Should I get my RE license?

Question

I know that an RE license is not necessary to be an investor but I would like to bid on HUD and invest in different states to expand and diversify my portfolio. Before I invest in taking the courses I'd like to ask...

Does having the license give you a lot more education and credibility as an investor?

When bidding on HUD, are there advantages to being a licensed agent over a licensed broker or vice versa?

If I don't get my license, what are the best sources to learn RE laws for different states?

Thank you!

Kevin Fletcher · Answer

I just wrote a blog about this I hope you don't mind the length:

TO GET YOUR REAL ESTATE LICENSE OR NOT TO  GET YOUR REAL ESTATE LICENSE?   THAT IS THE QUESTION!

I  have found that many real estate investors that look to do  fix and flips struggle with the decision on whether they should get  their license or not. I have compiled a list of Pro's and Con's and Personal Experiences to help people find an answer to this important question.

I  have been a real Estate Investor for about 8 years doing all types of  investing but mainly Buy and Hold and Fix and Flips. Originally I  planned to get my license primarily to just get better return on my  deals, but as I was going through the process of school for the license,  I really started to get more interested in also being an agent on the  side so supplement my investing income. It has been a blessing so far.

Pro's

• Saving Brokers Fees on Your Deals  - This is the reason most investors want to do get a RE License in the  first place. I saved a lot more in my first purchase/sale with my  license (14k) then it took me in money to go to school, get my license, and all the other fees for the first year which came out to about 3k total. If you account for a 6% +/- greater return on your investment, many deals become a lot more attractive. You can afford to do flips that others cant.
• Supplementary Income   - Now, with my license,  I have worked with client  purchases and  sales, and have already made more this year with my license then with my  investing. If you are waiting for a project to do, or a property to  sell, there is time to work with clients in the lulls that flipping can  create.
• Understanding of the Process -  Going through school was a blessing. I found there is a lot I should  have known about the process of buying a house that my former agents  never told me.  Most agents say "just look over the contract and sign it"  which can be dangerous. There was no way for me to fully understand  these contract until I spent hours studying them. I know now to always  go over the contract with my clients thoroughly for them to understand  what they are getting into, and what are the ramifications.
• Control From Start to Finish - With your License, you can buy, project manage, control timeline, design, problem solve and sell the the project. Its ultimate control, You  will control every aspect from start to finish which makes it easier to  get things done in a timely matter. There are less factors to derail   aspects of the project.
• Being in the Real Estate World/Networking - It  has really been a help to my investing to be an agent because I am more  in the RE world, so to speak. I meet agents buyers, sellers, investors,  title companies, lenders, inspectors, contractors everyday which helps  all aspects of my RE goals. That networking is huge. Also for leads on  projects, The other day I just found a buyer for one property and they  said they needed to sell their house, and it was in poor condition. It  was owned free and clear, and it was an instant deal.

Con's

• Liability Issues - The truth is, Yes,  with a RE license you have more liability concerns. People will tell  you its not worth the liability aspect of it, and going through school  you will see why they worry. Real estate licensing school just prepares  you for the test. The test is predominantly about RE Law, and laws that  are broken, have consequences. It will freak you out honestly,  but after the test is over you will know how to navigate and act  lawfully as an investor with a RE License. The main thing that's  important to learn is  Disclose, Disclose, Disclose... For us as investors Its all about disclosure of adverse material facts about the property.  And above that, don't discriminate or lie. I have not ran into any liability issues and I don't plan to, and there are ways to "CYA" such as written disclosure, contracts,  and honest dealings.
• Control from Start to finish - Above I have this as a pro, but It can also be a Con. Having control from start to finish also means that all the risk and responsibility of any investment is on you.  You have to be on top of the project, or you are the one who will  bear  the brunt of problems that may arise in any aspect of the deal. It can be too much to take on for some investors.

If you have any more questions let me know

Jason Rowlett · Answer

thanks, Brit. I thought it wasn't much of an advantage. Thank you for your insight.

Brit Foshee · Answer

@Jason Rowlett

I got my real estate license after about 5 years of investing without it.

It had Zero impact on my education and credibility.

I don't bid on HUD homes, so I can't respond there.

The biggest advantage was saving money on commissions, and I'd recommend it for that purpose alone.