Becoming an Real Estate Agent for Investing

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Becoming an Real Estate Agent for Investing

Sergio Rodriguez
San Bruno, CA · Member since 2017 · 10 posts · 4 votes

Hello BP Forum,

I am very new and exploring options to gain education and experience from within the industry. One option most ponder over is becoming a Real Estate Agent in the desired market area and is even advocated for in the BP Podcast.

The main reason a License is beneficial seems to be due to the ability to be your own buyers agent and save on some closing costs as well as a foundation on which to understand the paperwork and processes of a standard transaction. 

The other reasons a License is beneficial is the obvious access to the MLS and maybe a quicker ability to gain other confidence when starting to network.

I am in the Bay Area of CA.

Are my assumptions of the benefits of a REA License for an investor even applicable? I have heard that the MLS tends to be a desert with ever drying oases of deals.

Is becoming a REA a viable option to getting started?

What, if any, are the stipulations to using your REA License for your own investments?

Can I operate as my own buying and selling agent without a Broker? By "my own," I mean I am my own Client.

Is operating as an REA in the Bay Area an effective way to generate starting capital with which to invest?

If I am not taking certain facts of operating as an REA into consideration please let me know why and how they may effect my investing goals.

These are very green questions, so thank you for your time.

Sergio Rodriguez

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Steve Milford
Lender · Vancouver, WA · Member since 2015 · 482 posts · 316 votes
9y

@Sergio Rodriguez

My 2 cents.

Go for it!!! I became really interested about 10 years ago, and just read everything I could. At some point, you need to stop just reading/listening, and start doing. It is exactly what I did, and it has been awesome!

As a Realtor, it is a business and I treat it as one. Annually my fixed costs are about $3,000. My variable costs vary depending on how hard I work this business. I also receive income from it - it actually has been very nice for me. My conservative goal was and still is to break even each year. My aggressive goal last year was to have 5 transactions, and I beat it. My aggressive goal this year is to have 30 transactions. Yes I have state regulations to adhere too, and you can find yours at your licensing board. I know in Oregon and Washington, supervision of my activities by a principal broker (whom is also my mentor) is required for at least 2 years. In choosing my brokerage, I chose one w/o lots of training, it is the School of Hard Knocks. My mentor's model, Get Off Your Keister, & Get To Work! Lol. Where do my leads come from? Referrals, post cards, cold calling, and passing out my business card 1 at a time. 

As an investor, I get to look at anything and everything now, and yes because I am a Realtor I have less flexibility in what I can say, etc, but I am OK with being held to a higher standard. I haven't ever had anyone say, oh because you are a Realtor, I don't want your money.

I got my license because I felt a need to practice what I was being preached and to me I was always a "wanna-be" until I pulled the trigger. Personally, I like getting my feet wet and getting in the trenches - that is how I learn the fastest. Have I made mistakes? Of course, but I also have learned some valuable tricks of the trade because I have fewer hours available to fuss with it. i.e. I am not on here very much because although I like to teach and learn yet I still need to make money too, and this avenue, BP, is not a direct means to make money. And I am learning from people that are active in the business, from their listings etc and how they work.

What is the worst thing that can happen? Even if you are only a Realtor for a year? You will learn if this business is "really" for you, and you will learn how to market yourself or how NOT to market yourself. For me it was a gamble to get the licensing, I was getting a divorce and didn't have extra cash - I put everything on a credit card. But my first commission check sold me on it, I paid off that credit card, and it was the easiest money I ever made for the amount of hours that I spent.

Feel free to message me if you want.

Steve

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  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    9y

    Hi @Sergio Rodriguez,

    If you're buying and selling 3+ houses a year, go for it.

    Otherwise, it's a waste. 

    Did you close 3+ transactions in the last 12 months? 

    1Reply
  • Sergio Rodriguez
    OP
    San Bruno, CA · Member since 2017 · 10 posts · 4 votes
    9y

    Hello again @Chris Mason,

    No, I have not closed any deals ever. That is why I was asking if it was a decent way to get into the industry.

    While I need to acquire more cash reserves and general savings through an increase in my main income, I was thinking of becoming Licensed to gain any experience possible.

    I do not have a means to raise the amount of income I am currently receiving without leaving my current stable part-time job to pursue something else. An increase in hours is not an available option either.

    I suppose you are saying "No, don't get it. You don't have the need or experience to use the License effectively."

    While I do not have any inclination that becoming generally successful as an REA is easy, it seems like a decent way to both acquire the capital I need through possible commissions and gain experience. I can read all the books and forum posts I want, but experiencing the actions, ebbs, flows, and nuances in the winds of Real Estate investing is where the wisdom behind the knowledge and concepts resides. 

    I have read a few of the thousands of posts you have replied to and really appreciate your time. 

    Thanks, 

    Sergio Rodriguez  

    0Reply
  • Jeff Keller
    Palo Alto, CA · Member since 2017 · 226 posts · 95 votes
    9y

    I wouldn't recommend getting a real estate agent license for your own investment activity.

    I think the main advantage is that you would be able to enter vacant properties without waiting for an agent to show them to you.

    Most of the training revolves around proper disclosures and equal opportunity. Things even a private investor doesn't want to trip up on but not at the center of their choices nor activities.

    If you have an active sales person license you need to be under a broker. The broker is likely to be worried about the risk you create for him with your own investment activity. If you do improvements on a property and a buyer takes you to court because of workmanship, the broker could end up being sued also.

    In the Bay Area, both mlslistings.com and realtor.com display essentially all listings to the public.

    0Reply
  • Sergio Rodriguez
    OP
    San Bruno, CA · Member since 2017 · 10 posts · 4 votes
    9y
    Jeff Keller Thanks for the reply. What if I just wanted to gain more income and didn't invest for the time being? I'll look more seriously into those websites. I believed them to be inaccurate or similar to Zillow and Trulia where the information is decent but not analysis worthy. What about Redfin?
    0Reply
  • Jeff Keller
    Palo Alto, CA · Member since 2017 · 226 posts · 95 votes
    9y

    Hi @Sergio Rodriguez, MLSListings IS the local multiple listing service for Silicon Valley. I'm pretty sure that as a local broker (in San Francisco), Redfin is getting its information directly from MLSListings. All real estate agents log into a subdomain of MLSListings (pro.mlslistings.com) to enter and access listing information.

    The Silicon Valley Association of Realtors (SILVAR), Santa Clara County Association of Realtors (SCCAOR), and the San Mateo Association of Realtors (SAMCAR) control who has access to enter listing information into the multiple listing service and by setting standards of conduct, regulate real estate agents. These along with the California Association of Realtors (CAR) are all sub groups of the National Association of Realtors. Realtor.com is the public face of the National Association of Realtors and owns the trademark "Realtor". If you want to call yourself a Realtor you have to belong to NAR.

    Zillow will probably be changing significantly because they have been relying on property transfer records rather than MLS data to determine sales prices. (Private transfers distort sales prices) Changes are about to happen where Zillow will be getting its info directly from brokers. They are going to prevent agents from entering the listing information for the homes they have for sale. Zillow appears to think it is dominant enough that it will be able to force all brokers to provide listing information.

    0Reply
  • Jeff Keller
    Palo Alto, CA · Member since 2017 · 226 posts · 95 votes
    9y

    In terms of being a part time real estate agent to get additional income, in 2016

    9539 agents bought or sold at least 1 home in Santa Clara County or San Mateo County

    668 agents bought or sold at least 12 homes 

    16 agents bought or sold at least 52 homes

    With 75% of the agents buying or selling five or fewer homes it is very hard for a new agent to get started.

    0Reply
  • Rolanda Eldridge
    Investor/Realtor · Hoover, AL · Member since 2010 · 1k+ posts · 459 votes
    9y

    @Sergio Rodriguez..Keep an open mind.  It really depends on your personal goals.  You can invest without a RE license, but it's beneficial.  I started investing in 2005, got my license in 2016...Priorities shifted and I'm taking RE Investing to another level in 2017!!! GL!

    2Reply
  • Maria Diegelman
    Residential Real Estate Broker · Valencia , CA · Member since 2016 · 16 posts · 6 votes
    9y
    Sergio Rodriguez Hi Sergio, it sounds like you really want to get your license. Keep in mind there are per year costs associated with having your license. Plus the monthly cost or $ per transaction to hang your license with a broker. The advantage is that it's the same business of buying and selling homes. If you want your license for investment purposes only then follow Chris Mason advise. Because with the numbers that Jeff Keller stated it's tough as a newcomer to make money as a real estate agent while trying to find your owns deals. If I were you i'd try to find a mentor thats willing to put up the money when you find that great investment deal. It may not be a 50/50 split but you'll have the mentors experience on your side.
    0Reply
  • Steve Milford
    Lender · Vancouver, WA · Member since 2015 · 482 posts · 316 votes
    9y

    @Sergio Rodriguez

    My 2 cents.

    Go for it!!! I became really interested about 10 years ago, and just read everything I could. At some point, you need to stop just reading/listening, and start doing. It is exactly what I did, and it has been awesome!

    As a Realtor, it is a business and I treat it as one. Annually my fixed costs are about $3,000. My variable costs vary depending on how hard I work this business. I also receive income from it - it actually has been very nice for me. My conservative goal was and still is to break even each year. My aggressive goal last year was to have 5 transactions, and I beat it. My aggressive goal this year is to have 30 transactions. Yes I have state regulations to adhere too, and you can find yours at your licensing board. I know in Oregon and Washington, supervision of my activities by a principal broker (whom is also my mentor) is required for at least 2 years. In choosing my brokerage, I chose one w/o lots of training, it is the School of Hard Knocks. My mentor's model, Get Off Your Keister, & Get To Work! Lol. Where do my leads come from? Referrals, post cards, cold calling, and passing out my business card 1 at a time. 

    As an investor, I get to look at anything and everything now, and yes because I am a Realtor I have less flexibility in what I can say, etc, but I am OK with being held to a higher standard. I haven't ever had anyone say, oh because you are a Realtor, I don't want your money.

    I got my license because I felt a need to practice what I was being preached and to me I was always a "wanna-be" until I pulled the trigger. Personally, I like getting my feet wet and getting in the trenches - that is how I learn the fastest. Have I made mistakes? Of course, but I also have learned some valuable tricks of the trade because I have fewer hours available to fuss with it. i.e. I am not on here very much because although I like to teach and learn yet I still need to make money too, and this avenue, BP, is not a direct means to make money. And I am learning from people that are active in the business, from their listings etc and how they work.

    What is the worst thing that can happen? Even if you are only a Realtor for a year? You will learn if this business is "really" for you, and you will learn how to market yourself or how NOT to market yourself. For me it was a gamble to get the licensing, I was getting a divorce and didn't have extra cash - I put everything on a credit card. But my first commission check sold me on it, I paid off that credit card, and it was the easiest money I ever made for the amount of hours that I spent.

    Feel free to message me if you want.

    Steve

    3Reply
  • Sergio Rodriguez
    OP
    San Bruno, CA · Member since 2017 · 10 posts · 4 votes
    9y

    Hello Everyone

    @Jeff Keller Thanks for the clarification of the MLS as the different websites can cause confusion as to which is accurate and most helpful. The explanation of the network of associations in my area also helped in my understanding. Thanks.

    @Rolanda Eldridge I definitely will keep an open mind! I still have a lot of foundation building to do and cant wait to take my RE Investing to the next level! Thanks for your support and story. Good Luck Too! 

    @Maria Diegelman I am eager to get started and am trying to find a road into the industry that may suit me the most or are have the best possibilities in my area. What you point out makes sense, it seems being an Agent and an Investor must be separate businesses and dividing my time between the two may cause problems with success in both. I need to get networking, that's for sure. I have also thought of your suggestion and am trying to work on analyzing deals and practicing the numbers. Tempted to get a pro account just for the calculators haha. Thanks for your time, suggestions, and perspective. 

    @Steve Milford Your enthusiasm is contagious! I have the same mentality of wanting to get my feet wet and stating gaining experience as that is where the real education is. I will definitely take your post into consideration as your story, perseverance, and goal setting is highly motivational. Thank you. I may message you in the future if any questions pop into my mind

    From all these responses, I must take some more time to think whether I am able to achieve my initial goal of a significant increase of income through becoming an Agent. 

    Thanks Again

    Sergio Rodriguez

    0Reply
  • Steve Milford
    Lender · Vancouver, WA · Member since 2015 · 482 posts · 316 votes
    9y

    @Sergio Rodriguez

    Thank you! 

    My recommendation to you:

    1) Learn as fast as you can and then give away your knowledge in general. The specifics of your knowledge is what you get paid for. Read The Go - Giver by Bob Burg, and Networking on Purpose by Beth Bridges. The concepts essentially are just seek to help people, and by your actions, people will become attracted to you. I spend most of my time on education, and asking people, "Do you know of anyone I can help?"

    Most people think networking is meeting people and asking questions of them... that is what a mentor, mastermind group, or accountability group, or BP is for. Helping other people first, and expecting absolutely nothing in return is true networking.

    2) If you want to connect with people, ask people for a contact method that they would be most willing to give to you. For me, I find that this is an email address. I send out a bi-monthly newsletter that tracks what links people open so that I can give more of that. It also keeps me top of mind to people I have met.

    3) Learn the numbers - it comes from evaluating properties. My personal belief is that the calculators are just time savers, yet if you don't know how they are put together you are no better off. i.e. I know how much it costs to sell a house in my area including commissions, closing costs, taxes. So when I look at an investment property I add that to the cost of purchasing on the spot, in my head, for a close number - it doesn't have to be exact. There is no point in purchasing a property in my book, if my "profit" goes out the window when I sell it, even after the rehab.

    4) Keep asking questions until you get answers that satisfy you. 

    5)  Once licensed, get a small box of business cards, and find a way to give them to anyone who will take one. I am sometimes surprised where I get referrals - it is often from the most unlikely people.

    And yes feel free to message me.

    Steve

    2Reply
  • Meidelyne B.
    'Ewa Beach, Hawai'i · Member since 2016 · 9 posts · 3 votes
    9y

    Thank you @Sergio Rodriguez for posting this question of being a REA for investing. I have the same mindset of wanting to jump in rather than not taking action at all. I appreciate everyone's responses and it really helped me focus on aligning my goals. 

    0Reply
  • Edmund Ricker
    Gorham, ME · Member since 2016 · 224 posts · 116 votes
    9y

    @Sergio Rodriguez

    Thanks for the question.  This is one I have asked myself and got a myriad of answers.  My reason for wanting to get my license is so I can look at property whenever I have a chance without relying on a realtor.  In fairness to my local RE pros, they are trying to make money and I realize that I will take up a lot of their time looking at "clunker" homes.  Even if I bought one or two, these properties have low price tags and won't net an agent much commission.

    That being said, I have heeded the advice of many who say that the costs of maintaining the license and a seat in a brokers office are substantial, especially if you are not closing many deals and only using the license for your own investment activity.

    Here is what I have done:

    1.  I found a local RE school that offers the Maine Sales Agent course through correspondence.  This costs approximately $400.

    2.  I went to Amazon and found an older version of the text to one of these courses for $4 including s/h.  I am going to read this text and see how much I learn.

    3.  I continue to use the web to look at houses on sites like Zillow, Realtor.com, Craigslist, etc. and do desktop analysis on properties that I think might fit my criteria.

    My goal is to buy one property this year and get it rented, whether or not I am my own agent.

    Good Luck Sergio and keep us posted!

    Ed

    1Reply
  • Sergio Rodriguez
    OP
    San Bruno, CA · Member since 2017 · 10 posts · 4 votes
    9y

    @Meidelyne B. What a cool idea. Almost like testing out the classes before taking them. 

    I try to look into every house that comes up on the RedFin App, though its mostly virtual and 50% rule, 70% rule, or 2% rule analysis. 

    How thorough is your desktop analysis? I have trouble trusting my results since my not sure how to approach finding the ARV, insurance costs, taxes, and the things specific to my area. My county's assessors doesn't seem to have any way to find information either. Even though my numbers are practice for now, I still would like to include as much information as possible.

    If the numbers are good, the property meets your criteria, and your criteria meets your market, I'm sure you will meet your goal! 

    -Sergio Rodriguez

    2Reply
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