Benefits for becoming licensed in RE and/or as Home Inspector

Rehabbing & House Flipping
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Benefits for becoming licensed in RE and/or as Home Inspector

Derek Stewart
Edwards AFB, CA · Member since 2017 · 12 posts · 2 votes

Hello all, 

I have zero experience in the RE market or investing but I will be leaving Active Duty soon and plan to make flipping an immediate part of my portfolio with a partner who has minimal experience but 100% more than I have. With little capital to add initially from myself, he will be putting up the majority of the cash and we will be buying properties in the central Michigan area (likely in and/or around Lansing) cash deals/cash rehab and then sell. Overall goal is strictly to grow capital as quickly as possible for a move into the apartment/multi-family buy and hold world elsewhere (near a coast and near military bases). I certainly want to contribute as much as possible to become a 50/50 partnership sooner than later and one way, while we both work day jobs, is to get a real estate license and/or certified as a home inspector. We will both be pouring in sweat equity into the properties and dedicating 100% of our available time into achieving the larger goal quickly. 

My question to anyone willing to provide insight is basically what are the benefits of choosing one or doing both? Is it a waste of time with plans to move away as quickly as possible to do either? While there is cost associated with both, I have money available and the training/schooling would be at no cost to me. With that in mind, does anybody have both and would they recommend that at any point for an individual who plans to buy and hold properties for a long time to come? I appreciate anybody willing to share their perspective on this and if anyone is in the general area in or around Lansing who may want to chat further, I would appreciate that too. 

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Bob Okenwa
Real Estate Agent/Investor · Peoria, AZ · Member since 2016 · 2k+ posts · 2k+ votes
9y

An RE license will give you the ability to view homes on your own, submit your own offers, and earn commissions. You don't need to get a license to learn how to inspect homes, but it would certainly help overall although getting an inspector license just to flip homes isn't something you see people doing. You'd probably be better off getting a GC license before getting an inspector license.

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  • Bob Okenwa
    Real Estate Agent/Investor · Peoria, AZ · Member since 2016 · 2k+ posts · 2k+ votes
    9y

    An RE license will give you the ability to view homes on your own, submit your own offers, and earn commissions. You don't need to get a license to learn how to inspect homes, but it would certainly help overall although getting an inspector license just to flip homes isn't something you see people doing. You'd probably be better off getting a GC license before getting an inspector license.

    2Reply
  • Eddie Egelston
    Residential Real Estate Broker · Crystal Lake, IL · Member since 2012 · 124 posts · 94 votes
    9y

    Inspector license is not the way to go. It's a full time job and it's slow to start. In my state it requires something like 1,000 hours of apprenticeship. All the guys I know doing it have a ton of experience in construction too.

    RE license has a lot of synergy with flipping, and you can hit the ground running after getting the license.

    You save $300-$500 per property inspecting yourself. You save approx 3% of $200,000 on a flip. No brainer I think.

    1Reply
  • Mark Russell
    Fredericksburg, TX · Member since 2017 · 51 posts · 36 votes
    9y
    Eddie egelston if someone were to get their realtor license would you have to hold a job at a realty office or are you more like an independent contractor? I guess what I'm asking is if its the norm to have the license as an investor and not really use the license working under a broker?? I hope that question makes sense.
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  • Ritch Bonisa
    Specialist · Indianapolis, IN · Member since 2016 · 841 posts · 480 votes
    9y

    @Mark Russell It's not the norm to have RE license.  Most of the investors I come into contact with don't have one.  There are other players that we call investors that are licensed.  Ex. if you wholesale properties, then it's a huge benefit. @Derek Stewart I agree with @Bob Okenwa a GC license would be much more beneficial vs. inspector.  How can you really evaluate your deal if you don't understand scope of work and real rehab costs?  Purchase price and exit price are many times much easier to figure out.  When I see investors really make costly mistakes - it's with the rehab. 

    I think you should get your RE license and then do whatever it takes to understand construction and the related costs. Most investors overlook the "construction smarts" and don't pay enough attention to how subs and GCs operate and why they do things the way they do.  Understanding those costs and the people that do the work = gold.  

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  • Taylor Debs
    Real Estate Agent · Milwaukee, WI · Member since 2017 · 8 posts · 8 votes
    9y
    Mark Russell if you do decide to get a real estate license, it is possible to just hold it and not use it. I got my license just to be able to view properties myself, write my own offers, and save money selling my properties. I know the type of investor I want to be could benefit from having this license. However, there are costs to be aware of that might outweigh benefits for you. 1. Monthly fees charged by the broker you associate your license with. This is unavoidable since you must put your license with a brokerage. Fees vary however from firm to firm. 2. Annual association fees. Some brokerages require their agents to be members of local and national associations of real estate agents. 3. Continuing education costs, which vary by state.
    1Reply
  • Derek Stewart
    OP
    Edwards AFB, CA · Member since 2017 · 12 posts · 2 votes
    9y

    Thank you everyone for the discussion so far. Great information and the consensus seems to meet at being a no-go on the home inspector piece. My thought process behind it was to get a taught education on what to look for as opposed to the unfortunate experience piece but with that much apprenticeship, it just doesn't make sense. I fully intend on getting the real estate license but @Taylor Debs brings up some good information on costs of which I was unaware. 

    @Ritch Bonisa I see that you are in Indianapolis, which is where I am from originally and still have family. In a midwest market with affordable housing virtually everywhere (compared to say the LA's or NYC's of the country), do you have much insight into the flipping aspect in the Indy market and do you only represent yourself or other investors?

    I think the HI idea is out the window and the GC seems great but the long-term goal is not flipping forever but partnered ownership of large multi-families which I would expect sub-contracts most any work like that beyond what a paid maintenance man can do. So, in that space, with the long-term goal in mind, I think it would be beneficial to gain the knowledge on how a GC thinks but would it benefit me as much moving into those commercial properties?

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  • Ritch Bonisa
    Specialist · Indianapolis, IN · Member since 2016 · 841 posts · 480 votes
    9y

    @Derek StewartI represent myself as well as many successful investors that I work with on a regular basis. Yes, I am talking in terms of flips,  SF rentals, MF rentals (up to quads) - rehabs to flip or to rent.  I work with alot of remote investors, they end up needing me, because they don't have local contacts and don't know good contractors.  

    The thing I see alot is investors who are great with running numbers, but they lack in real construction knowledge.  I think this can create a dangerous situation.  Anyone selling a property will give - "rehab costs".  These numbers are often low and not well put together.  I've also seen too many contractors who low-ball estimates and then up the ante with a lot of change orders in the middle of a project.  My point is that we don't understand our deal until we have real info on construction costs.  That's why I think it's important for us all to keep learning more on that part of the equation. 

    It may not be important for us as investors to be a licensed GC, but I see great value in understanding construction costs and processes.  I think it holds true for many situations.  It might not be ideal for where you are going, but it might add value while you are getting there.  I don't see how it could hurt whether it be commercial or residential construction.

    I am always more attracted to the markets that fly under the radar. Over the past few years I've seen many investors who live in big markets, shift their focus into those markets like the midwest where their money goes farther and helps them diversify to some extent. 

    We are seeing this younger generation flock to the Indy and market want to buy homes close to downtown.  That's why flipping is working well in Indianapolis right now.  The distressed properties are there, the end buyers are willing, it's all happening in the right areas, we keep getting more and more tech-type jobs, and the city has done a wonderful job of paving the way for all of it to happen - the downtown area is really developing.  20 - 30 years ago when I was a young man, no one would have thought about living in these areas.  We are also attracting alot of attention from buy & hold type investors and people who want to own those SF & smaller MF type properties.   It's a fun place to be right now!

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  • Zachery Buffin
    Investor · Away · Member since 2017 · 167 posts · 131 votes
    9y

    I will tell you from my personal experience of getting out of the Air Force my Real Estate License has been invaluable to me but not for the reasons I thought it would. I had expected to be able to reduce costs in closing and access the MLS to find deals. What it got me was a job where I learned, and continue to learn, so much about what I never knew before. I rarely use the MLS to find a deal (I will absolutely take them if the math works) but now I have legitimacy in the industry because I am a real estate professional. I am certified, I have at least some core of knowledge, I also have a code of ethics that I am held to, it matters at least a little and sometimes a little can count for a lot. It cost me something like $1000.00 all said and done to get the license (school, license, fingerprint, etc.) and it has made me so much more. If you have questions PM me and we can talk a little more, if not best of luck brother!

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  • Derek Stewart
    OP
    Edwards AFB, CA · Member since 2017 · 12 posts · 2 votes
    9y

    @Zachery Buffin I am glad that it has worked out for you. Did you plan to become a REA when you got the license? Or was that just a possibility or not in the plans at all? I completed my Bachelor's degree (TODAY!!!) and I will be using that to get in, hopefully, with a very good company that pays well above the average income in the area we will be working. I don't foresee real estate as my primary job until the investing side takes off but I know better than to rule everything out. 

    @Ritch Bonisa I agree completely and I enjoy working with wood, doing home projects for myself and the idea of doing AS MUCH sweat equity in our properties as possible appeals to myself and my partner. I will keep that in mind and see if I can't make a good connection with a GC when I get to where we are going. I have heard that before about Indy and I am really glad it is on the up and up. I know the city put a lot of money into downtown when the Superbowl came in and the areas surrounding have all really grown. I don't get home all that often but I was blown away by areas past Brownsburg and Pike that were so built up. A lot changes quickly I guess. The area we intend to flip (I think) fits that "under the radar" bill you like and that is what I am hoping for as well. I am nervously excited to get this all underway and get moving on my goals. I practiced an analysis on a flip the other day and just in basics (obviously without seeing the home) I realized quickly that I have a lot to learn about ARV, rehab costs and other things too but those stuck out. If you could offer one piece of advice in evaluating comps for someone new like myself, what would that be?

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  • Mark Russell
    Fredericksburg, TX · Member since 2017 · 51 posts · 36 votes
    9y
    Thanks Taylor debs! That's good info
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  • Zachery Buffin
    Investor · Away · Member since 2017 · 167 posts · 131 votes
    9y

    I also can already see a danger here too, you are a military man and an artist of sorts. Perfection is something you will seek but honestly you may need to back away from. I don't want to discourage at all but this is a product you are selling, you should absolutely take pride in it but not artistic pride. Never, I mean never, rehab a property for yourself. Always ever look at the market and your comps. Whatever comps you are using post rehab mimic hard man! Don't reinvent the wheel, make the same wheel time and again and you will have yourself a multimillion dollar industry soon!

    1Reply
  • Brett Snodgrass
    Investor · Indianapolis, IN · Member since 2014 · 2k+ posts · 601 votes
    9y

    @Derek Stewart It has been my professional experience that having a real estate license has done nothing but helped me in business. The biggest advantages are that you get full access to the MLS and can save a ton of money on brokering your own deals instead of having to pay out commission fees on each deal you buy or sell. The disadvantages I hear people say, in my opinion don't hold that much weight. Having to disclose everything in your

    transaction is a GOOD thing and having a higher standard of professionalism over your head will only help you serve people better. If it was up to me, I’d say get your license it’s far worth it!

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  • Derek Stewart
    OP
    Edwards AFB, CA · Member since 2017 · 12 posts · 2 votes
    9y

    @Brett Snodgrass Thanks. Nice to see another Indy patron on here. I plan on getting it without a doubt, first thing. I see that you wholesale. Is that in Indy or elsewhere?

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  • Brett Snodgrass
    Investor · Indianapolis, IN · Member since 2014 · 2k+ posts · 601 votes
    9y

    @Derek Stewart Yes I do wholesaling in Indy and nearby areas like Anderson, Fort wayne ...

    1Reply
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