured simply because of the LOW barrier of entry into the field. Although there are many regulations, a LOT OF part time realtors don’t know heads from tails. They give the industry a bad name. s I absolutely don’t see how a real estate license gets you an advantage buying property. I can get the price of a listing as cheap as you can even with your 3% paid back to you. I can also get my same like offer selected over a licensed realtor most every time. So I don’t see where your advantage lies in buying. I can approach someone as a pure investor to buy their non-MLS property. I can work my best deal in my interest only. However, in Texas, if I’m a licensed realtor, I have to disclose that to the potential seller. Unless I get something in writing by the seller that clearly states that I am not working in his best interest, I open myself up to a lawsuit simply because I’m licensed. Later the selling party realizes he sold the property too low, he might find some angle to come back on a licensed real estate agent, not so much on a pure investor. Lastly, the author’s title “3 Reasons You Should Forgo Your Real Estate License”, should only expect the reader to see supporting evidence of the title. I am sure there easily could be an article titled “3 Reasons You Should Get Your Real Estate License”. I own 19 rental units consisting of duplexes and one four-plex. I manage another 6 units for my kids. I consider myself an expert in duplex investing in Central Texas. I don’t need a realtor license to get a better deal than someone who is licensed. Sorry, but if I’m willing to pay what a licensed real estate investor is paying on an MLS property I will get the deal over the agent simply because money talks. I can CREAT the conflict of interest that works in my favor and because I’m not licensed there is no legal issue with me.
    Tess Elkins from Highlands, New Jersey
    Replied over 1 year ago
    From the OP: “Now, one thing that I mentioned is that if you get a real estate license, you pretty much have a job. Your job will consist of selling other people’s properties. That will be all you do.” I VERY much question this point., and whether others “got it” or not.
    Chase Lee
    Replied 3 months ago
    The overall opinion of this article is fine - becoming licensed isn't for everyone. However I find issue with supporting statements such as, "...selling other people's properties. That will be all you do." That is just false. There are plenty of brokerages that are happy to let you hang your license (for a monthly fee, commission split, or both) and leave you be. That's one aspect of a career in real estate that is alluring to many people - you can work as much or as little as you want or need to. The idea that if you get a license you are going to be beholden to the traditional model of a salesperson is preposterous.
    Amanda Gant from Washington, DC
    Replied 3 months ago
    Agree, Chase. I have found a good time being an agent. I was first (and still am) an investor. I like getting the 3% PLUS 2% sellers assistance that I negotiate into every deal. Makes it easier for me to dish out the 20% on my investment properties. I also like being able to put any of my units on the market at anytime without paying anything -- just to test the waters. That's how I sold my first property for a 50% profit after owning it for 3 years. And I'll be doing it again. I also like making some side income helping tenants find places, and reconnecting with my friends from college and grad school to help them find houses. But, homes are a passion of mine. I just found out about it late in life. I think if one doesn't WANT to be a realtor, they don't need to do it. But, I have found it very beneficial, and I love it. I can always chat with my favorite Realtors who I meet, and learn from them. I'm sure it can be cut-throat, but I don't focus on that, and I've found a lot of other realtors who are good people. So, it's been a good community for me.
    Yolanda Mobley
    Replied 3 months ago
    There is also the cost of continuing education classes, which (at least here in PA) are required each renewal cycle.
    Account Closed
    Replied about 2 months ago
    The premise of the article is that a real estate license isn't required to become a successful investor. And that is 100% correct. I've seen a lot of investors go to real estate school or take courses to become licensed because they thought it was necessary for success as an investor when it's not. Licensure is for people interested in a career in brokerage or property management - not investing, per se. A brokerage career can be a very expensive business. The author is simply trying to save folks the added time and expense.