If you are not active doing deals, yours or other people's, all the fees and time you invest are more or less a waste. If your going to be purchasing putting time in reviewing MLS data will be very helpful.
From my understanding it’s usually strictly commission based. If you’re only doing a couple deals this isn’t worth your time.
You need to do ten plus deals a year for it to be worth it. Also remember being an agent is top heavy meaning a few agents make most of the money and most agents make very little
I don’t think you need it before getting into real estate and many agents don’t invest. Probably the majority of agents don’t invest.
It doesn’t hurt and you learn a lot about the other sides of real estate. It is a commission based job so it would probably be two years after starting to make money as an agent that you could get a loan.
I wouldn’t get into it until you can afford to not make money for at least 6 months.
The pros are that you can learn the market by showing properties. You will meet more professionals in the industry and more people will get to know you. Please let me know if I can help more.
I disagree with @Caleb Heimsoth . You do not need to do "ten plus deals a year" to make it worth your time.
The median sales price of a single-family home in America is $247,000. A 2% commission is $4,940. If you have a 50/50 commission split with the Broker, you still earn $2,470 which more than pays for all your licensing costs, MLS fees, etc. Anything earned after that is profit.
The greater benefit is that you can leverage your license to get an inside track:
1. Other investors. People like Caleb don't want a license so they go to a REALTOR to buy/sell. If you market yourself properly, it will give you an inside track to Buyers/Sellers. Prove yourself and they'll continue throwing business your way and you will eventually start finding deals.
2. Other REALTORS. You will have access to the MLS but the real deals are found before they hit the market. Who finds out about these deals first? REALTORS! Network with as many agents as you can and let them know you are an investor (or working with investors). Offer a fat "finder fee" and they will bring the deals to you before looking anywhere else because they can earn a commission without having to do any work.
I bought two investment properties in the past 18 months that were off-market. The first was a hoarder house. The Sellers were too embarrassed to let anyone see the home and didn't' know what to do with it. Their agent knew I was in the market for a deal so I snuck over and took a look. I made an offer "as is" the following day and picked it up for half price. ARV was 3x the purchase price! The second opportunity was an investor looking to sell off his portfolio and retire. I learned about it first and made an offer on an apartment complex. He sold it to me for 75% of market value because I was willing to take it "as is" and close under terms that helped him. He also sold two other properties through me and bought a single-family home, which earned me another $25,000 in commission.
Do you need a license? No.
Is a license worth it? Absolutely!
We invested for 5 or so years before I got my license. You do not need a license to be a successful investor.
I decided to get mine for a couple of reasons: 1) we have a direct mail campaign going that occasionally produces leads better suited for retail sale - commission opportunity; 2) I network with a ton of people, perhaps I can get a listing with my flipper friends or help someone buy a house - commission opportunity; 3) we started as landlords but are adding flips to our business model - I can save the agent commissions on the seller side by listing myself (same is true of our rental listings).
A 4th benefit that I did not consider: I recently listed an "as-is" house on the MLS and got a ton of interest from investors, most of whom I did not know before: these folks get added to my database in case I pick up another junker listing or want to wholesale a deal.
To crank on Nathan's already great post. If your in a major market with a lot of brokers you should be able to do way better than a 50% cut. A # of brokers in the Chicago market offer 100%, and charge other fees rather than a percentage. The good part for the managing brokers is you pay for some of their expenses, even when you don't produce. That likely eliminates some just there to drink the coffee.
@Caleb Heimsoth any sales position is TOP heavy ... car's boats planes real estate stocks and bonds
etc etc.. wholesaling especially.. the way guru's teach it the wipe out rate is probably greater than 90%
real estate taken seriously is a career.. I have been doing it 40 plus years.. it leads to all sorts of different aspects of real estate.
take my expiernces.
started selling bare land and ranch land..
then worked as a buyers agent for a syndicator locating development tracks and apartments.
Then morphed into HML ( in CA a RE broker is allowed to also be a lender)
which then led me to buy and sell timber land then Timber rights.. and subdivide those timber lands to sell to home owners and Vineyard operators.
then go on to buy court house steps.. listing my own buys.. save hundreds of thousands a year.
owned a few brokerages along the way..
Build new construction and list all our own homes.. last year we sold over 15 million in new construction that alone brought 450k to us .. as we listed our own properties.
its a long long career.. really depends on what you want to do.. along the way the wash out rate for agents is above 50%.. and like I said wash out for wholesalers is about 90% but that 10% can make a nice living .. and morph into other areas.. usually they like to think they want to be landlords.
oh and along the way I owned over 500 SFR's as rentals.. that my man is a ton of work and was very glad to sell out..
so lots of ways to use a brokers license along with some of the most successful brokers out there are Commerical brokers long apprenticeship but if you can stick it out its a 300 to 1mil a year income JOB and you are rubbing elbows with the very rich and very successful.. not some beginner wholesaler.
Wow!!! Everyone’s feedback is great appreciated, just looking at the potential that Real Estate offers makes me excited. Thank you all for your personal stories. It gives me motivation. I wish you all much success and I hope one day that I will be able to share my success stories!
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