Value in Real Estate or GC License?

Question

I am new to REI and trying to learn all I can before trying to find my first flip and finding funding for that flip. I am wondering if it would be worth it to get either a real estate license or a general contractor license. I feel that a real estate license will help me learn a lot more through hands on, but a GC license will save a good bit of money on bigger rehab projects. Any input, relevant or not, is welcome.

April Thibodeaux · Answer

Yes you guys are completely right, the four years experience I need to get the GC license would probably give me what I was hoping to get out of the license. As for the Realtor license, I was not thinking of it as my main income, that would hopefully be houses, but more like a tool I have to use for the flipping. As mentioned though it may not be worth it to maintain a realtors license for the little bit I would use it. Thanks for the quick responses!

Nathan Gesner · Answer

A quick search shows that you need four years experience to get a GC license in Florida. Even if you had the experience, I would find out if a GC is necessary and what benefit it would add to your investment business.

A real estate license is definitely handy. It enables you to find deals before they hit the market. You can represent yourself and save commissions. As you build your network you can buy/sell for other investors bringing value to them and possibly finding more deals. The downside is that becoming a REALTOR and staying can be expensive and hard to make a living. Around 70% of all agents quit within one year and around 80% are gone within three.

April Thibodeaux · Answer

Thank you everyone for the input, this is exactly why I came here. It looks like I would be better off investing my time in continuing to collect knowledge about REI rather than pursing either license. I do think a good real estate agent will be very helpful to my journey and of course it wouldn't hurt to have someone more experienced than me assist with the first deal.

Jacob Wathen · Answer

Hello! It looks like there is a lot of valuable information in this forum.

I debated the same thing an ultimately I chose to become a real estate agent. I chose to focus on real estate sales full time helping primarily investors. I have gained so much valuable information and great contacts that will help my personal investments. That being said I agree that it may not be the best option if you do not plan on putting your license to use outside of your own investments.

I have learned the most from being a part of my RE office/community and speaking with the variety of seasoned investors and agents. The initial real estate classes and preparing for the test really did not help me understand the industry as much as I thought it would.

John Mocker · Answer

April,

You may want to explorer the cost and availability of Liability and Workers Compensation coverage for a General Contractor.  In our area, many fewer carriers will insure a General Contractor as compared to an Artisan (plumber, electrician, carpenter, etc..) and the cost is generally 3 - 4 times higher.   Before you invest the time and effort it would be good to know if you can get affordable coverage when your done.

Kevin Martin · Answer

@April Thibodeaux for a “GC” license in Florida you need to show 4 years experience as a supervisor on buildings 3-4 stories or more. They have residential contractors licenses for only residential projects and “Building” contractors which is limited to buildings 3 stories or less. If you have a construction or engineering degree the required experience goes down to 2 years. Another kicker is you are required to hold a minimum 300k liability insurance policy and workman’s comp to stay active and current as a contractor.

If you dont plan on starting a construction business then there is no need for the license in residential. You can pull the permits as the owner and hire the subs as needed. There are still a lot of things to watch out for if you go this route but essentially you are playing contractor without the need for license.

Jeffrey Stasz · Answer

I went through this same analysis and went the other way. I think building the construction knowledge is way more helpful, harder and more time consuming then learning about the contract and sales side of the business.

Moreover, Redfin, Trulia, Zillow et.al have rendered the MLS pretty much useless. Pretty much every listing is available online.

I also find that I get a lot of value out of GOOD re agents. These folks are working with buyers (my potential clients) all day everyday and so their design input and predicted final pricing is super helpful in putting together a project pro-forma.

Ultimately, go with what interests you more. If you have the time and capital, you can usually get around the apprenticeship requirement by taking the NASCLA level 5 building exam. That's the one for the big boys and it's a hard hard test. If you plan on going that route you should budget 3-6 months of study time (if you have experience) and 6-12 months of study time if you don't. BUT... if you pass, you will have learned more about the technical side of construction and specifying then you ever thought possible. And you'll find that your conversations with other building pros are much improved.

Good luck.

Value in Real Estate or GC License?

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