Minneapolis, MN · Member since 2015 · 13 posts · 3 votes
I am curious if there are any downsides or disadvantages to getting a real estate license as an investor? I heard that when you are licensed agent you are required to hold security deposits in the brokers trust account, but I can't seem to find anything online that supports or refutes that (this would be a MN license).
I also understand that you are required to disclose to tenants that you are a licensed agent, but that doesn't seem like a big deal.
Are there any other things people would consider a downside that I should be considering?
Specialist · Lakewood, CO · Member since 2014 · 1k+ posts · 1k+ votes
9y
I don't know MN, but in CO you must be an agent to manage other people's property. You can still manage your own and do not need the trust accounts. As an agent you may also be required to use the state approved real estate forms.
If you are an investor then I do not see a downside. If you are a wholesaler then you may not be allowed to use your own buy/sell contracts and you have greater risk as you may be held to a higher standard.
If you are a flipper then it could save quite a bit of money if you like the additional work.
If you clarify what you are trying to do in RE you may get more targeted responses.
Involved In Real Estate · Greenwood, IN · Member since 2014 · 63 posts · 26 votes
9y
Fees are probably the biggest concern, between broker fees, local RE board fees (for MLS access) and others, you could potentially be paying $5-10k per year.
Yes on the disclosures to buyers and sellers, but often that doesn't pose many issues.
Also keeping up to date on your license requires continuing education. Classes that you have take to keep up with the local requirements for RE agent CE. You will have to pay for those classes and obviously attending takes time out of your schedule.
A lot of it depends on what you want to do in REI on whether you feel you need to have your RE license. For some it makes sense to have it to save on fees but then again that means you take on all the negotiating and paperwork that goes along with being an agent.
Also yes most brokerages require you to hold earnest money in their escrow accounts (but again that can be dependent on your local state)
Josh Sohar
Flipper/Rehabber · Minneapolis, MN · Member since 2016 · 1k+ posts · 1k+ votes
9y
The coursework and cost and time to maintain the license are the main pitfalls. I am not a realtor but it would not cost anywhere near $5k-$10k to maintain a license unless you are paying for office space. It has been a while since I have looked into it but I recalls ~$500 board fees, likely $100 license renewal, then CPE. Maybe a local realtor can help you out.