Moving from Rentals to Realtor?

Question

I currently have 5 SFH rentals and I am considering getting my Real Estate License.

Are there any downsides to getting a Real Estate license and owning rentals?

I would potentially use the license to supplement retirement income and for expanding to more rentals when the market eases a bit.

Any thoughts?

Joe Zinger · Answer

@Joe Splitrock yes that makes sense that it takes different skills especially on the sales side of things and dealing with clients vs contractors.

Joe Splitrock · Answer

Being a real estate agent is a completely different job than being a real estate investor. Just because you are good at one, doesn't mean you will be good at the other. Some investors are actually better at selling real estate than managing their own portfolio.

Jennifer Lyles · Answer

@Joe Zinger

Yes, some of them in GA are pretty particular about it.  It was a question I asked when I was interviewing brokerages.

Joe Zinger · Answer

@Jennifer Lyles great information on the number of rental limitations I never thought of that angle.

Joe Zinger · Answer

@Marcus Auerbach That is great feedback not really needing the income generated from the license in retirement but being successful at it would be a nice bonus. I currently have a corporate job and my network may allow for some quick references (or not lol). I talked to my investment realtor and she expressed the lots of offers required especially when going against all cash offers.

Jennifer Lyles · Answer

@Joe Zinger  Hi Joe, I actually do both right now and the only suggestion I have is to make sure that the brokerage you chose to hang your license with will allow you to have more than 1-3 rentals. Some brokerages have their own PM division and/or see it as a conflict of interest and may require you to have them manage your properties or get an outside property manager.  One of the bonuses to being an investor and realtor is saving on closing cost!  It will add up over time.  Good Luck!

Marcus Auerbach · Answer

Not much of a downside, but the upside is not what you might think. Getting licensed does not make you a better investor. I own and operate a portfolio and got licensed after I quite my corporate job. You would never hire an agent like yourself (a bloody rookie) to represent you, why would you hire you?

New agents burn out very fast, we have a close to 90% drop out rate after the first year. And then again after the second year. Google: how many homes does an average realtor sell in a year?

The market has gotten so much tougher, it seperates the pro's from the part timers. A friend of mine owns a brokerage franchise and his agents currently have to write 7 offers to get one accepted. The expectation used to be that when you finally find a house your buyers like, you should be able to get the offer accepted, maybe (worst case) you have to find a second house.

Agents who do less than 20 deals a year lack the market experience and involvement and have an increasingly tough time to compete. So if you want to get licensed do it right and become a full time pro.