Hi guys, I am loaded with seemingly simple questions like this, so I've just been asking them as I think of them. I think of it like teaching a teenager how to pump gas. It may seem like a straightforward simple task to those of us who do it on a regular basis, but when someone is trying it for the first time they may not know that you have to look at which number pump you are at when you go inside to pay, or that the nozzle will clunk when the tank is full rather than just overflow.
My question is: I am a licensed real estate agent. I got my license back in March of 2014 and signed with Keller Williams. But I didn't exactly get my license to work as an agent. I got it more to have access to the MLS and gain experience with different contracts. So at this point I am paying my office dues on a monthly basis, but not using any of the technology that I am paying for. Do I need to be signed with a broker to use the MLS or am I paying for nothing? Will it harm or hurt me to be working for a broker while I invest? Just looking for some basic insight. I don't really understand how that would affect deals.
yes you definitely need to find a small company that you can actually have a conversation one on one with the principal broker. They might charge you an affiliation fee, but I would categorize you as a referral agent, and referral agent fees are much more reasonable.
I look at a lot of people like you that don't necessarily want to run after deals, but want to have access to the information, and that is how I classify people to determine their affiliation fee.
Also look for someone that will give a flat fee to hang your licenses under their company. They will have to charge you something, they still have to pay E&O insurance based on the number of people licensed with firms, and also the amount of commissions made (either sales or management).
Thanks Lisa, that makes a lot of sense! That way you are paying a minimal monthly fee rather than paying for a bunch of stuff you don't use or need. So how does being an agent affect your investing. Hypothetically, if I sat down with a FSBO right now with a contract, and we both signed it, would a cut have to go to the broker? How would that work?
The broker is taking on a risk by having a newly licensed agent. The risk is increased further by being an investor and trying sometimes grey area approaches to buying and selling. It opens the brokerage up to possible claims for E & O and state commission issues for license law violations.
You being an agent are looked at now as being trained in contracts and have an advantage over a regular seller. You now have to do disclosures when buying or selling etc. that you are licensed and make the proper disclosure for your state. You also need to check the required timing of the disclosure. In some states it is upon initial contact and others when the contract is formed for signing.
Haven't had agents for years and years. Too much training and they want the world for a small fee. If you pay a small fee do not expect much from the brokerage other than being a number.
No legal advice.
Okay, that's about what I expected. So for example, I am under KW right now. So if I were to go to buy a house from someone, I would obviously disclose that I am an agent, but does that mean I would be representing myself in the deal and some percentage would go to KW? Or does it not work that way where I would be having a personal interest in the property?
@Michael King why did you choose to join KW rather than the myriad other brokerages that Fitchburg has?
I chose to be a Keller Williams agent for the simple fact the founder has authored and co-authored several books on investing and self-improvement. If your office does not encourage your investing then find an office that does. With that being said you should take full advantage of all of the benefits that being a KW agent affords you; unlimited training, a decent CRM, support of an interested broker, profit sharing, Agent Leadership Councils, the list goes on, but I don't want to get off topic.
Being a Realtor can have unlimited earning potential, but you have to learn the ropes. I would think that sticking a firm whose training program is as highly ranked as KW's would be the best choice for anyone just starting out. Using the training that KW provides and going out and earning Master Degree level salary at a young age should accelerate your investing to where you could retire in your 30's! All of this training will easily translate into your investing as well.
There are some pitfalls to be licensed, I have not experienced any yet. I have worked with wholesalers and FSBO. I run everything through my office, give them their cut and go about my business. Yes it does hurt but I consider it paying for my education. When I submit a contract that is not correct I get an email from my MCA telling me what corrections need to be made.
I also use the tools provided by KW for my personal business. The CRM is wonderful for tasks and reminders and using Dotloop for transactions is great.
I don't know if any of my ramblings will help you, I just don't understand why anyone (not just singling you out), would become licensed and not use it to go out and make a few thousand a month.
Don't worry, I don't take anything personally. Here's the full scoop. My parents are real estate investors who buy multi-families in the area. When I was 18 I was asking them about finding an apartment, and instead they helped me buy a multi-family of my own because they knew I couldn't afford to rent. Buying a house was the only thing I could afford.
Long story short, I work full time (regular hours as a $10/hr teller) at a credit union and part time at a restaurant. About three years ago, my father gave me Rich Dad Poor Dad as a gift. It wasn’t until a year later that I finally got around to reading it and had that ah-hah moment. I realized that my rental income always came in, even when I wasn’t working. Since then, I’ve become absolutely excited and obsessed with real estate investing, and read numerous books on the subject.
The book learning was great, but some things were tough to learn from a book. That’s why I decided to become a real estate agent; to "jump right in" and learn how to fill out the contracts that I would need for investing. I spent many long months studying and taking the required salesperson courses, but really didn’t learn much that I didn’t already know.
I had a close family friend, who had been a realtor for years, recommend that I sign with Keller Williams. Also, the realtor that my parents work with was with Keller Williams, and she agreed to sort-of take me under her wing. So when I got my license that’s what I did, signed with KW.
The problem now is not with KW, but rather with myself. Because of my regular $10/hr teller job, I am stuck in “the rat race” so to speak, and working diligently to get out of it. Unfortunately because I work during the day, I cannot make it to most of the trainings that KW offers, and the realtor that was going to take me under her wing works during the day time. So I assure you that I am not badmouthing KW in any way, but was more looking for opinions as to whether it was worth it to stick with them, or look at other options.
However your response has enlightened me. Considering they do offer unlimited training, and their CEO is indeed an incredible investor who encourages investing throughout his company, I have decided to stick around. Although I am not free to enjoy and benefit from any of those trainings and courses yet, I am a very motivated and determined person and will at some point be able to participate in the numerous benefits available to KW agents.
@Michael King It sounds like a few things to me:
- you are young, have a license, and already own a multifamily unit building ... this is an amazing place to be starting from ... how much after expenses are you bringing in on this building?
- you work at KW that gives you the opportunity to learn even if you don't want to be a realtor for your career, but rather an investor ... there are flip sides to both of the idea investing with or without a license, but you have it ... use it
- if you are making $10 an hour at a crappy job, I can't imagine the only answer here is ... quit. Negotiate something with your parents who are already in the business ... even if its at $10 an hour, live more cheaply ... have a BUDGET ... and use it
- learn from your parents ... you have an unlimited resource already in place learning from you parents ... think about how Robert in the book learns from his rich dad ... get is paid peanuts ... but has an education
You need to talk to other brokerages! There are a LOT of different setups as far as fees, who pays what... I am only just studying for a license but I plan to talk to at least five or six different types of companies, from the high cost- high service companies like KW to some that only have a flat fee of a few hundred dollars per transaction.
You're obviously a smart and articulate person, but IMO (please forgive me if I am overstepping here) you need to grab a hold of this thing. You're just going with the flow right now - time to decide where you want that boat headed. Your question about buying a house on your own and what percentages you may or may not owe the brokerage should be covered by the office policies that were given you when you joined KW. Read them. If you can't get the answer, call the broker and ask them directly. KW is a reputable company but it may not be what you need. To me, it seems better suited to folks who are focused on retail sales, not investing, and from my preliminary exploration a lot of their training is about how to build your retail sales career (again, I haven't explored in depth yet). I know Gary Keller writes about investing, but I do find myself wondering what proportion of his fortune he actually made off of investing and how much comes from all the eager agents in the brokerage ;)
Talk with other investors in your area. I bet you can find a small brokerage that will charge you a flat transaction fee plus a small monthly charge that will cover your E&O and mls access. The broker will probably be happy to help you get through the first several contracts. As far as training to be an investor -- well, that's why you've found biggerpockets!
Thank you for your response Nathan. To answer your question, I bring in about $100 a month extra from the rent which goes right to maintenance. On the subject of budgets, I am already on about the tightest budget you can imagine. Were it not for my lovely girlfriend, I probably wouldn't eat. So I can assure you it doesn't get much cheaper than this. However working at the credit union, I do understand there are a lot of people out there who can't seem to grasp the concept of a budget.
As far as my parents go, I certainly do not take them for granted. They are an excellent resource and very knowledgeable on many subjects. However, they typically buy multi-families with traditional financing. I have excellent credit, but my DTI doesn't allow for me to use the same method of investing. Thus, I am planning to invest more creatively - lease options, subject to purchases, etc.
I must agree with both you, Nathan, and Jean. KW certainly does encourage investing, however I do get the impression that many, if not most, of their courses and training are retail sales oriented.
Thank you everyone for the advice!
@Michael King you definitely have a good head on your shoulders that is a plus. You are surrounded by sources of positive information. Just remember that one deal as a Realtor will more than compensate for the $1600 that you would make as a teller at a credit union. That is a pretty lower barrier of entry. I have to replace nearly that much per week if I wanted to go full-time. You will also have a lot more exposure to deals WHEN you are consistently talking real estate. You will have the time to call FSBO, I personally never hesitate to ask a FSBO if they will carry financing.
KW's training is what you make it. You are encouraged to call FSBO, expireds, knock on doors, you are trained to know the ins and outs of a sales contract, you are trained to market yourself. You are encouraged to timeblock 3 or 4 hours a day to cold-calling and lead generating activities. Sounds kind of familiar... Wait a second, that training sounds like it could be good for an investor...
Always make sure you are talking with other investors of all stripes too. Learn from those that did or do creative financing. Go to REIA meetings and your local Meetups.
You might get the warning that you will never be able to get a traditional loan, which is not true. I was at a REIA on Wednesday and a rep from a local lender was talking about a product specifically for 1099 workers that just needs a couple of years of bank statements to prove income.
Grab this bull by the horns and you will never go hungry again!
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