New Investor - Should I get my real estate license?

15 Replies

Hi All, I’m a new Investor currently looking and saving for my first deal and also have a strong interest in getting my real estate license. I want to get my license because I’d like to work as an agent in Utah for the next year or so. I’m confident that I can find moderate success with the network and skills that I have; however, I‘d like to make sure I‘m thInkIng about this the rIght way. I’m under a few assumptions that I’d like you all to either support or poke holes in. I assume that if I go through the real estate agent course and exam, that I’ll have several advantages as a new Investor: 1. I’ll understand more thoroughly the entire process of making offers, signing contracts, inspections, financing etc. 2. I’ll have easy access to new listings, market reports, email alerts that I can customize. I can also go look at any house I want any time. 3. Save 3% on any deal I purchase as I take the commission instead of giving it to an agent. 4. I’ll build a network as I work with other agents, lenders, and buyers/investors. Could you guys challenge my thinking here or suggest other reasons why this might be a good idea. Regardless, I plan to get my license to be an agent, but I’d love your feedback on if you think this will help me as an investor. Are there any hidden costs to being a realtor that I should be considering? Thank you all so much!

I want to first say that I think its great you want to be an agent.  However there are some flaws in your logic.  Also please realise that there aren't many part time agents.  The agent/investors that are doing well is because they treat one of those things as a full time job and the other part compliments it.

Lets address each point of your post.

1.  Never been an agent but heard from other agents that your classes won't teach you to negociate, put in offers, inspections, financing etc.   Its all  taught to you in the brokerage, usually working underneath other agents, or through the school of hard knocks where the broker tells you you messed up.

2. Yes but you can get an agent to aready set those alers up for you without having to pay the MLS fee.

3.  More like 1.5% because your brokeage will take a portion and can limit you on how much you make.  Side not Kellar Williams tells their new agents to charge 7%.

4.  These are all things you can do with out a real estate license.

Overall I recommend you to choose a hat and stick with it for a bit, after a bit then add the next.  If you try doing both things at once that may hurt more than help.  Its not easy being an agent or investor so you don't want to jump off the deep end and fail at booth.

Also if you find this helpful please don't forget to vote it up

I agree if you want to sell real estate get your license first.  And do that until you are comfortable doing it without always needing someone's help ( We all need help at some time).  Then when you are secure you could maybe start investing.  

Or you could just jump in and do both but you will not learn how to write hardly anything in classes.  The in the seat classes seem to work the best from what I have heard.  Going to meet and greets are a great way to learn also.  

Good Luck!

@Connor Cushman

Hi Connor, I will address each of these below. 

1. I’ll understand more thoroughly the entire process of making offers, signing contracts, inspections, financing etc.

  Answer: You wont learn most of this until you work in a brokerage or under another agent for at least 6 months. It will be a year before you are really good at this. Writing an offer is complicated but you can pick it up by the 3rd time but you still might make a mistake. Inspections are easy because you just schedule them with an inspector. Financing is not what you learn in RE school. You will learn that my studying finance or talking to a lender a lot. 

2. I’ll have easy access to new listings, market reports, email alerts that I can customize. I can also go look at any house I want any time. 

Answer: you will have access to new listings, marker reports and alerts. It will take time to learn the market and the backside of the MLS so you can find good deals as they hit the market. An experienced agent can do this for you and only send you solid flips or investments.

3. Save 3% on any deal I purchase as I take the commission instead of giving it to an agent. 

  Answer: yep you will save 3% but you will miss out on deals because you wont have a great agents sending you the best deals on the first day they hit the market. After about a year you will likely be able to spot some good stuff easily. 

Being a real estate agent is a fun and hard job. I love it but it is hard hard work. Finding deals is not as easy as having access to the MLS. Also, if you get in full time then you wont have a W2 and qualifying for a loan is a huge PITA. You need 2 years of W9 income before they let you use it on a loan app.

Like others have said I would choose one and go for it and once you master it then go for the other. If you have access to another W2 then I would go the agent route and you wont need to worry about loan approval on the W9 income. It will take you months to get up in running in RE. 

I hope you find this helpful. If you want more information message me or post here. I am open to helping. 

@Eric Gardiner Eric thanks so much. What knowledge do you really come away with after finishing the real estate course? Do you agree with Jackson that there aren’t part-time agents? I was thinking of doing 20-30 hours a week in hopes of doing a couple of houses a year. Not really for making big bucks, but more for the experience and understanding of the buying and selling process while also helping out a friend here and there. I see the logic of not trying to do too many things at once though.

@Connor Cushman yes the percentage varies by brokerage and experiance level.  Some brokerages with experienced investors it is just a very low flat fee.  Other brokerages its just a fee.  Others are a percentage.  I don't know where everyone stacks up but it does vary by brokerages and different borkerages will offer different things, i.e. training, advertisement/marketing etc....

@Connor Cushman I was under the similar impression as you about two months ago and actually took the leap to get my real estate license in order to learn the market and eventually become a full-time investor. I decided to focus on going full-time real estate agent by July 2018 (because I have a FT marketing business I need to transition out of.) 

I've now had my license for two weeks, joined Keller Williams, and am struggling to get in enough time blocks outside my current marketing work/family responsibilities just to set up my real estate agent systems (MLS, CRM, training, website, social media, etc.) I soon realized that it would be VERY challenging to try to be an agent part-time, manage my marketing business, and also do real estate investing on the side.

Focus is the name of the game. You really need to be full-time as an agent to make it work -- and actually be profitable, especially as a newbie.

@Kevin Dang Thanks for calling me out! I should remove that. I put that in my bio because I was a couple of steps into the process already and didn’t want to have to update it in a couple weeks, but I’ve removed it now! Do think you probably have better things to do than that though :)

@Connor Cushman - I believe you are thinking about this correctly. To cover your costs of being an agent, you probably only have to close one deal per year. Whether that's your own or someone else's, it doesn't matter. At the end of the day, it just depends on how much volume you want to do. 

If you are looking to be a full time agent, your first year is typically slow, but then grows exponentially from there as you build your network and get your systems going.  

If you are just being an agent for yourself, make sure you close at least one property per year to make it worth it.

The only time it really is not worth getting your license is if you are closing 5+ deals per year and you need to focus on growing your business rather than doing agent work.

For me, I plan to close on 1-2 deals per year here in Colorado and have found it very beneficial to have my license. I just closed on a property and got $10k at closing, which helped with the rehab. 

Here is a blog post that Mindy Jensen wrote about the benefits and costs of getting your license. It's a few years old, but still relevant. 

https://www.biggerpockets.com/renewsblog/2014/12/03/real-estate-license-benefits-costs-investors/

@Connor Cushman If you'd like you can shadow me at my office to see what it's really like. It's not what most people expect. Like most have said the schooling just teaches you how to stay out of jail. The rest is taught by the brokerage. There are lower split brokerages that you can pay less $500 a transaction but they teach you nothing and just check the paper work at the end. You still have MLS Dues that are $900 (Might be more I don't remember) a year and $33 dollars a month. Then there is errors and omissions insurance and that depends on your brokerage. It depends on your goals and where you want to go. Keller Williams does not teach new agents to take 7% listings as @Jackson Pontsler said commission is negotiable and you get what you pay for. I do know of one KW agent who does 7% listings but that's not in Utah. 

I've learned more on investing from BP and other investors than I've ever learned from being a Realtor. The only advantage is access to the MLS to run comps.