After speaking to a few investors who have had skin in the game now for over a decade, several mentioned the idea of having one person (wife or myself) become a real estate professional and then start the business of investing etc. This then has the advantage of not limiting the passive income loss filing for tax purposes.
curious if people on here have some thoughts pro/con on this as well as peoples experience on how this would even work in the Denver area (ie requirements to do so, how to maintain this title, etc).
mean while i will continue to read up on it...seems CO requires like 168 hours of class and then passing the test at a min.
John...I'm not sure about the tax implications, but my cousin (@Dan Mackin ) is a RE Professional in the Denver area. Perhapse he could be of assistance.
@John A vanecko how close to are to having 25k a year in passive lost? If you're nowhere near that, don't worry about it now. It's putting the cart before the horse so to speak.
In addition to the initial expense of getting your license, you'll need to pay some annual fees (at least a brokerage to hang your license at) and get E&O insurance, to name a few things.
Depending on the real estate strategies that you're using, having a license can severely limit the more creative strategies. I don't know DORA's official position, but I doubt having one spouse does the frowned upon creative strategies and then the other spouse do the transactions as an agent would be acceptable in their eyes.
It depends on how much business you or her would do. If you don't do enough, you won't be proficient in the contracts, processes etc. At these price points, it can cost you money and get you in trouble. If either of you would pick up clients and do 8+ transactions a year, then I say go for it.
@John A vanecko - This has been the great debate on BiggerPockets for awhile now. Like almost any debated question, the answer is.... it depends.
It sounds like you want to become an agent for yourself and NOT transact properties for other people. It sounds like you want access to the MLS, to view properties at any time, to negotiate your own deals, and to earn a commission each time you do a deal.
Those reasons, for me, are enough to want to get my license. I am actually going through the process right now. It's 168 hours of classes + a national and state exam. I am going through the Colorado real estate school, it was only $400 for the online class.
I'm not sure of your investment strategy, but if you are looking to do more than one deal, I would suggest getting your license. It will cost you ~$3,000 to get the license initially and maybe another $1,000 per year to maintain (very rough numbers).
If you buy a $350k property, at 3% commission, you make over $10k by transacting your own deal. If you're doing an FHA loan (3.5% down), you are effectively buying it with 0.5% down.... not a bad deal.
If you are looking to do 5+ deals a year 5+, getting your license may not make a whole lot of sense because it's tough to transact multiple deals at scale. Your expertise will likely be elsewhere.
From the sounds of it, you and your wife are looking at real estate as an investment whereby you will purchase 1-2 properties a year for the next X years. If that's the case, I would suggest one of you getting the license. That way when a deal pops up, you don't have to coordinate with anyone else to see it.
Hope this helps!
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing