Is becoming a realtor a good way to get into the business?

12 Replies

I would like to start my real estate investing career by the end of this year.  I am also interested in becoming a realtor as I believe it would be something I would enjoy.  Anybody with experience have any input?  Do the two careers go together?

You do not need to be a realtor to get into investing. Some of the best deals you'll find would probably not be on the MLS anyway. But if you want to do it because you'd enjoy it, go for it!

I don't have an exact answer for you since I don't have the experience that you are referring to. I would say that it could be a benefit to operate as an agent and invest as well for many reasons, one reason being that because you would potentially be very in tune with your markets as you would have exposure day in and day out, this could help hone your ability to realize value and develop resources and capabilities because of your exposure as an agent.

I would also caution you to be careful that you wouldn't blur the lines between the two (agent and investor). Because of your licensure you could potentially be seen as having an unfair advantage in your dealings on your own behalf as an investor. I think that full disclosure around the fact that you are a licensed agent would protect you from liability in most instances, but I would definitely suggest checking the specifics in your state. Best of luck. 

A Broker may not like having you as a Realtor at their company if you are representing yourself in transactions.  Often insurance doesn't cover, and it is an increased liability.  The combination can be problematic. 

However, if you are an investor, it is always a good idea to have your license, even if you have another Realtor represent you in transactions. Knowledge is power, plus you buy access to the MLS.

Plus, if you get your license, and you don't want to represent others, you can always use your license as a way to increase income by referrals.  You could refer Sellers and Buyers to someone at the company you hang your license and collect referral fees.  You just have to make sure the Realtor you are referring them to is following up with your leads and actively pursuing their business.  If you refer business to someone who doesn't secure the business, you make no money.  Find yourself a closer who you personally enjoy as a person.  

Additionally, their are some tax benefits that may come into play to an investor.  For example, because I am licensed in Real Estate, I can write off loss on rentals when others cannot once in a higher tax bracket.  I am full time Realtor, I believe the tax code has some requirements regarding what % of your time your work in Real Estate.  It can be a meaningful difference because it enables me to write off $25K in rental loss per year AFTER I have reached the higher tax bracket.  Generally when you reach a certain tax bracket, you are no longer able to write off rental loss.  This can be substantial if you find yourself writing big checks to Uncle Sam, the family jerk.  I might opt to remove trees, paint the exterior of my rentals, roof, pave, recarpet to reduce my tax bill and improve my properties at once.  I find that even Realtors don't know this.     

Like Jordan said, having your license is a great way to learn your market.

Depending on what type of investing you would like to do, you could also save $$ by listing your properties and time by being able to pull comps instantly.

In addition, I find it helpful to know the local laws that the board enforces. 

Thank you for your input.  As far as investing goes, I am primarily interested in buying and holding.  I do know it varies from state to state, but what would be the basic steps in becoming a realtor?

@Bradley Heath

- I would recommend getting your license. Even if buy mostly non-mls properties you will appreciate the knowledge and use of the MLS. If you do buy MLS properties you also get the commission. Good luck!

I would recommend choosing the most-economical method that will allow you to pass the licensing exams. My understanding is that the courses to obtain a license doesn't really prepare one ti be a RE agent; it simply prepares one to pass the licensing exams. Based on this I would go with the most-economical method. 

@Jordan Decuir is right about the courses not really preparing you to be an agent.

I am an agent, and have had my license for just over a year. It can be expensive to get a license. Check out these costs to make sure you want to jump in with both feet. It isn't simply a matter of taking the courses, which can run you $700+ just for the information. 

Also keep in mind that in most states, a new licensee - unless they are also an attorney - must hang their license under a more experienced broker for at least two years before venturing out on their own. 

There are a lot of positives to being licensed, but there are also a lot of negatives. Right now, in most markets it is a sellers market, and the houses are flying off the shelf. Agents who had let their licenses lapse have jumped back into the pool with all the money to be made. It is a tough market, to be sure.

Taking your classes online is the most desirable because you can take classes at your own pace.  I have used OnlineEd or Proschools for Continuing Ed requirements, but they also offer license education in most states .  Try to get through them as quickly as possible because it does require significant memorization.  It is not rocket science, but don't let people fool you, it is not easy, it really requires your full attention while taking the classes and studying for the exams.     

My husband got through all of the classes in under a month, then took the state and federal test.  A billion years ago, when I got my license, they didn't have online classes.   However I became friends with my instructor and later sold his real estate.........so I suppose I can't complain.