SHOULD I GET MY RE LICENSE?

13 Replies

I've been contemplating getting my RE license for quite a while as there are many opinions on the books and blogs I've read that highlight specific advantages of being licensed, especially if I want to acquire more investment properties (rentals, flips, and perhaps wholesale deals) in the future.

A few unique variables:

1) my parents own rentals that they'd like to make sure they pay me as the listing agent if and when they are to start selling these properties in the years to come. At the moment, I'm gainfully employed and would only like to begin pursuing RE license/agent activity on a part-time basis as my other personal/professional obligations keep me busy. But long-term, of course I'd like to transition over and leverage the passive income of real estate investing!

2) obviously, having the MLS access and being able to see the houses I want at the time I want is a benefit, rather than waiting for a realtor's assistance. It also affords me some slack when looking to buy and/or sell investment properties (a la Mark Furgeson's investfourmore advice).

3) I would like to begin investing in the San Diego, CA market as I have lived here forever, but will also be looking to invest in the Detroit Metro Area as I will be relocating there in the next year. How will getting my RE License in CA effect that as far as a dual-market investment strategy?

What should I do? Appreciate all the insight and feedback.

Of course you wouldn't be able to function as a RE Agent in Detroit with a CA license.

But you would still have to disclose your license on any purchases you did up here.

What brings you to Detroit area? Living up here? I relocated from Orange County CA to Detroit because of the opportunities up here. 

What are you plans for San Diego? I've been trying to figure something out for buy and hold, but unless you have a large cash reserve, the only way to go is owner occupied, and rents aren't high enough to cash flow in that type of situation. You're lucky if the other unit's rent pays for the mortgage let alone any other taxes, insurance, and repairs/vacancies. Compare that to where I moved from in Florida where I could buy a 4-plex that costs $450/mo and rents out for $2,400 a month ($600/unit) It just doesn't work that way in San Diego. I'm really interested hear any ideas you might have.

@Joy Mondala

 If I were you, I would hold off on getting my real estate license until I was 100% sure that I was relocating and then work on getting my Michigan Real Estate License. It will probably take you at least 4 months with taking required courses and scheduling and taking the state exam. You will be able to find a proxy and take the exam in San Diego.

As far as your parents rental properties, if they do sell you can then get a Realtor in California to give you a referral fee. 

In California with MLS access, sentricard, San Diego, California & National Association of Realtors dues it is around $1,000 a year. Having MLS access is a big plus but it isn't free.

@traver Yeah I know what you mean as far as difficulty finding deals in SD: up until this spring, I spent at least a year (semi-actively) looking for a SFR to move to and rent out my condo, or use as a buy&hold while staying in the condo but couldn't find anything to make the numbers work. So in the meantime, I rented out the other bedrooms in my condo so i could ramp up my savings while spending more time finding good REI resources and networks.

The whole "RE License" idea came up when my parents had mentioned that they were considering unloading some of their properties starting in a year, and if they were going to pay a commission for a listing agent, it may as well be me. That plus they knew how I have plans to continue buying rentals, fix and flips, and perhaps wholesales in the future.
At this time, I'm working FT, saving, and renting out the unused bedrooms in my primary residence for some extra income which is nice. I also plan to move in the next year, and there are other life events that may effect my time and money in the future (wedding, children, selling my condo and/or buying a SFR for me and my growing family etc. etc.)

I just want to weigh my options especially considering the price and time investments needed vs the payback of cost savings benefits (when acting as my own agent when buying/selling properties in the future, having MLS access, and perhaps using the License under a broker in the future if i transition to REI full time).

Hey Joy, I think you are in a very similar situation as me. I am actively searching for investment deals (primarily wholesales) in the San Diego area but I also have recently finished the RE course requirements and will be taking my exam in the next few weeks.

What I have found is that there is a grey area when having your license as an investor. Since you are buying for yourself you are not acting as an agent but there is the potential that if you don't disclose that you are an agent, a seller might say that you took advantage of them by being 'more knowledgeable' and buying at a discount rate.

That being said, I plan on still getting my license so that 1) I have access to the MLS 2) It can greatly expand my network and 3) it opens the potential for referral fees for houses that the seller insists on retail price. I also plan to add a written disclosure with any contracts for them to sign for some added protection.

I hope this helps while you are still in the San Diego area. Good Luck!

@Richard Dunlop the plan is to move to Detroit around March/April 2016. girlfriend is a doctor at DMC so of course I want to mitigate the distance between me in SD and her in DET. I've started looking around Detroit Metro Area for potential rentals/flips/wholesales so it's nice to see that you can invest for basically pennies compared to what's needed to invest in southern California to generate an equivalent amount in cashflow. I'd still plan on maintaining my CA RE license and looking for properties here since I've lived in SoCal forever and know the area.

Been speaking with a few realtor affiliates as well to get pointed in the best direction. Perhaps working in a team at a smaller brokerage firm is best? I have a FT job, I don't plan on going FT in REI or being a huge producer starting out, so I'd imagine that would be the better option

Thanks everyone for all the advice and insight.

Agree to weigh benefit of cost and overall use of of re license for Calif versus Michigan. Access to MLS in California is great but if you will live and see Michigan as your primary place of residence and part time REI then would lean in that direction. Like you I have a great full time job now but have a license and agree fees are about $1.000/year and am considering whether or not I want to maintain it since I'm an out of state investor given the exorbitant costs of San Diego and maybe only use the license for friends and family but difference is I don't plan to move out of state.

PS be very careful about investing in Detroit Josh D just doesn't joke about the city on the podcasts for nothing there are good areas in Michigan to invest in like Ann Arbor just work with someone very familiar with the area

All the best

I would say get it. 

It will help you in the future understand the transactions you are putting together. 

I am in the process of getting mine and its a 2 part test. National and state. So once i am done with it in AZ who require in person classroom time i will get a CA where I can just take the state part and log the online hours. 

It comes in handy i am an assistant in san diego which allows me MLS access.

I can tell you from experience that sometimesa commission   can be there difference from a property being a deal (buy and hold) or have to walk away in SD in such a competitive market everything counts. 

Originally posted by @Cedric Corpuz :

Agree to weigh benefit of cost and overall use of of re license for Calif versus Michigan. Access to MLS in California is great but if you will live and see Michigan as your primary place of residence and part time REI then would lean in that direction. Like you I have a great full time job now but have a license and agree fees are about $1.000/year and am considering whether or not I want to maintain it since I'm an out of state investor given the exorbitant costs of San Diego and maybe only use the license for friends and family but difference is I don't plan to move out of state.

PS be very careful about investing in Detroit Josh D just doesn't joke about the city on the podcasts for nothing there are good areas in Michigan to invest in like Ann Arbor just work with someone very familiar with the area

All the best

 Thanks Cedric - I know what you mean! It was my parents' suggestion that I should profit off of them selling their houses that got the ball rolling again on "should I get my RE license" but I didn't know if it'd be worth it (and to what degree) if in a year's time, I barely recouped the financial investment I made into just getting licensed/registered as an REA through the commissions of the houses, not including the time invested studying/testing/away from work and play.

I know on the podcasts Josh jokes about Detroit, and seeing it first hand, I can see why as some of the pockets of the city are off-putting, but much like San Diego (from Oceanside all the way down to San Ysidro) there are surrounding areas that have piqued my interest, I just need to get boots on the ground once I'm there and see if these all pencil out. 

You said you invest out of state? Which states? It's funny that SD and Detroit present investors similar difficulties as far as finding a profitable rental, although for 2 very different reasons haha.

Thanks for the insight!

Originally posted by @Garrick Oconnell:

I would say get it. 

It will help you in the future understand the transactions you are putting together. 

It comes in handy i am an assistant in san diego which allows me MLS access.

Thanks for the insight Garrick. Any suggestions on which brokerages (large or small) would be the best fit for my time availability and production strategy? 

Where are you an asistant in SD at? Any tips? Someone also mentioned perhaps being an assistant to a high producer would be a great opportunity to Learn & Earn - I would rather make 50% of something good than 100% of nothing.

Hello @Joy Mondala

I am an assistant to an old friend and i pay him a fee to help with his annual fees for access. 

You can learn and earn but that REALLY depends on your availability and schedule

real estate is a business hours business (paperwork, escrow, title), with showing and meeting being after hours and weekends.

As far as joining up with a brokerage again it depends on your goal. 

Sounds like your main goal is to sell your parents homes in the future. 

brokerages generally take a percent of your commission to cover costs, some take a fee or a combination of both. So speak with a your local brokerage you feel comfortable and be honest with your plans. They may say your not a good fit or work out a fee structure.

The great thing about large brokerages is they often have offices in multiple states, probably in both markets you are considering. 

So in short identify your short term goals and long to term goals. Then weigh out the cost and pros and cons.

Remember that a realtor had to get licensed first, and pays for MLS access so they usually want a fee or something in return.

Hit up a local REIA like SDCIA or Nsdrei (@brucemay ) depending on your area

928‑362‑1584 | http://www.cearnach.com

Decisions, decisions....

Working for a top producer may not be an option for you with a full time job. FWIW, Most "high producers" are very driven and demanding and tend to hire experienced assistants.