Is Getting a Real Estate License Worth It for a Multifamily Investor?

Question

I’m looking to invest in multifamily properties (3-4 units to start) and was wondering if getting my real estate license would be beneficial. My main goals are to house hack, find great deals, and possibly expand into more investments over time.

For those of you who invest in multifamily properties, have you found having a real estate license to be an advantage? Does it help with deal flow, commissions, or negotiations, or is it more hassle than it’s worth?

Would love to hear from both licensed and unlicensed investors about their experiences!

Allan C. · Answer

You already have great responses above, but I'll put my vote to not get license. It'll be a distraction and I think it'll cost you more in the long run.

If you get your license, you'll naturally want to be involved in all aspects of the deal, which ultimately prevents you from focusing on the most important parts of the deal.

I invest in multiple markets and have strong relations with numerous realtors in each market. It's like with any business, vertical integration has is pros and cons, and you won't fully understand the tradeoffs until you are far down the line. Focus on taking ones step at a time and then make a decision when you are more informed. You aren't losing anything by deferring this decision.

Rick Albert · Answer

Every market is different, but generally speaking from a California perspective is having the license does absolutely nothing to help you with investing. It also does not help you with negotiations, deal calculations, etc. These aren't investment licenses, they are salespeople's licenses.

There are also costs to having the license each year and you have to hang your license with a broker.

It will ultimately depend on how many properties you plan on buying each year. If you were buying 10 properties a year, then it might be worth it. If you are buying one every few years, don't waste your time.

Plus there are other advantages to having separate representation like they schedule the showings, do the paperwork, deal with inspectors, etc. Your dollar per hour matters.

David Schmiediche · Answer

I'm an agent and investor who has been growing my sales business for 6 years and my investment portfolio for 5 years. Having a real estate license has been a huge benefit because it has allowed me to grow both my businesses by doing the same work. Here are a break down for the reasons that you should or shouldn't get a license.

Perceived pros:

1) Access to MLS Data: The realtor MLS will have access to more information than Zillow, that will be beneficial for an investor (Primarily the Rent Roll)

2) Save on commissions: The commission would be paid directly to you, so you would get a 3% discount on all properties you purchase

3) Networking: Being licensed helps you build relationships with agents, brokers, and investors to help find deals that may be worth pursuing.

4) Off market listings: Since you will be lead generating for listings to sell as a real estate agent, every deal you come across is a potential property to purchase.

5) Additional income: You can earn commissions by representing other buyers and sellers to purchase properties that you decide to pass on.

Cons:

1) Time & Cost: Licensing requires education, exams, fees, and ongoing continuing education.

2) Almost every benefit I mentioned above can be done without a real estate license, so there is it's a lot of money and time for no benefit.

Yes, the biggest con to getting a real estate for an investor is that it doesn't help at all. I put perceived pros, because you could do the most of the pros of having a license without getting one, as listed below.

Why the pros aren't really pros:

1) Reach out to your number one agent that you've been growing a relationship with. If that doesn't work, reach out to the listing agent directly to get the missing information.

2) After the first one or two deals, you'll be getting more than a 3% discount because you should be getting better at finding/negotiating deals, on and off market. Even as an agent, if another agent brings me a deal 10% or more below market value, I want to pay him 3% (Even if it is out of my own pocket) so that he continues to bring me deals. Some people will say that agents buy all of the good deals, so there aren't any deals left for the investors. Statistically, agents don't own investment properties, and if they do, it's just one or two units. This means, for all of the great deals they find, the only way they can make money on the deals, is to get a commission form selling it.

3) You can network with agents and investors, without having a license. Find the agents that do a lot of multifamily investing in your market and call them to schedule lunch or coffee. Network with them and make sure they know that if they bring you a deal that goes to closing you will pay them their commission of 3%, even if the seller doesn't pay it. You don't need a license to network with people.

4) All the lead generating that you would be doing as an agent can be done as an investor. Door knocking, cold calling, direct mail marketing, etc. This is the work you would be doing as an agent to find leads to buy or sell. You can, and should, be doing the exact same thing as an investor. Sadly, just because you have a license, doesn't mean off market deals fall into your lap.

5) This is the only real benefit to having a license. Since you will be lead generating to find off market deals and buyers, if you find a good deal that isn't perfect for you, you can sell it to someone else and get a commission. Although, if you are doing this, you are becoming an agent. An being an agent isn't easy, 70% fail in the first year.

All of that to say, the only reason you should get a license is to sell real estate. If you wish to be a real estate agent, get a license. If not, there is no real benefit and it will cost you more time and money than it is worth.

Wale Lawal · Answer

@Tiffany Alfaro

Getting your real estate license can be beneficial if you’re serious about finding off-market deals, saving on commissions, and scaling your multifamily investments over time. As a house hacker and future investor, it could help with deal flow, market insights, and direct MLS access, but it does come with time commitments and disclosure requirements. If you plan to be hands-on in acquisitions and networking, a license might be worth it—otherwise, working with an investor-friendly agent could save you the hassle.

Good luck!

Ryan Kelly · Answer

@Tiffany Alfaro I don't recommend getting a license unless you want to help others buy and sell real estate. Like any profession, it will take many hours to master, lots of continuing education, dues and fees, and unnecessary distractions if you are just looking to purchase a few investments for yourself. Start working with an investor-friendly agent and focus on finding deals.

Bruce Woodruff · Answer

It will give you no advantage (as someone who has done what you're thinking)

Access to the MLS is no big deal any more, the free sites like Zillow and Realtor are better in many ways IMHO.

Save your money (it's not cheap) unless you want to buy/sell RE for other people.

Cole Bossert · Answer

Having a real estate license can definitely offer some advantages, but it’s not necessarily a must for everyone. Here’s a breakdown:

Advantages of having a license:

1. Access to the MLS: You’ll have direct access to MLS listings, which can give you an edge in finding deals before they hit the market.

2. Commissions: You’ll save on commissions when you buy your own properties, which can add up over time, especially if you’re house hacking or buying more properties down the road.

3. Networking and Credibility: Being licensed can help build credibility when negotiating or dealing with sellers, other agents, and investors.

4. Deal Flow: You can work with other investors and potentially find more opportunities since you’ll be plugged into the real estate community.

Disadvantages or considerations:

1. Time and Costs: Getting and maintaining your license takes time, money, and effort. If you’re not using it consistently, it might not be worth it.

2. Increased Responsibility: Once you’re licensed, you might feel more pressure to operate within certain legal and ethical guidelines, and there’s more paperwork involved when you’re buying or selling properties.

3. Distractions from Investing: Sometimes, the focus on making commissions and working with clients can take your attention away from your own investments.

Overall, if your main goal is to house hack and find great deals for yourself, getting your license could help in a number of ways. But if you’re only casually investing, or you don’t want to commit to all the responsibilities that come with being licensed, it might be worth weighing the pros and cons before jumping in.

Have you thought about the time commitment or how often you plan on buying/selling?

Abel Curiel · Answer

@Tiffany Alfaro your license can help you if you use it to consistently and systematically generate leads.

If you find good potential deals, you can aim to buy them yourself and/or with partners.

The deals that aren't a good fit, you can list them on the market for other investors/end buyers and earn a commission. You can also earn additional commission by helping the sellers purchaser their next property.

I agree with @Obed Calixte and @Ke Nan Wang. With a RE license, you only get what you put in.

That said, if you don't get your license, you can still:- purchase lead data- subscribe to dialer systems for cold calling (i.e. RedX, Mojo)- send mailers- use SEO marketing - and moreIf you cannot convert the lead or don't like the deal, not having a license can limit your ability to monetize the relationship with the seller. It becomes more difficult to refer the deal or collect a commission, although wholesaling the deal could be an alternative.

Obed Calixte · Answer

The value you get from a license is a direct correlation to the effort you put in.

As it relates strictly to investing, biggest benefits are access to MLS, viewing listed homes on your schedule, ease of contract access and agent only events. Those benefits are amplified when the market/property are hot.

Ke Nan Wang · Answer

Having a real estate license would mainly teach you the ins and outs of the real estate transaction. These knowledge can be very helpful in terms of negotiation. The art of negotiation is to figure out what people want that you can give, and what you want that people can give, and figure out a creative way to bridge the gap.

If you aren't discipline enough to learn this on your own, the road to getting your real estate license will force you to learn them. Then being around real estate brokers, continuous training opportunities will help you learn more.

Being a real estate agent is the same practice as any other professions. You will be better at the things that you are interested in and do it day to day and not be much knowledgeable or experienced in the area that you don't practice in. Even my license allows me to do commercial transactions but all commercial deals I will refer out to commercial real estate agents.

Commission is always good. But when you are making most money from getting good real estate deals, the commission is really just cherry on top. It's not gonna make or break a deal.

In terms of deal flow, you can do this without a license. That's why we have bunch of wholesalers around. Some wholesalers have real estate license but most of them don't. It's basically a loophole to let people do real estate without a license. Not commenting on the legality or ethics of this activity but saying people are doing lots of deals without a license.

Is Getting a Real Estate License Worth It for a Multifamily Investor?

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