What are the benefits and drawbacks of getting a broker's license to start in real estate investing?
Not sure exactly how it works in NY, but in CA you are typically required to first get your salesperson's license and then hang under a broker for a couple years, take a few more classes and another test before you can become a broker. But once you have that it frees you up to set your own course. Of course there are lots of benefits to coming under the wing of a broker who might assist with the details of the business (desk, phone, E&O insurance, leads, etc.)
1) multiple ways to earn income
D) referral fees
2) you can actually learn the market by being an active broker - which helps you be a better investor
3) discount on your own deals by earning a commission
4) easier to make offers cause you can rep yourself
5) if you invest, you may be able to file taxes as a real estate professional which gives ability to write off virtually everything (check with CPA on that)
6) the better agent you are, the more clients Youll work with (maybe investors if that's your thing) and you'll get to lead them into different areas with diff strategies and you'll get to see first hand how they play out. It's like learning and earning on someone else's dime.
1) disclose disclose disclose that you are an agent
2) there is a annual cost to be an agent (varies state to state)
3) continuing education to keep your license in place - this is a con because its additional cost/time BUT also a pro because your educating yourself.
4) slippery slope when facilitating deals you have interest in as an agent. You are a "shark" so you can't take advantage of people. State will see you as a shark
5) held to higher ethics and thus, easier to get in trouble if your doing questionable things
If your getting a license just to invest I think it's a waste.The value is doing this business actively because it educates you on the target market of certain properties/areas and helps make you a better investor in the long run. If your not doing it active, save your time and money do what your comfy with or good at. Plus, you need to be good at sales to be a good broker. Can't be passive, thin skinned, and shy.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing