How can I leverage my real estate license for multi-family deals?
Hi! I am about to get my real estate license next month, and am getting it solely for my benefit as a real estate investor. I have 8 units now, but am looking to scale up into 5-50 unit multi-family properties as my next step. What is the best way to use my license to help me break into multi-families? Should I look to align with a commercial broker initially? (even though I'm not planning to work in the capacity of a traditional broker?) As additional perspective, I'd prefer to invest in or near my local market (Raleigh, NC), where is VERY tough and competitive to find multi-families!
I'd love any advice or perspective you may have. Thanks!
@Julie Pedraza a real estate license is an effective tool to have in your bag, congrats! Professionally, you can build a network among licensees which may provide access to pocket listings. The license also gives you some flexibility to negotiate with listing brokers because you are entitled to commissions, but keep in mind that any commissions must be disclosed to your investors if you are using private funds to syndicate an acquisition. You need to be careful to comply with the real estate advertising rules in your state and watch out for obscure license law violations. For example, here in Florida it is a license violation if a licensee purchasing property for themselves fails to make an earnest money deposit per the contract.
This is not legal advice and does not create an attorney client relationship.
This is exactly what I did 3 years ago. I wanted to Buy MFU and I didn't know what I didn't know. I ended up finding a small family owned CRE company in my market. They asked me to work in their office, and our goals aligned. They were MFU investors themselves...they owned 300 units at the time, and now I think they are up to 800. So I hung my license here, and was able to learn from their experience with renovation, and blighted property.
My main advantage is that when I get the Seller on the phone I have multiple options when it comes to income. I can list the property if it is not something I want to Buy or if they want to much $$ for the property. The license also opened me up to meeting a lot of investors that now I can partner with in the MFU space. Listing a few decent deals on LoopNet or Crexi is all it takes to build the Buyer pipeline.
I would say the best benefit is you are in the trench's you get to see all the deals, and you can capitalize on all of the Seller's you meet rather than just the deals you want to take down.
Good Luck! Matt
Your best bet IMO would be to try and get in with like Marcus & Millichap, CBRE, Cushman & Wakefield, etc. Interview a bunch of places and see what they offer regarding training and tools regarding investment properties. Compare & contrast what they offer for commission splits too. Because ultimately you want to learn how to buy investment properties, yet broker stuff all along the way right? Most brokers have access to software like CoStar, ProspectNow, etc that can help you find property owners, do research, etc. I'm an agent and I remember when I first started, I was with a primarily residential oriented company & I attempted to explain syndications to my broker and he literally said, "I have no idea what you're talking about." haha... Priceless.
Thank you so much, @Robert Borr and @Matt Popilek! Very helpful perspective! Matt, that's so encouraging to hear about the great benefits you've found in joining a CRE company. It's a different path than ALL of my classmates are taking, so it's great to hear that it's a viable path with direct benefits to your RE investing goals. Thanks again!
@Chris Tracy - thanks for the perspective! The challenge for me is that - in the short term, at least - I wanted to use the license primarily for my benefit, and not necessarily as a "job". Yes, I'd like to learn whatever I can in terms of multi-family investing, and I wouldn't mind brokering a few deals along the way, but I'm in no way interested in making this a full time career. So, I'm also wondering if it will be harder for me to get "in" with a CRE company if I'm not really fully committed to it as a career. Thoughts?
I would say your better off at a small out fit rather than the big guys like CBRE. If you wanted to be a full time commercial broker that is where you go and cut your teeth for a few years until you earn your stripes. I would ask you teacher if they know anyone that owns a smaller yet successful commercial outfit a boutique firm or a mom and pop. Make sure they have CoStar and LoopNet subscriptions also another good one is Reonomy if you are wanting to find deals that is the subscription you'll want to have access to. They should also have either a subscription to a service or an employee that prepares OM's for your future listings. You don't want to be in charge of building the marketing pieces it takes too much time.
@Julie Pedraza- I totally understand. Of course you would have to "sell" the big guys and lead them to believe that you are fully committed and in it to win it, despite the fact that you have another vision. The reason why I recommended trying to get in with the big guys is #1) for the training and education you would get and #2) access to software that can be otherwise quite pricey. I hung my licence before with companies (and they were not even considered to be a small outfit, but rather well known) and they didn't even provide a LoopNet subscription for their agents, let alone CoStar.
I know... it's like a jungle sometimes... lol. Realtor problems
Thanks, @Chris Tracy! Great perspective and food for thought as I consider my options going forward. Thanks for taking the time to share your thoughts.
You need to sign up with a brokerage allowing you to taking in as much commission. Most brokerages with a commercial RE department allows you to use Costar, LoopNet for free.
Of course you can purchase these subscriptions for your own use. Some commercial brokerage have very high desk fees and expect you to generate sales not to do investment for yourself so you need to avoid them.
Hi @Julie Pedraza -- I too have the same thought process as you! I am looking to get into the MFU world and was wondering if it makes sense to get my RE license here in PA where I live if I am just looking to do it for my own personal investing? How have things been working out for you? What route did you end up taking? Did you find a commercial brokerage to work for? Thanks in advance for your response! Joe
Hi @Joseph Eaton - I haven't done much with my license yet. I haven't joined a commercial brokerage, as it's really not my intent to represent other buyers and so I'm not sure that's the right path for me. And I haven't been super focused on acquisition these past few months after acquiring 2 properties in August. I'm still glad I got my license for the access I have to any MLS listed properties (smaller multi-family and single family) - just glad to not have to use a middle man to view the properties, access info, and of course benefit from the commission. I've also enjoyed the networking with other realtors in my firm, which I believe will come in handy now and in the future. I'm just still not quite sure how I leverage it to benefit me in finding larger multi-families as I begin to focus more on that next step in the coming year. I can update you if anything changes! Good luck to you!
@Julie Pedraza progress towards a principal/managing broker's license as well so you can perhaps go out on your own one day. In my state it also allows me to manage property for a fee. I built a cash flowing prop management biz as a way to break into syndication. Today we manage nearly 300 million (210m owned; balance fee managed) and it all started with a few small management clients.
@Julie Pedraza thank you! I would love to hear about your progress. I’m just saving and thinking I need to raise funds and get into a larger MF as my first deal vs. messing with small deals
Hi @Julie Pedraza,
Thanks for starting this thread! How are things progressing with your RE license and representing your own deals? I've shied away from being an agent in the past, and similar to you, am not really interested in marketing for deals. However, I am considering getting my license as I start working larger deals and look to bring in investors.
Also, curious if you know, are there any stipulations or limitations with getting an RE license for larger MFU deals? Is it the same as any agent who just needs a broker/brokerage? Are you able to be the RE agent on, say a 10+ MFU purchase the same as you would on a traditional SFR?
Thanks again,