FAQ Forum Question: Should I Get My Real Estate License?

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FAQ Forum Question: Should I Get My Real Estate License?

Mindy JensenPro Member
BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes

Hello BiggerPocketeers!

In an effort to clean up the forums, we're creating an FAQ Forum, where the most-asked questions will be prominently featured, along with some really great answers.

I need your help!

Please take a moment to give me your very best answer to the question: Should I get my real estate license? Other variations of this question are What are the pros and cons of getting my license? and Do I need a license to invest in real estate?

Once I have some really great answers to this question, I will create a new thread in the new FAQ forum, and through the magic of computers, make it appear as though these amazing answers all came in order. So please give me your best answers to this very frequently asked question!

Thank you!

***Please note any posts offering agent services will be removed. This thread is to share advice and opinions on getting a real estate license for the purposes of investing.***

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Most Popular Reply

Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
9y

5+ transactions per year, get your own license. 4 or less, its not worth the cost, time or liability.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    9y

    @Ron Dayley  @Mike Cumbie  makes a nice distinction in his post.. you have licesne for the benefit of investing .. and you get a license to enter the vocation of selling real estate and building a career at that.. two different things..

    for the investor.. the cut rate shop works fine.

    for someone who wants this to be their vocation then full service with great training is recommended as you state..

    And my favorite and I have seen many agents go on to great things.. is for said agents to start on a top producer team.. get fed leads and earn while you learn.. Apprentice ( I know with the I want it all tomorrow attitude these days that's a foreign concept).. but those are two very good distinctions.

    Plus the license allows you to do some much more... for instance I am not really active in sales to the public.. but I got a really good referral .. client was 1031 out of vegas looking for 5 to 6 million replacement property.. I found them one at 5 million.. close in 90 days.. I made 100k on that deal.. if I did not have the license that would not happen.. and this client and I have gone on to partner on about 50 new builds.. all because I had my license and the referring party had enough confidence that I could take care of his client..  these things happen.. also referral fee's I will get 3 to 5 of those a year.. did one in Charleston this year client bought 800k rental... and I got 5 or 6k just for referring them to another agent... these type of bene's that you really can't know or understand until your in the business.

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  • Lee S.
    Northern, CA · Member since 2014 · 674 posts · 444 votes
    9y

    Cant beat @Jay Hinrichs experience with this. I got my license almost immediately after I started investing because I saw the advantages to it. I pay $35 a month and work from my home, $425 per transaction for E&O etc or I could pay about $2500 a year total if I was listing or representing more buyers. Another big advantage to being licensed is I can refer listings/buyers to other agents or brokers. If you are talking to sellers, a majority of them that want to sell need to sell the traditional way via an agent/mls. I don't want to waste my time doing listings and dealing with all the paperwork and hand holding so I refer them for a cut, free money. If I didn't have my license I couldn't legally make a dime off of the relationship.

    1Reply
  • Terrell Garren
    Rental Property Investor · Concord, NC · Member since 2016 · 1k+ posts · 3k+ votes
    9y
    Originally posted by @Michael Ristom:

    I asked this question in the form a few days ago and unfortunately didn't get any answers so this works out great! Here's the question: Since I'm an active duty military member I don't have a lot of free time to take off work. I'm new to real estate investment (closing on my 3 property in 5 years) and I'm going to get my license, I just can decide whether I should sit down in a classroom for 4-5 days or take the course online. If I do go the online route, does anyone have any recommendations?

    Active Duty and Vets - Don't forget your 10% purchase discount at the big box stores.  It's saved me a lot of money unfitting and maintaining rental properties.

    0Reply
  • Troy GandeeBusiness Member
    Real Estate Broker · Charleston, SC · Member since 2013 · 795 posts · 454 votes
    9y

    I agree with what these other folks are saying. @Jay Hinrichs has been around the block and knows his stuff.

    I got my license first and started investing because I had to create my own buying/selling transactions in order to pay the bills. Shortly after, I expected to primarily invest and be a licensed agent on the side.

    A couple of years later and that has shifted to about 50/50. The majority of my income is from brokering now. I help investors and luxury buyers and sellers. I love it. It's hard and frustrating, but it fits my personality. Investing is my vehicle for creating lasting wealth. I've always been with a small, boutique company. I love it, but I had 0 training. I basically cut my teeth on my own transactions and calling my BIC a lot. Last year, I left my small company to join a big company and I hated it. I have a lot of freedom and my current company allows me to do a lot of creative stuff both for myself and my clients. I would recommend starting with a big company for training and education sake, but be prepared to doll out a lot of your paychecks. I just got my broker's license a couple of months ago and intend to go independent soon and hope to hire at some point. It's not an easy business. It's more expensive than you'd think and it's a real grind. I wouldn't get your license thinking it's a sexy job, either. I'll be crawling up under a house this Sat morning with a client to see how extensive some joist damage is. Just like flipping houses, the shows are not an accurate representation. It's a very difficult industry and you have to be prepared for a lot of flops before you get even one small success. It's fine to get your license if you intend to use that as a tool for investing, but it really is more wise to just use an agent that knows the market and industry if you don't intend to really dig in.

    0Reply
  • Michael Ristom
    Fort Walton Beach, FL · Member since 2017 · 23 posts · 9 votes
    9y
    Originally posted by @Terrell Garren:
    Originally posted by @Michael Ristom:

    I asked this question in the form a few days ago and unfortunately didn't get any answers so this works out great! Here's the question: Since I'm an active duty military member I don't have a lot of free time to take off work. I'm new to real estate investment (closing on my 3 property in 5 years) and I'm going to get my license, I just can decide whether I should sit down in a classroom for 4-5 days or take the course online. If I do go the online route, does anyone have any recommendations?

    Active Duty and Vets - Don't forget your 10% purchase discount at the big box stores.  It's saved me a lot of money unfitting and maintaining rental properties.

     That's a great tip! Which big box stores do you recommend other than those such as Lowe's and Home Depot? I don't do a lot of big box store purchases. Thanks again!

    0Reply
  • Steve Babiak
    Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    9y

    @Mindy Jensen - here is a thread that contains a few links that will get you a broad variety of answers both pro and con:

    https://www.biggerpockets.com/forums/12/topics/729...

    1Reply
  • Mike CumbieBusiness Member
    REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
    9y

    @Jay Hinrichs brings up another excellent point about the referrals.

    If you are planning on "wholesaling" and you run into clients who want to sell for retail prices (Most you will find). You can get a referral fee for just sending them to another licensed agent. Talk about a whole lot easier work than wholesaling. Just find someone who wants to buy or sell a house and send them to an agent. If they do you get paid a portion of the commission. I have 2 deals going on right now that I have referral fees going out to other agents on. They got a lead from somewhere (online or word of mouth) and they didn't want/have the time so they sent them over. 

    If you are not licensed I can legally give a hearty "Thank you". If you are licensed I can legally give you cold hard cash..... Just for sending a referral over.

    1Reply
  • Thomas Hickey
    Real Estate Investor · Peabody, MA · Member since 2013 · 304 posts · 91 votes
    9y
    Ron Dayley Is it possible to be an agent and just work on your own on deals only for yourself? I only have interest in getting the 3% on rental properties I buy. Also I would like to be able to access properties. Is it possible to do these without being part of an agency?
    0Reply
  • Ron Dayley
    Clarksville, TN · Member since 2016 · 238 posts · 96 votes
    9y

    You have to be an agent under a broker for at least 3 years then you can become a Broker. 

    0Reply
  • Thomas Hickey
    Real Estate Investor · Peabody, MA · Member since 2013 · 304 posts · 91 votes
    9y
    Ron Dayley So I would have to be an actual broker to get the 3% on deals and show myself into properties? I have no intentions on representing others
    0Reply
  • Ron Dayley
    Clarksville, TN · Member since 2016 · 238 posts · 96 votes
    9y

    No, an agent can do all that but you would have to "hang" your license at a brokerage/agency.  So you would have to "work" for a broker for the first 3 years.  If you were only wanting to do your own thing then I agree with Jay about finding a discount brokerage to hang your license with.  

    1Reply
  • Thomas Hickey
    Real Estate Investor · Peabody, MA · Member since 2013 · 304 posts · 91 votes
    9y
    Ron Dayley appreciate the info.
    0Reply
  • Hai Loc
    Specialist · Toronto, Ontario · Member since 2012 · 2k+ posts · 891 votes
    9y
    I had a long reply but my phone died. In short if it compliments you investing there is nothing wrong with it. Active flipper it would be great for comps and submit offers and even list your own flip. If you already rolling with rentals and need a license to access MLS for comps to grow your business also good. If you are actually pursuing a career of buying and selling and maybe for investing you need to think a bit deeper. In my Market Toronto I wouldn't recommend anyone to be an agent unless they have a minimum network of 100 professionals or willing to generate leads via cold calling or doorknocking that doesn't cost anything. Unless you have deep pockets to drop on advertising online then go ahead but that is still not guaranteed success. Name of the game of a realtor Generate leads follow up get listing presentation appointment and get them to sign. But you might start as a buyer agent early in career but the big bucks are getting listings Good luck whatever path u choose
    1Reply
  • Erica Williams
    Houston, TX · Member since 2017 · 4 posts · 0 votes
    9y
    Originally posted by @Michael Ristom:

    I asked this question in the form a few days ago and unfortunately didn't get any answers so this works out great! Here's the question: Since I'm an active duty military member I don't have a lot of free time to take off work. I'm new to real estate investment (closing on my 3 property in 5 years) and I'm going to get my license, I just can decide whether I should sit down in a classroom for 4-5 days or take the course online. If I do go the online route, does anyone have any recommendations? 

    You may want to look into Champion Realtor School.

    0Reply
  • Erica Williams
    Houston, TX · Member since 2017 · 4 posts · 0 votes
    9y

    I believe a your license will enhance your knowledge. After reading the most of the discussions, if there's no conflict of interest clause, why not? Obtaining your license appears to have more Pros than Cons. Best wishes. 

    0Reply
  • Moe Garcia
    Real Estate Agent · West Orange, NJ · Member since 2016 · 11 posts · 3 votes
    9y

    For me it can get me quick access to properties and ability to make offers quicker. But the biggest help is it helps me become an area expert, making it easier to spot good deals.  A bonus is you can lower your expenses on the sale. As for the split with broker they will share more of the split the more you sell the key is to a company that does not reset split every year.

    0Reply
  • Daniel Guas
    Real Estate Professional · Levittown, NY · Member since 2016 · 38 posts · 10 votes
    9y

    A few questions that I have:

    1) If I get my license, do I need to have a real estate broker hold it for me or can I just hold it myself? My understanding was that I need a broker to sponsor me and hold my license. 

    2) If I have my license and I represent myself and purchase a house, how do I get my commission? Am I given a separate check for my commission or do they just deduct my commission from the selling price of the house?

    0Reply
  • Jeremy Kuchenbecker
    Investor · Winter Garden , FL · Member since 2014 · 72 posts · 27 votes
    9y

    Heres my .02 because I just got my license a few weeks ago: Sign up for an online class, click through the courses, study for a couple hours and take the exam the next day. It will take you a day and will save/make you a significant amount of money. 

    Find a brokerage that gives you a good commission split 90/10 or 80/20. 

    0Reply
  • Hai Loc
    Specialist · Toronto, Ontario · Member since 2012 · 2k+ posts · 891 votes
    9y
    Daniel Guas I believe in most states you must be registered through a broker until you actually have a brokers license. The broker you register to will determine your commission split, monthly fees etc. So shop around. My advice will be to go to a broker that has decent training.
    0Reply
  • Amy Ranae
    Real Estate Broker · Maple Grove, MN · Member since 2016 · 216 posts · 80 votes
    9y
    I like having my license because of the access to information I can get. I have the option to earn a commission on my own purchases and I save some money when I sell. Also, it's a good way for me to earn cash for projects or downpayment. It works for me but it's not for everyone. If you only had it for your own projects you may look inexperienced when you put offers together to submit and some agents won't work with you. It may be more expensive than it's worth if you're only doing your own deals too, depending on your brokerage.
    0Reply
  • Thomas Hickey
    Real Estate Investor · Peabody, MA · Member since 2013 · 304 posts · 91 votes
    9y
    Here's a question for those who are active in real estate. What are the average hours and what does a day look like for a full time commercial realtor/ broker? I realize that there may be some occasional weekend/ night hours but is that the norm? Never been a fan of residential, showing someone 50 cape houses on beautiful July weekends has never appealed to me. Wondering if commercial is much different?
    0Reply
  • Ron Dayley
    Clarksville, TN · Member since 2016 · 238 posts · 96 votes
    9y
    As a Full time Realtor, you are an independent contractor so you set your own hours. Like any small business owner, you hours have to work for your clients.
    0Reply
  • Marty Joyner
    Alexandria, VA · Member since 2017 · 12 posts · 8 votes
    9y

    What is the preferred way to get your license??  Through a sponsoring firm or outside of that??

    0Reply
  • Harrison D.
    Investor · Ottawa, Ontario · Member since 2016 · 23 posts · 31 votes
    9y
    Does anyone have any info from a Canadian perspective?
    0Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes
    9y
    Originally posted by @Mindy Jensen:

    Hello BiggerPocketeers!

    In an effort to clean up the forums, we're creating an FAQ Forum, where the most-asked questions will be prominently featured, along with some really great answers.

    I need your help!

    Please take a moment to give me your very best answer to the question: Should I get my real estate license? Other variations of this question are What are the pros and cons of getting my license? and Do I need a license to invest in real estate?

    Once I have some really great answers to this question, I will create a new thread in the new FAQ forum, and through the magic of computers, make it appear as though these amazing answers all came in order. So please give me your best answers to this very frequently asked question!

    Thank you!

    ***Please note any posts offering agent services will be removed. This thread is to share advice and opinions on getting a real estate license for the purposes of investing.***

     Should I get my real estate license? In short, maybe, maybe not.

    Getting a real estate license takes time and money. Generally speaking you need to spend between 40 and 120 hours in the classroom as well as time studying for the exam. The cost to obtain your license in roughly $2,000 and you will be spending a little over $1,000 every year to maintain it. You will also need to regularly attend continuing education courses and some brokers have mandatory meetings at their offices.

    If you are an arm chair investor who would like to passively park their capital in real estate investments then no you should not get your real estate license. One should always use their time for the highest and best use. For you that is likely whatever job you work at that gave you this additional capital to invest.

    If you are someone who is looking to create a primary or even secondary source of income or wealth through active real estate investing then yes you should absolutely get your real estate license. Having your license has many benefits.

    1. Income generator. Many people want to get into real estate investing to create income because they don't have any. They have this big grandiose plan of becoming a deal maker but they don't have any money to do any deals. If you have no money, there is nothing for you to "invest" in. This is where having a license comes into play. You can use your license to provide value to investors who do have money. You will be paid handsomely to to learn the business while connecting buyers and sells together. Do that a few times and what do you know? You have enough money invest in your own deal.
    2. Leg up on the competition. Let's say you are already a step ahead of the person in scenario 1. Having your license will be a huge benefit because you now have more knowledge and resources than your competition. When a new property hits the market you don't need to make a phone call and wait for another agents schedule. You can get up and go see the property whenever you like. You will be in there before anyone else.
    3. Savings. You will be able to earn a commission as an agent for properties that you buy. When you sell properties you will act as your own listing agent and save close to half of what everyone else needs to pay. This gives you a leg up on your competition as you can turn a profit on slimmer deals than they could.
    4. Networking. As an agent your entire job is about meeting buyers and sellers. This means that people will reach out to you first. So many more opportunities will come across your desk than the desks of the general public.
    2Reply
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