Broker vs. Real Estate License

11 Replies

I am new to REI and my goal is to learn as much as possible in the field before buying my first property. After reading many threads, it seems the best way to do this is to get either a real estate or broker license. Which would you recommend and why?

There are many, many successful unlicensed investors. Don't let the pursuit of a license delay your first property. Getting licensed, and having access to the MLS, provides some advantages as well as some obstacles. Besides, most agents in my experience aren't that knowledgeable about investing anyway.

But like Ron said, it's not a choice - you can't just start off as a broker.

If you are looking for a rental property, there is no need to get your RE license. Find a good investor friendly agent in your area and have them help you find your first property. For your first one, you're going to want something relatively turnkey unless your background has been in construction or your are a glutton for punishment and want to jump right in and learn a lot of lessons all at once. 

If you were wanting to flip properties, then I would say getting your license is probably required. 

Lastly, like others have said, you can't just go get a broker's license. Almost every state requires a few years of experience under a broker to learn before they will even let you take the tests.

Originally posted by @Thanh Vu:

I am new to REI and my goal is to learn as much as possible in the field before buying my first property. After reading many threads, it seems the best way to do this is to get either a real estate or broker license. Which would you recommend and why?

 Welcome to the site Thanh.

Your 1st step would be a sales license.

Prior to obtaining a brokers license you would need to be licensed for at least 2 years and perform 40 transaction sides as well as complete 2 years of college with some specific business courses included in the 2 years of college.

@Thanh Vu Welcome to the site. I"m sure you've found lots of great information already, lots to read and learn! All the comments above are spot on, see this link for Ohio specific information...

Go for the license if you want to learn how to sell other people's properties and help buyers find a new home, etc. That's what the license teaches. About all the broker's license teaches in addition is more about contracts and the laws you must obey and also the responsibilities of stepping up to that role. Some states (like IL) also have a "managing broker" license which is what you get to have sales brokers / agents working out of your office.

Investors don't need a license. It IS helpful to have someone on your team who is licensed, but being licensed yourself may impose limitations you may not want to deal with.

My advice is to get the broker's license as quickly as you can, and immediately if the state you are in allows it.  It will potentially give you some extra freedom.  Different states have different requirements, and often, though I'm pretty sure not always, a salesperson's license is required for a bit.  Good luck! 

I am an investor with 32 units now and also a licensed real estate agent. I just got my real estate license in January 15. You have to be a sales agent for a couple years before you can become a broker. I do not recommend waiting to get. License before you buy your first investment. Time is very precious, I bought my first rental property at age 28 and would have started much sooner had I known. 

Get out there and make that first purchase! You will learn so much more doing and experiencing than reading about people who have done it. I have made a lot of mistakes along the way and have learned a lot from them.

@Thanh Vu

You can find the license requirements for your state pretty easily, just go to your state's real estate commission site, it should be there. 

Having a license is NOT an encumbrance or road block to investing in real estate, unless you plan on doing things that are illegal or unethical, there are "those" "investors".

A broker's license adds a bit more credibility to your business card, in reality that's about it as you are assumed to have greater knowledge than an agent in the public's eyes. This route would probably be as a "Broker-Agent" meaning you'd have greater recognition of being a broker but you'd be dealing under another broker as an agent.

Being an independent broker isn't cost effective just dealing for yourself. You may be required to have a sign out, that could mean an office, you'll probably need regular office hours, business phone for the public (as well as regulators). Your office may need to be occupied during your business hours by someone, doesn't usually have to be a licensee. 

Only a fool would attempt to defuse a bomb with simple step by step instructions without proper training. Real estate can be a financial bomb that can blow your financial world apart! I said "proper training" which is what you get taking a class to be an agent, NOT deal making training. Learn the basics first, then learn investor stuff! You also need a good BS Meter, read my blog on "How To Develop A Good BS Meter"!

You don't NEED a real estate license to invest, but you do Need a good education, however, having a license IS a better way to operate in real estate and I highly suggest getting one especially in the beginning. :)

Getting a license is really easy.  Having the ability to deliver sound information and persuade buyers and sellers to listen takes experience.  

A good foundation is owning and controlling real estate.  It would be hard to drop off my children with someone that has never had children.