Is having a real estate license beneficial before investing?
Investor · Fredericksburg, VA · Member since 2022 · 14 posts · 8 votes
Is having a real estate license beneficial before investing?
Most Popular Reply
Real Estate Agent · Member since 2018 · 459 posts · 414 votes
3yHey @Niecy Smith, good question. I think it depends...
I've been investing for a few years now. I got my license last year. It has helped me tremendously. I was working logistics for an Agricultural equipment company prior to working full time as an agent and I was always frustrated because a lot of my time was being allocated to work and my other responsibilities. I quit (I had a side business) and got my license and now I am working in real estate every day. Sure, I am spending time helping people find deals and new homes or selling their homes, but I have control of that in my schedule. I also have control of when I want to focus on investing. And I get to network and connect with a lot more people that are in the industry. That is something I could never get with my job.
The only downside I have been going through since being licensed is that I have to wait 2 years of tax returns to be lendable again through traditional financing. Have I bought since then? Yes, but through creative financing. I want to buy a new owner-occupied home. I've yet to close on a creative deal through owner financing. So I have to wait 1 more year to get conventional owner-occupied financing.
If I were to go back, I would have:
1. Set up a HELOC on my current residence before quitting. Then I'd be able to access a lot more equity to make bigger moves.
2. Worked as an agent on the side before quitting my job. You will not get many deals done but there's a big learning curve when you start (understanding laws, contracts, building your network, etc.) that you can leverage while working and receiving consistent income and then moving full time when you build up a reserve and build up your network.
I don't think getting your license takes away from investing unless you see yourself as an agent. I see myself as an investor with a license and I am doing both.
I hope that helps!
32 Replies
- Investor · Denver, CO · Member since 2022 · 184 posts · 78 votes3y
If you plan on being a real estate agent then yes. If your goal is to invest in real estate I personally don't think it's a good use of time to get a license unless you plan on brokering real estate transactions.
- Real Estate Agent · Member since 2018 · 459 posts · 414 votes3y
Hey @Niecy Smith, good question. I think it depends...
I've been investing for a few years now. I got my license last year. It has helped me tremendously. I was working logistics for an Agricultural equipment company prior to working full time as an agent and I was always frustrated because a lot of my time was being allocated to work and my other responsibilities. I quit (I had a side business) and got my license and now I am working in real estate every day. Sure, I am spending time helping people find deals and new homes or selling their homes, but I have control of that in my schedule. I also have control of when I want to focus on investing. And I get to network and connect with a lot more people that are in the industry. That is something I could never get with my job.
The only downside I have been going through since being licensed is that I have to wait 2 years of tax returns to be lendable again through traditional financing. Have I bought since then? Yes, but through creative financing. I want to buy a new owner-occupied home. I've yet to close on a creative deal through owner financing. So I have to wait 1 more year to get conventional owner-occupied financing.
If I were to go back, I would have:
1. Set up a HELOC on my current residence before quitting. Then I'd be able to access a lot more equity to make bigger moves.
2. Worked as an agent on the side before quitting my job. You will not get many deals done but there's a big learning curve when you start (understanding laws, contracts, building your network, etc.) that you can leverage while working and receiving consistent income and then moving full time when you build up a reserve and build up your network.
I don't think getting your license takes away from investing unless you see yourself as an agent. I see myself as an investor with a license and I am doing both.
I hope that helps!
- Real Estate Agent · Seattle, WA · Member since 2017 · 150 posts · 80 votes3y
If you plan on buying or selling properties for yourself in the future then the commission you save over the long run would make it worth it. I know many folks that just have a license so they can do their own transactions. However, getting a real estate license is not required to be an investor.
- Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes3y
I hold my license and am an investor first. The benefits outweigh the cons in my opinion.
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes3y
Quote from @Niecy Smith:
It absolutely depends on you. How smart are you? Will you put in the hard work to make it successful? Around 85% of all agents quit within two years because they realize it's not worth the effort.
If you represent yourself as an investor, you lose the objectivity and experience of a REALTOR. In other words, you'll be hiring an amateur that is emotionally involved in the transaction instead of an experienced REALTOR that knows contracts, knows laws, knows the market, has negotiating skills, can provide a second set of eyes, and is completely objective to the transaction.
The DIY Landlord Book4.7247 Reviews - Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes3y
You are in Virginia which is particularly a pain in the *** to be an agent. Prelicensing class....and post licensing education of another 30 hours...plus 24 hours CE per cycle. So even after you get your license in that 1st year you need tk do 54 more hours of classes.
District Invest Group545 Reviews - Investor · Fredericksburg, VA · Member since 2022 · 14 posts · 8 votes3y
@Lawrence Potts
Thank you for perspective from this and sharing your journey. I believe that the experience as an agent would provide many opportunities for networking and understanding in the industry. This I hope will make me a better investor. If I could go back in time, I would have made my first home a rental and used the equity from it to invest in another. You live and learn.
- Investor · Fredericksburg, VA · Member since 2022 · 14 posts · 8 votes3y
@Dennis Nguyen
Thanks Dennis for that information. From my understanding, once you receive your license you have to be assigned to a brokerage correct?
- Investor · Fredericksburg, VA · Member since 2022 · 14 posts · 8 votes3y
@Nathan Gesner
Hi Nathan,
Thank you for your response. The goal is to become well versed in the laws, contracts, negotiations etc, which I know I can handle. I don't think emotion should play a role in investing, since I am not buying a personal property. Coming from an investigative background, I have experience with dealing with a wide variety of people and building relationships. Hopefully the experience gained from this will help become a great realtor and even better investor.
- Realtor · Ogden, UT · Member since 2019 · 338 posts · 415 votes3y
Quote from @Niecy Smith:
@Lawrence Potts
Thank you for perspective from this and sharing your journey. I believe that the experience as an agent would provide many opportunities for networking and understanding in the industry. This I hope will make me a better investor. If I could go back in time, I would have made my first home a rental and used the equity from it to invest in another. You live and learn.
Hey Niece,
I fully agree with what you said here. My work as an investor before getting my license was fine but as soon as I got my license I saw my portfolio and skillset dramatically improve. I'm a big fan of getting your license and would encourage you to do so!
Good luck!
- 3yRick BassettBusiness MemberProperty Manager · Greater New Haven, CT · Member since 2010 · 377 posts · 434 votes
I was an active investor for over 20 years before getting my RE license; I thought I knew it all....wrong! I realized how much I didn't know about RE law while going through the training for the RE license and then my RE broker's license.
Also, I was using buyer's agents to put in offers for me on properties, which was often a slow process and always kept me 1 step away from direct negotiations with the seller's agent. I could've closed many more deals without a buyer's agent involved.
Besides the commissions, as others have mentioned, the other big benefit of being an agent is being able to see potential investment properties quicker, very often the day that they come on the market, as there is no longer waiting for a buyer's agent to arrange for a showing.
Bassett Property Management5109 Reviews - Property Manager · Leominster, MA · Member since 2022 · 103 posts · 50 votes3y
@Niecy Smith. Practicing is valuable, just having the license is meh...
@Niecy Smith
That’s a loaded question. But in my opinion, no. In fact a license can limit an investor, and most investors with licenses know this.
As an Investor, you have more freedom, and flexibility in your offer strategy, especially if you are flipping homes on a regular basis.
Meaning, in Las Vegas, NV if I want to purchase a home from someone at wholesale; and let's say that property has an ARV of $325K, but I want to offer $200K, that would seem fair to most. But if I know I can actually list and sell that property on the MLS in As-is condition for $250K I could run into problems later. Possibly even a lawsuit, major fine or loss of license. Why? Because it's implied that you are the expert, and may have used your expertise to take advantage of someone who didn't know better.
Simply because when your “Licensed” your held to a code of Ethics that Investors are not subject to.
On the other hand, Agents have an advantage, because they typically have more resources and additional streams of income at their fingertips than Investors.
But if I had to do it all over again, I would have focused primarily on investing.
Hope this helps.
- Real Estate Agent · Seattle, WA · Member since 2017 · 150 posts · 80 votes3y
Quote from @Niecy Smith:
@Dennis Nguyen
Thanks Dennis for that information. From my understanding, once you receive your license you have to be assigned to a brokerage correct?
Yes, you would have to "hang" your license at another brokerage. Although it may vary state by state but at least in Washington you do.
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes3y
You have so many things to learn, focus on investing and put your effort into finding a good agent, who also invests and can show you the ropes.
Leverage other peoples experience, because you don't have it (yet) and experience is expensive to come by.
The skillsets to invest and to sell real estate are quite different. The more you know the better, but where do you draw the line? Plumber's license?
- Real Estate Agent · Arlington · Member since 2016 · 162 posts · 100 votes3y
@Niecy Smith - here's my take as a Virginia agent who is becoming a broker:
- First, only you know what is best for you and your future. Please take anyone's input with a grain of salt and filter it through your own goals. Consider the experience of others and their perspectives but make your own decisions after you've researched thoroughly.
- For me, becoming an agent was a unique experience. I actually took the RE Principles course a long time ago (2006) as a junior in college. I had zero interest in it (or anything related to school - I partied...a lot). I only took it because it was a credit I needed for my degree. Fast-forward to 2014 and I realized I wanted to get my license and start investing. As I researched the requirements, I realized I had a huge amount of the coursework completed. I took the exam (failed it the first time!) and got my license.
- The coursework teaches you some but I'd say it's lost in the process. Your goal is really to get the license and the education really begins once you hang your license at a reputable broker and put the elbow grease into creating a line of work for yourself. Your teacher, your sensei, your mentor and guide in the practice should be your broker. I'd say that is the most important part of the licensing process. Following someone's lead who has a solid local reputation, a lengthy career, and spotless ethical record is a huge win. There's a good number of solid brokers in the F'Burg/Spotsy area (where I went to high school! Go Cougars!) so you should be able to identify them. Putting some energy into identifying particular brokers with investing experience can be a major win for you.
- Does having a license help with investing? I can certainly. Having MLS access, the ability to represent yourself and gain a portion of the deal as a commission, and a general knowledge of the buying/selling process are all advantages. But caveat emptor - buyer beware - there is a big cost to doing this: in addition to the licensing process (which @Russell Brazil is right - it's a huge pain in the booty!), you'll need to pay a bajillion different membership fees (NAR dues, MLS dues, Fredericksburg Area Association of Realtors dues, DPOR licensing fees, remote entry fees, all in addition to having a website and marketing costs you'll incur). It's a big, big commitment and the cost doesn't get communicated enough to aspiring agents - which is why so many drop it when they realize it's not worth it to them.
- Weigh these costs in relation to what you could spend in terms of time learning the flipping process from people who have good track records. Maybe that means spending a few hundred dollars on a bootcamp to get acquainted with the best practices of how to get involved in flipping or asking someone in the area if you can shadow them for a few months in exchange for you performing certain tasks for free. Avoid Avoid Avoid anyone who tries to sell you bootcamps that exceed the several thousand dollar realm. Maybe there are some out there, but I have not met a single person who has pinned the success of their career on a $15,000 bootcamp.
- Investor · Central Virginia · Member since 2020 · 394 posts · 253 votes3y
My take is it is only worth it if you are using it as a job. Investing should be passive income not another job. @Dion McNeeley has an excellent video on this that you could watch on YouTube. However, you can be an excellent investor and real estate agent. You can learn from @Beth Traverso exactly how to do this. She has a playlist on One Rental at a Time on YouTube. Good luck!
- 3yJacob SloopBusiness MemberRental Property Investor · Virginia Beach, VA · Member since 2020 · 274 posts · 111 votes
I have had a positive experience. I have saved money on commissions for the deals I buy, it was a great education going through the classes, I can always help others buy deals and bring in some extra income and expand my network
- New to Real Estate · DFW · Member since 2022 · 2 posts · 1 vote3yHello Lawrence, I am curious why a new agent can't get traditional financing for 2 years? I am working on my license and looking for my first investment property (will use someone already licensed for the first one or two). I'm actually closing on a HELOC next week, so just in time I guess.
Quote from @Lawrence Potts:
Hey @Niecy Smith, good question. I think it depends...
I've been investing for a few years now. I got my license last year. It has helped me tremendously. I was working logistics for an Agricultural equipment company prior to working full time as an agent and I was always frustrated because a lot of my time was being allocated to work and my other responsibilities. I quit (I had a side business) and got my license and now I am working in real estate every day. Sure, I am spending time helping people find deals and new homes or selling their homes, but I have control of that in my schedule. I also have control of when I want to focus on investing. And I get to network and connect with a lot more people that are in the industry. That is something I could never get with my job.
The only downside I have been going through since being licensed is that I have to wait 2 years of tax returns to be lendable again through traditional financing. Have I bought since then? Yes, but through creative financing. I want to buy a new owner-occupied home. I've yet to close on a creative deal through owner financing. So I have to wait 1 more year to get conventional owner-occupied financing.
If I were to go back, I would have:
1. Set up a HELOC on my current residence before quitting. Then I'd be able to access a lot more equity to make bigger moves.
2. Worked as an agent on the side before quitting my job. You will not get many deals done but there's a big learning curve when you start (understanding laws, contracts, building your network, etc.) that you can leverage while working and receiving consistent income and then moving full time when you build up a reserve and build up your network.
I don't think getting your license takes away from investing unless you see yourself as an agent. I see myself as an investor with a license and I am doing both.
I hope that helps!
Susanna Kilgore
DFW, Texas - 3yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Susanna Kilgore:
Hello Lawrence, I am curious why a new agent can't get traditional financing for 2 years? I am working on my license and looking for my first investment property (will use someone already licensed for the first one or two). I'm actually closing on a HELOC next week, so just in time I guess.Quote from @Lawrence Potts:
Hey @Niecy Smith, good question. I think it depends...
I've been investing for a few years now. I got my license last year. It has helped me tremendously. I was working logistics for an Agricultural equipment company prior to working full time as an agent and I was always frustrated because a lot of my time was being allocated to work and my other responsibilities. I quit (I had a side business) and got my license and now I am working in real estate every day. Sure, I am spending time helping people find deals and new homes or selling their homes, but I have control of that in my schedule. I also have control of when I want to focus on investing. And I get to network and connect with a lot more people that are in the industry. That is something I could never get with my job.
The only downside I have been going through since being licensed is that I have to wait 2 years of tax returns to be lendable again through traditional financing. Have I bought since then? Yes, but through creative financing. I want to buy a new owner-occupied home. I've yet to close on a creative deal through owner financing. So I have to wait 1 more year to get conventional owner-occupied financing.
If I were to go back, I would have:
1. Set up a HELOC on my current residence before quitting. Then I'd be able to access a lot more equity to make bigger moves.
2. Worked as an agent on the side before quitting my job. You will not get many deals done but there's a big learning curve when you start (understanding laws, contracts, building your network, etc.) that you can leverage while working and receiving consistent income and then moving full time when you build up a reserve and build up your network.
I don't think getting your license takes away from investing unless you see yourself as an agent. I see myself as an investor with a license and I am doing both.
I hope that helps!
Susanna Kilgore
DFW, Texas
your self employeed usually need two years tax returns if thats your sole income.. although We have done it with one year. - Real Estate Agent · Member since 2018 · 459 posts · 414 votes3y
For my situation, I am considered self-employed. Most traditional lenders want 2 years of tax returns in order to lend. You can still make deals happen, but you it'll be very difficult to go owner-occupied traditional financing since most lenders will not even look at you if you have less than 2 years.
I've brought on partners that have their own financing (Cash, IRA's, etc.), so there are ways to make deals happen.
Good question though!
- Member since 2018 · 1 post · 1 vote3y
I think having a license is a great tool to add to your tool belt. We are in the business as problem solvers and want to give the best advice possible and offer alternatives. You can get seller or buyers commissions, listing fee, wholesale fee and get paid different ways possible.
- Investor · Tampa, FL · Member since 2019 · 1k+ posts · 1k+ votes3y
Hey Niecy,
It definitely depends on what you are going to be focusing on after flipping that property. I got my license after I did my first flip and It has been totally worth it. I use my license for investment purposes, I don't offer services as a realtor but I have helped friends and relatives acquire properties and it never hurts to make a 2-3% commission helping someone close to you. On top of that, you get to save money when buying and selling your properties until you reach a level where delegating that work to an agent is worth your time.
Best of luck,
David
Quote from @Niecy Smith:
Hi everyone! I am very new to real estate investing. The most experience is with buying a fixer upper for my first home , rehabbing it and eventually selling it. I am in the process of taking a real estate course to get my license. I'm aware that you dont need a license to invest, but wanted to know if it's worth it either way.
NO, no advantage, all the deals are off market anyway
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