Real-Estate License While Investing

11 Replies

Hello BP Family,

I am new to investing in real estate. My market will be the Houston Texas area.

I have been doing countless hours of digging through the forums, listening to podcasts, watching YouTube, and scrolling through Facebook trying to find the answer.

So my question,

Is it worth getting your real estate license here in Texas if you plan on doing the BRRRR method and fix and flip?

Also, do you have to go through the brokerage that hangs your license on every deal that you take as a personal investment? Let’s say it is an off market home you plan to pay cash for.

I have weighed the pros and cons of having it and to me it makes more sense to get a license. The only one I can’t find the answer to is the question above. I like the fact that you can do showings whenever fits your schedule, and the fact that you don’t have to wait on an agent to submit your offer for you. The cost yearly is Relatively low compared to the benefits.

Any help would be appreciated, or just your thoughts on pros and cons of having it.

Thank you,

Sam

@Sam Collins most brokerages will let you do a personal transaction as an exempt transaction, but if you make a business out of it then most likely they will want a cut of the brokerage side. 

I would think through what your goals really are. Having a license is great for access, but what a lot of novice investors miss is a good agent will provide a lot more than just the access to the house. Honestly, that is the starting point and doesn't take much skill or commitment. A good agent should give you access to their network which is built on the back of a full time business networking with other RE professionals. 

I wouldn't even consider this question until you've done your first deal or two. After that, you can weigh the pros and cons. Im in NC, I'm licensed and I do BRRRRs...I did 5 deals or so before getting my license and only have it because I decided to be a full time agent. There are some advantages and disadvantages and TX may be different than NC. Also in NC my costs are ~$4k per year to be actively licensed and pay all dues, MLS fees, etc.

My $0.02 is there are a million questions people try to wade through before buying their first deal and it tends to prevent action (not saying that is the case, but it very common for people).  If you haven't yet bought a property, I would focus solely on that task first.  Your knowledge will grow 10x afterwards.  

If you've got a few properties and are still wanting to pursue real estate, then my answer is that its not worth it, unless you want to be an agent as well.  The time is better spent finding deals and building relationships with others in real estate.  

for fix and flip  one thing you will see is brokerage fee's are a huge cost to the end sale since they are calculated on the gross selling price.  To me if your going to be flipping houses it is simply a no brainier to get licensed.. not sure how long you have to work for a broker before you can become your own broker.. In most states that's 2 years.. so that's what I did worked for a broker for two years from 18 to 20 then at 20 and a few months I passed the brokers exam and have been my own broker ever since.
the key is access to put your product on MLS and save the listing side and get a fee when you buy.. it can equal 20 to 50% of your net profits ..

working for yourself as a broker should ONLY include MLS dues unless MLS makes you join the board.. some do some dont

I agree with @Ryan Howell , I would focus on getting your first deal to provide insight into the problems you might face, and the time that goes into the investment strategy you will pursue.

You can still generate wealth without a license. You just need a great agent/team that will be your catalyst to your journey. In the meantime, I will leave an article from BP explaining the pros and cons of getting your real estate license. 

https://www.biggerpockets.com/...

@Sam Collins as an Agent and Investor in Houston, my best advice would be to pick one first and get good at it. Then add skill #2. Determine what the end goal is and develop the skill that will get your closest to that first.

I also don’t usually recommend being both unless you plan on putting significant effort into being an agent as there are fees involved with being an agent that make if expensive if you aren’t actively using your license.

Good luck!

@Karl McGarvey

I found a small town brokerage here where I live at. They charge no monthly fee. They have an 80/20% on the deals with a $10,000 year cap. No fees associated with not hitting cap per year. From what I understand talking with most of my realtor friends it’s roughly $1,200 a year to keep everything you need active.

Also I am waiting on my refi of my personal home to be able to purchase the first deal so I would have roughly another month to be able to get it before my funds are available to purchase investments.

@Sam Collins

MLS fees

E&O Insurance

Supra Fees

…these just name a few of the fees your brokerage is not going to cover even with “no fees”

@Ryan Howell

I am still waiting on my funding. Currently working nights on my regular job so all I am doing is crunching numbers on deals I see trying to get good at it simply because I am waiting on my funds. I would have around a month to get my license before I can even purchase my first deal

@Karl McGarvey

E&O is covered through the brokerage that I was looking at going with.

Here is a break down of what I have been told.

Annual fees:

HAR,NAR, TAR: $469.00

MLS: $447.72. Or $111.93 a quarter

Supra: $13.69 per month or $164.28 a year

License renewal every 2 years: $55.00 annual

Docusign: $225

A good agent is like part of your investment family too. Its worth it to have access to their resources, contractors and vendors. When its just you, it can be harrowing trying to find help for projects. But your good realtor will have great resources. Well worth the 3% alone. We have not even talked about their MLS access and their bird dog solutions. Plus you may alienate realtors by being your own agent, its clickish as heck in the real estate community. So again, I would outsource it, build a champion and family member for your business.