Realtor · Oakley, CA · Member since 2013 · 116 posts · 21 votes
Hey everyone,
I'm fairly new here, but I'll be staying for good. I'm also fairly new real estate investing. Haven't done any deals and just starting out. I plan on starting a rei company. My focus will be sfr flips. I'm going to be working on my business plan to get things going.
I initially planned to start right away. However, I was wondering if I should get my re license first to get some experience. My uncle is pretty close with a re broker and says that he'll take me under his wing if I get my license.
As of right now, I'm debating whether or not I should get my license and work with him to get some experience, or if I should just start on my own (with license or no license)?
What are your thoughts? I'm curious to find out what the wise decision would be. Thanks in advance!
Real Estate Investor · Tempe, AZ · Member since 2011 · 102 posts · 27 votes
13y
Under his wing, or does he mean he will just let you hang your license there? If you have an experienced broker willing to mentor you, then I would say do it. But reading other posts here on BP I have seen that many brokerages will seek you out.
Either way I don't see any reason not to get your license.
Realtor · Oakley, CA · Member since 2013 · 116 posts · 21 votes
13y
He Levi,
I'm not quite sure myself. I don't speak to him much myself. My uncle is the messenger and he's not very good at relaying messages. I did send him (the broker) an email this morning to get some clarity.
I'm guessing 'hang your license' is where you work for a broker and you get a commission for each house you sale. Is that correct?
Also, would there be any benefits if I decided to hang my license with a broker (considering the investment plans I have and the business I'm going to start, etc.)?
When I start my rei business, I will be starting a LLC. I will elect S-Corp when filing taxes so I can get the best of both worlds. However, I came across a site that states, "For example, in California a licensed professional cannot form an LLC so their best option may be a corporation." I'm not sure if they're talking about a real estate license or what, but can someone clear this up for me please? If I get my re license, will I be able to elect S-Corp for my LLC? This is the only thing keeping me from getting my re license right now. Once this is cleared up, I will be on my way (if of course I am able to elect S-Corp even after I get my re license).
Real Estate Investor · Buzzards Bay (Bourne), MA · Member since 2012 · 208 posts · 28 votes
13y
Hello Jordan,
There is no reason why you can't start your investing career and work with your uncle getting experience at the same time. If you feel you want to get your re license then go for it. Good luck.
Just remember if you get your re license there are laws that govern you on what you can and can not due so don't mix up your investing with your license if you get it.
Investor · Houston, TX · Member since 2008 · 167 posts · 44 votes
13y
I agree with Mike. Starting out with your uncle could just be the kick-start you need to get your career in real estate moving.
I work with nothing but investors on a daily basis and many of them are licensed themselves. There are some advantages to having access to your local MLS to comp your projects beforehand, see the history, and the ability to list it yourself when you're done. This happens daily.
Learning the basics from your uncle or even growing under and/or with him is a great idea. Don't hesitate...just do it. I did 9 years ago and it's been a blast.
Realtor · Oakley, CA · Member since 2013 · 116 posts · 21 votes
13y
Mike LaCava - That's great advice! I'll start pursuing my re license and continue with my business plan. That way, everything in my business plan will be complete and ready to go when I get my license. I can get the experience as an agent and carry it over to my business.
Can you expand a little bit on some of the things I can't do when investing, if I were to get licensed?
Manesh Hardeo - Access to the MLS is one of the main reasons why I want to get licensed. Also, I save a few extra pennies because I don't have to pay an agent for each property I sell. Great advice! Thank you!
I'm still curious as to whether or not I'm able to start a LLC and elect it as a S-Corp if I get my RE license. Will I be unable to elect S-Corp if I get my RE license?
Flipper/Rehabber · Greensboro, NC · Member since 2010 · 623 posts · 615 votes
13y
The sooner you start, the sooner you'll learn.
No need to get a license so don't let that slow you down. If you decide to, it's certainly an option.
Start by hanging out at local real estate investment groups and landlord association meetings. This is where you'll learn the language and the players in your area. And, those are the folks really doing what you want to do. Real estate agents deal with retail sales - completely different.
Realtor · Oakley, CA · Member since 2013 · 116 posts · 21 votes
13y
Karen Rittenhouse - Thank you for your reply! Where would be a good place to locate real estate investment groups or landlord association meetings in my area (Antioch, CA)?
Realtor · Oakley, CA · Member since 2013 · 116 posts · 21 votes
13y
Are you just an S-corp or a LLC that elects S-corp for tax purposes?
Here's a link to the article that raises my concern (it states that licensed professionals cannot elect S-corp for their LLC, take a look under 'GENERAL COMMENT'):
Investor · Houston, TX · Member since 2008 · 167 posts · 44 votes
13y
I don't know anything about that stuff Jordan -- I just defer to the CPA. It could be that I run a small business and that I'm in Georgia or a combination of the two, but it looks like it's a California specific thing from what I saw briefly.
Realtor · Oakley, CA · Member since 2013 · 116 posts · 21 votes
13y
Are there any real estate investors in the california area (near Antioch/SanFran) who need help fixing up houses, or anything else, in exchange for mentoring me? I simply want to get my feet wet and create a track record for myself. If anyone is willing to mentor me in exchange for my time fixing up houses and anything else you need help with, please let me know. I want to jump in right away!
Realtor · Oakley, CA · Member since 2013 · 116 posts · 21 votes
13y
Steven - That was my main concern. Thank you for finally clearing that up for me. I've decided that I won't be getting my re license. I think I'll still take the courses though so I can get the information. Would that be a good idea?
Realtor · Oakley, CA · Member since 2013 · 116 posts · 21 votes
13y
Ryan Moses - Thanks for the advice. However, I've decided that it's not really necessary to get my license. At least not just yet.
With that being said, I was wondering if someone could refer me to the top online schools (inexpensive, up to date material). Since I'm not getting my license, I at least want to learn about the basics.
Wholesaler · Salt Lake City, UT · Member since 2009 · 1k+ posts · 401 votes
13y
Jordan I am very familiar with East Contra County as I did a lot of business out there, as an investor and a broker. Now if I were you I would start the process of getting my license, no if ands or buts, it won't melt and you can activate it when your ready and you will find out your ready a lot sooner then you think.
So today start building your buyers list, focus on those posts and getting a list of 200 names, and build a relationship with them. Nothing heavy, just a e-mail or note saying your keeping them in mind and intend to give them first shot if you find something that fits their criteria. Then start prospecting for sellers where your buyers want to buy.
Yes, forget being a desk investor right now, go talk to the people. They don't bite, and your not required to sign anything or make an offer on anything, you can just say I can't see where I would even break even on this, much less make a profit. Carry a calculator and let it do the talking for you even if you have to erase the screen and put it in your pocket. Surprising how many people believe a calculator where you put the numbers in.
Just say I was hoping we could do business together but if things change and you can lower your price call me, give them your card. And then when you get your license you can say you know at X dollars this doesn't make any investment sense to me as a investor, but have you considered maybe doing some fix up and listing it for such and such. I could do that for you and maybe it is the best way to go, why don't we talk about that for a minute.
Realtor · Oakley, CA · Member since 2013 · 116 posts · 21 votes
13y
Brian P - Thank you for the reply Brian. I'd rather have my license, but I plan on starting a REI company. If your a licensed realtor, you cannot elect it as an S-corp. This would be a problem for me. I'd like to have the liability protection and the tax benefits.
You mentioned not having to activate it right away. Could you clarify on that a bit? Specifically, how long do you have to activate it?
Where should I start at to build my buyers and sellers list? I'm still learning the basics of REI. I've recently learned how to do a property analysis, still need to learn a lot more though.
I'm meeting up with a group of investors this Thursday in San Jose to network and build some relationships. Looking forward to the wonderful opportunity.
Last but not least, where's the best place to find good properties outside of MLS?
Thank you for your advice and input. I am getting involved, which is the first step. I plan to attend many more meet ups in my area in order to network and build relationships.
He mentions the benefits and drawbacks of getting a real estate license. One of the drawbacks he mentioned involves disclosures. What does he mean when he says, "You can't knowingly take advantage of a buyer/seller?" Also, he stated that some investors feel that having to make these disclosures and being held to a higher standard will negatively impact their business. How could it negatively impact your business?
As some of you know, I plan on starting a llc in the very near future. The main reason for choosing an llc is for the liability protection. However, in order to get the tax benefits, I will choose to elect it as a S-corp. I'm currently in Antioch, CA, and from my understanding, licensed realtors cannot choose to elect their llc as a S-corp, they will automatically be taxed as a sole-proprietorship or partnership, depending on how many members there are. What entity would grant me liability protection along with the tax benefits, aside from an llc electing S-corp?
I've been getting different opinions on whether or not I should get my RE license. This is why I've been back and forth with my decision. I would like to get my RE license for the benefits it offer, but I wanted to find out what other alternatives there are pertaining to the structure of my business.
If I get my RE license, will MLS give me access to all the necessary information to do property analyses (property details, purchase info,financing details, income, expenses etc.?
Thanks in advance! I know it's a lot, but I need to gain as much knowledge as I can in order to make a decision.
Realtor · Oakley, CA · Member since 2013 · 116 posts · 21 votes
13y
Can someone enlighten me on my above post please? I want to get moving, but I want to make sure that I don't regret anything after it's too late. Thanks again!
Wholesaler · Salt Lake City, UT · Member since 2009 · 1k+ posts · 401 votes
13y
Jordan
Actually talk to the DRE. You keep saying you can't put you license under a s corp. I don't know the law nowdays but you could and that hasn't changed that I know of. You just have to be the broker of the s corp. Many salespeople used to be owners of a c corp and hire a managing broker. What advantage do you see as being a s corp?
The LLC and your investing should be your prime concern. As for a license it can be activated until it expires.
Realtor · Oakley, CA · Member since 2013 · 116 posts · 21 votes
13y
Brian P - Okay, I'll have to give DRE a call asap. To make sure I'm understanding you correctly, are you saying that when I choose to elect my llc as a S-corp, I need to be a broker or hire a managing broker? If I hired a managing broker, what would be their role?
The advantages for being a S-corp: tax benefits + liability protection since my entity is llc.
Flipper/Rehabber · Greeley, CO · Member since 2013 · 2k+ posts · 1k+ votes
13y
Have you talked to a CPA? These are very complicated matters and should be discussed with a local expert. I have separate companies for my real estate and flipping businesses. Being an agent will save you so much money and give you a huge advantage.