Newbie here! Would it benefit me to get my real estate license?

33 Replies

Hello everyone! 

I've spent the last few weeks lurking on the forums and am excited to finally make my first post! My question is... do you think it would be worth it to get my real estate agent license before investing?

Here's a little bit about my situation... I'm 27 years old. My partner and I are moving back to Minnesota from LA in the next few weeks. We're planning on living with my parents for approximately a year (big sigh) to pay down as much debt as possible. Rents seem to have increased a lot in Minneapolis in the past two years that we've been gone. We rented in Minneapolis for 7 years before moving to LA. I'm pretty familiar with the Uptown area, South Minneapolis and parts of Northeast.  

I don't know that I'd feel comfortable carrying the mortgage of a SFH in a year, but I think that investing in a MFH might be a good option for me. I make good money as a registered nurse so while I could afford to carrying the mortgage of a SFH, it is much more appealing to have lower monthly expenses with renters sharing the cost of a mortgage while I continue to pay down the mountain of federal student loan debt I have.

I don't anticipate that I will be able to take the plunge into purchasing for at least another year. I have an unconventional schedule as a nurse (working 2-3 12 hour shifts per week). Do you think that it would be beneficial for me to get my real estate agent license to work part-time on the side over the next year to gain some experience and knowledge in the Minneapolis market? I realize that there is a bit of an investment in getting the license and would like some local advice on whether or not this advisable. I also know that being an agent can be time consuming and that there are different opinions on whether getting a license for part-time work is worth it. 

Thanks in advance for any words of wisdom that you have! I look forward to being part of the Bigger Pockets community!

Hey Kayla,

I too live in the Minneapolis area and I am currently in a similar situation. I am currently in school for Real Estate and I must say I’m glad I went for it. It’ll be extremely beneficial for you to learn the ins and outs. Plus, You could make some good money while doing so! I would go for it if I were you! Even if you don’t close as many deals as you’d like being part time, the knowledge and experience you’d gain is a plus! 

I would consider that you will need to work for a broker and they would take a cut. You also need errors and omissions insurance, mls access fees, local association fees, state and national fees, continuing education costs, among other costs.

You also would be inexperienced to begin with and if you are not doing good volume it could take years to get to a point where you have good grasp of all the odd situations that come up.

As a buyer if you are looking for off market deals fsbo you can do those deals without you license anyway. If you are looking at MLS listed deals the seller is already paying for the buyers agent (mls agreements specify the compensation on every listing).

I can tell you that for the first 20 contracts I felt like prey against the predators. If you are interested in getting it for personal use I would advise against it, as it will not save most investors enough money, but if you want to do it full time it is like anything else, you get what you put into it. I hope this helps.

I do not have experience as an agent, but you need to figure out what your goals are in RE.  Do you want to be an agent to help others buy/sell homes, or are you looking at this as an option to purchase something and be able to open your own doors?

If you do not have a lot of connections-specifically people who may be looking to buy and sell, you will need to figure out how you are going to get work.  Without good relationships, it might be hard to make it worth the time.  

It's hard to be an agent part time outside of working with select friends and family. I do not recommend being a part time agent, from personal experience.

I do think it gives you a slight advantage as an investor but that's just my perspective. Everyone has their strengths and some will benefit from having a license. It may drive others crazy. If you're just doing it for MLS access, don't do it. I can set that up for you and you won't have to spend all the money doing the courses and paying fees.

If you want to eventually do it as a career it's a great place to be.

@Kayla Wagenmann - I have both my MN Real Estate Broker license and MN Residential Building Contractor License. After the initial investment in courses and exams, holding a license costs a few thousand dollars per year (this accounts for state, local, national Realtor dues, MLS access fees, and continuing education costs). If you're able to work one transaction per year, the commission from that transaction should more than cover the cost of maintaining your license.

As others have mentioned, it's totally dependent on your goals and comfort level. I do not have any intention of selling/buying with clients full-time; however, I find that I typically work 3-4 transactions annually for myself or friends/family. I also appreciate having access to all of the market data and MLS analysis tools when comping properties, learning about new neighborhoods, etc. True, you can have any Realtor set you up with auto-emails and searches, but then you're at the mercy of their responsiveness, etc.

I'm working on building a portfolio of properties outside of the metro area, and as such, I'm working with an agent who specializes in that target market. The biggest downside for me is not having MLS access to gain a faster understanding of the market (fully examining sales in neighborhoods, quickly comping properties when they become available, etc).

Based on both approaches, I'm biased toward having the license but also knowing when it's best to utilize an agent to achieve your goals.

Hey Kayla, I think your 3/12's schedule would work really great for being an agent. The most important thing is being able to respond to your clients and get them into houses when they need to, so you actually have more free time than other people who work a 'normal' part or full time job and do real estate on the side. 

For me, having my license has been a way for me to learn about the business and make some money to put into buying properties of my own. They feel like a really great partnership. I get how that wouldn't be for everyone though. I also feel that the knowledge I gain from doing investing benefits my buyer/seller clients.

I had a real estate license in Texas for about 30 years.  I have been a member of Biggerpockets for about 3 years learning very much there and because of my medical condition I spend most of my time 10 to 12 hours a day, seven days per week, on the Internet and I read a book about every two weeks.  From what I have looked at and listened to many, I have noticed that that somebody's thought about licensing gets many pros and cons depending on the license status of the individual.  Licensees usually say yes and the non-licensees say no.  I tend to agree with the person that says to invest first and make that decision later but if the time and cost does not bother you getting a license could help your knowledge and can make you some money later on.  I never used that full time because of my honesty feelings and it maybe who you know.  Good luck to you!

Hey Kayla, welcome to the family! The “short answer” is no, you don’t need a license to make money in real estate. The longer answer is, is not a bad decision to get your license first, but please know these three things:
1) The real estate course required to get your license has NOTHING to do with making money. It’s about protecting the public. Although I do not know the Minnesota exam, almost every state in the nation uses a similar set of guidelines for teaching the real estate course. About 3/4 is National in nature (and standardized) and about 1/4 is local laws pertaining to real estate agency. If you are familiar with the term “Bird Dog”, a real estate agent is just a bird dog who is licensed to be one; 2) After getting your license, you’ll spend about $2,000 per year +\- to keep your license, regardless of whether or not you’ve actually made a dime, so be prepared to do something that first year to cover the cost of getting and keeping the license; 3) The average annual salary of a real estate agent is $42,000 per year according to the Bureau of Labor Statistics, the federal agency that tracks what different jobs pay across the country. No question, you can make 2-3 times this as an investor, with the same amount of effort.
I’ve had my license for 34 years, I am a CCIM and GRI, and I run a brokerage firm with 40 agents. We also have a real estate school that teaches BOTH classes on how to become an investor and how to become a real estate agent. If you were close, I would suggest taking one of our real estate investor classes first, to see if you really like the business. If you do, then go get the license. If there is someone in your local market with a good reputation for teaching real estate investing, “hands-on”, give that a shot. The commitment to get a license is not about you, it’s about the clients you serve, and a number of people who do get their license usually figure this out after investing a few thousand dollars, which is one of the reasons so many get their license, but less than half keep it after 2 years.

I am an investor, self managing landlord, and GC, I specifically don't Want to get a realtor license so I’m not considered a real estate professional for tax designations so when I periodically sell something, I still qualify for long term capital gains.  Being a realtor has limitations as all transaction are regarded as regular income (add both side is SS and regular tax rate  25 percent, instead of long term capital gains15 percent) so for me it’s the difference of 23 percent taxes versus 46 percent.

Originally posted by @Tianna Wade :

Hey Kayla,

I too live in the Minneapolis area and I am currently in a similar situation. I am currently in school for Real Estate and I must say I’m glad I went for it. It’ll be extremely beneficial for you to learn the ins and outs. Plus, You could make some good money while doing so! I would go for it if I were you! Even if you don’t close as many deals as you’d like being part time, the knowledge and experience you’d gain is a plus! 

 Thank you for the encouragement and sharing your experience thus far, Tianna! Are you taking your courses online or in-person?

Originally posted by @Amber Gonion :

I would consider that you will need to work for a broker and they would take a cut. You also need errors and omissions insurance, mls access fees, local association fees, state and national fees, continuing education costs, among other costs.

You also would be inexperienced to begin with and if you are not doing good volume it could take years to get to a point where you have good grasp of all the odd situations that come up.

As a buyer if you are looking for off market deals fsbo you can do those deals without you license anyway. If you are looking at MLS listed deals the seller is already paying for the buyers agent (mls agreements specify the compensation on every listing).

I can tell you that for the first 20 contracts I felt like prey against the predators. If you are interested in getting it for personal use I would advise against it, as it will not save most investors enough money, but if you want to do it full time it is like anything else, you get what you put into it. I hope this helps.

Amber, thank you for your input! The various costs for maintaining a license has definitely been something that I've considered, and one of the major reasons I sometimes lean on the side of NOT getting a real estate license. Additionally, I want to be able to commit enough time to being  a real estate agent to be able to be an effective agent for my clients. I know there is a lot to learn, and I would definitely need to find a supportive broker and/or team if I were to do this part-time. I do not want to mess anything up for my clients because I lack the experience or resources. 

I know that I would probably have to do at least 3-4 transactions per year to make the associated fees worth it. However, I know that it is unlikely that I would become a great real estate agent if I only did 3-4 transactions per year. If I were to pursue being an agent, I would likely try to find a nursing job were I only work two 12 hour shifts per week so I could dedicate 5 days per week to real estate. I could always pick up shifts for extra money if needed, and I would not need to worry about benefits since I would be benefited working that amount of hours at a hospital. 

I don't want to transition to real estate full time as I really do enjoy being a nurse and helping others. However, being a nurse can be quite draining, and it is not something I want to do full-time for the rest of my life. I am hoping that getting into real estate will allow me the financial freedom to be a part-time nurse instead of a full-time nurse. 

Originally posted by @James W. :

I do not have experience as an agent, but you need to figure out what your goals are in RE.  Do you want to be an agent to help others buy/sell homes, or are you looking at this as an option to purchase something and be able to open your own doors?

If you do not have a lot of connections-specifically people who may be looking to buy and sell, you will need to figure out how you are going to get work.  Without good relationships, it might be hard to make it worth the time.  

 James, thank you for your thoughts! When I first started looking into real estate a few weeks ago, I was looking at becoming an agent. However, I stumbled across a Bigger Pockets podcast and starting looking into real estate investing and thought that may be a better option for me in the long-term. I am not in the position to start investing for at least another year, so I'm thinking that being an agent during that year would help me get a better feel for the industry. As I stated in a reply to another poster, I am trying to get away from being a nurse full-time. I like being a nurse, but doing it full-time is draining. Ideally, I would be a nurse part-time (two 12 hour shifts per week) and fill the rest of my time with real estate (as an agent or investor or both). I'm just trying to figure out how to best utilize the upcoming year while I pay down some debt. The idea of helping others buy and sell homes does excite me! However, I do get nervous about not being the agent my clients deserve since I am not doing it full-time. 

Kayla,

Welcome here to b/p, I have been here for close to 6 years and have met some great connections here on b/p. Your question is popular with people getting started in real estate. I started in real estate when I was your age 27 and I found a mentor that was a land guy with no real estate licence. So he taught me how to operate as a principle not a realtor. There are pros and cons on both sides of the fence. The first question to you is you want to invest or sell real estate and make a commission, start with that question first and go from there. If you have a licence someone can always take it away from you? I have been doing deals for close to 40 years and never had a licence and did many deals. Hope this helps some.

Originally posted by @Jordan Moorhead :

It's hard to be an agent part time outside of working with select friends and family. I do not recommend being a part time agent, from personal experience.

I do think it gives you a slight advantage as an investor but that's just my perspective. Everyone has their strengths and some will benefit from having a license. It may drive others crazy. If you're just doing it for MLS access, don't do it. I can set that up for you and you won't have to spend all the money doing the courses and paying fees.

If you want to eventually do it as a career it's a great place to be.

Jordan, thank you for your input! Having MLS access is definitely something I consider a huge positive about being a real estate agent. I want to have as much information on hand as possible when analyzing deals. However, I'm also interested in helping people buy/sell houses and making some commission doing transactions before I dive into real estate investing. I don't know that I'm in the financial position to be taking the risks of investing just yet. I want to make sure that I am well-informed before I start making investments. I feel like being an agent might be a good introduction to the industry. While I know that this is different from investing, having knowledge of the market as an agent would definitely be beneficial.

You say that being a part-time agent would probably not being worth it. Do you think that being a nurse (working two 12 hour shifts per week) would lend itself well to being an agent? I realize that being a full-time agent is better for your clients and your own growth as an agent, but I would guess that I have a lot more availability than your average part-time agent. I don't want to transition to real estate full-time as I do enjoy being a nurse. However, I definitely don't want to be a nurse full-time. 

I would love to connect sometime. I see you have a duplex in Northeast, and this is an area that really interests my partner. He is a little hesitant with investing in real estate, but I think if I found a good deal in Northeast, I could definitely win him over :) 

Originally posted by @Keith Linne :

@Kayla Wagenmann - I have both my MN Real Estate Broker license and MN Residential Building Contractor License. After the initial investment in courses and exams, holding a license costs a few thousand dollars per year (this accounts for state, local, national Realtor dues, MLS access fees, and continuing education costs). If you're able to work one transaction per year, the commission from that transaction should more than cover the cost of maintaining your license.

As others have mentioned, it's totally dependent on your goals and comfort level. I do not have any intention of selling/buying with clients full-time; however, I find that I typically work 3-4 transactions annually for myself or friends/family. I also appreciate having access to all of the market data and MLS analysis tools when comping properties, learning about new neighborhoods, etc. True, you can have any Realtor set you up with auto-emails and searches, but then you're at the mercy of their responsiveness, etc.

I'm working on building a portfolio of properties outside of the metro area, and as such, I'm working with an agent who specializes in that target market. The biggest downside for me is not having MLS access to gain a faster understanding of the market (fully examining sales in neighborhoods, quickly comping properties when they become available, etc).

Based on both approaches, I'm biased toward having the license but also knowing when it's best to utilize an agent to achieve your goals.

 Keith, thank you for your response! This post reflects a lot of the same thinking that I have regarding being a part-time agent and how that could benefit me as an investor in the future. I'm definitely the kind of person that is borderline obsessive when making large decisions, so I anticipate that waiting for a realtor to respond when I'm trying to get a deal would drive me nuts. However, I don't want to create a liability for myself by being licensed, and I know another investor here has mentioned that there are some tax disadvantages to holding a license. Have you found that being licensed has been a tax disadvantage for you? 

Originally posted by @Amy Ranae :

Hey Kayla, I think your 3/12's schedule would work really great for being an agent. The most important thing is being able to respond to your clients and get them into houses when they need to, so you actually have more free time than other people who work a 'normal' part or full time job and do real estate on the side. 

For me, having my license has been a way for me to learn about the business and make some money to put into buying properties of my own. They feel like a really great partnership. I get how that wouldn't be for everyone though. I also feel that the knowledge I gain from doing investing benefits my buyer/seller clients.

 Amy, thanks for your encouragement and point of view as an agent and investor! I agree in that my unconventional schedule would make me more available for clients than your typical part-time real estate agent. Also, thanks for reaching out to me directly through messaging. I have responded to you there as well!

Originally posted by @Michael Lee :

I had a real estate license in Texas for about 30 years.  I have been a member of Biggerpockets for about 3 years learning very much there and because of my medical condition I spend most of my time 10 to 12 hours a day, seven days per week, on the Internet and I read a book about every two weeks.  From what I have looked at and listened to many, I have noticed that that somebody's thought about licensing gets many pros and cons depending on the license status of the individual.  Licensees usually say yes and the non-licensees say no.  I tend to agree with the person that says to invest first and make that decision later but if the time and cost does not bother you getting a license could help your knowledge and can make you some money later on.  I never used that full time because of my honesty feelings and it maybe who you know.  Good luck to you!

 Thank you for your thoughts, Michael! I have perused a lot of the forums here on Bigger Pockets and other websites, and I agree that people tend to have very different opinions about whether or not being licensed as an agent is beneficial as an investor. You're right in that it seems that the majority of people who hold licenses say that they think it's a good idea while those who do not have a license say it is unnecessary and can be a disadvantage in some ways. I really appreciate all the feedback I've received so far on this post as everyone's input will definitely play into my decision about whether or not to get my license. I'm hesitant to invest first, just because my financial situation. I don't think that I'm in the position to be taking large financial risks just yet. At least I can anticipate the exact cost of the investment I will make if I chose to get my license. If I were in a better financial position right now, I would definitely start getting involved in real estate by investing with an owner-occupied MFH and go from there. 

@Kayla Wagenmann I was in Minnesota for a few days over the weekend! Very very cold to say the least! I would suggest getting your real estate license if you plan to do 3-4 sales a year. The cost of doing business as a real estate agent is pretty pricey. I would also suggest creating a plan for your own real estate investing and figure out if within your plan it makes senses to get your license.

Originally posted by @Sherman Ragland :

Hey Kayla, welcome to the family! The “short answer” is no, you don’t need a license to make money in real estate. The longer answer is, is not a bad decision to get your license first, but please know these three things:
1) The real estate course required to get your license has NOTHING to do with making money. It’s about protecting the public. Although I do not know the Minnesota exam, almost every state in the nation uses a similar set of guidelines for teaching the real estate course. About 3/4 is National in nature (and standardized) and about 1/4 is local laws pertaining to real estate agency. If you are familiar with the term “Bird Dog”, a real estate agent is just a bird dog who is licensed to be one; 2) After getting your license, you’ll spend about $2,000 per year +\- to keep your license, regardless of whether or not you’ve actually made a dime, so be prepared to do something that first year to cover the cost of getting and keeping the license; 3) The average annual salary of a real estate agent is $42,000 per year according to the Bureau of Labor Statistics, the federal agency that tracks what different jobs pay across the country. No question, you can make 2-3 times this as an investor, with the same amount of effort.
I've had my license for 34 years, I am a CCIM and GRI, and I run a brokerage firm with 40 agents. We also have a real estate school that teaches BOTH classes on how to become an investor and how to become a real estate agent. If you were close, I would suggest taking one of our real estate investor classes first, to see if you really like the business. If you do, then go get the license. If there is someone in your local market with a good reputation for teaching real estate investing, "hands-on", give that a shot. The commitment to get a license is not about you, it's about the clients you serve, and a number of people who do get their license usually figure this out after investing a few thousand dollars, which is one of the reasons so many get their license, but less than half keep it after 2 years.

 Sherman, I really appreciate your advice. Thank you! When I originally started looking into real estate, I was interested in becoming an agent. Investing in real estate is something I stumbled upon while listening to podcasts about being a real estate agent. I've read a lot about how the courses don't really prepare you to sell real estate, and I realize that I need to partner with the right broker and/or team if I decide to become a part-time agent. The costs of maintaining a license is what worries me the most. Since I'm in the financial position where I want to pay down my debt aggressively (hence, the reason I'm deciding to move into my parents with my boyfriend and 3 pets for the next year, BIG sigh), I'm worried about wasting money on license that I could be using to pay down my debt. On the other hand, I could make more money as a real estate agent to pay down my debt. I know some would say that I should focus on paying down debt and working more shifts as a nurse, but in all honesty, working full-time as a nurse is really draining and makes me hate my life. I'm hoping that real estate will allow me the financial freedom to work part-time as a nurse. My only worry is not having enough availability to best serve my clients or not having the necessary experience or resources to make sure that I don't screw anything up for my clients. 

Originally posted by @Melissa Gittens :

@Kayla Wagenmann I was in Minnesota for a few days over the weekend! Very very cold to say the least! I would suggest getting your real estate license if you plan to do 3-4 sales a year. The cost of doing business as a real estate agent is pretty pricey. I would also suggest creating a plan for your own real estate investing and figure out if within your plan it makes senses to get your license.

 Melissa, thank you for the advice! Yes, Minnesota is pretty cold! I'm really hoping that the 1-2 feet of snow they got last weekend melts before I move back in a couple of weeks. Fingers crossed! The costs of maintaining a license is probably the one thing I worry about the most. I still have a lot of research to do before I make my final decision, and I appreciate the advice you have for creating my plan for investing before making that decision for myself. I will definitely do that before making my decision on whether or not to pursue my license! 

Originally posted by @Bruce Runn :

I am an investor, self managing landlord, and GC, I specifically don't Want to get a realtor license so I’m not considered a real estate professional for tax designations so when I periodically sell something, I still qualify for long term capital gains.  Being a realtor has limitations as all transaction are regarded as regular income (add both side is SS and regular tax rate  25 percent, instead of long term capital gains15 percent) so for me it’s the difference of 23 percent taxes versus 46 percent.

Bruce, thank you for this information! This is not something I had previously considered and very much appreciate you pointing this out. I will definitely look into this aspect of everything more as I make my decision. I don't anticipate that I would be selling my own properties right away as I'm more interested in buy and hold for my first property, and even then, I likely won't be buying for at least another year. The Minneapolis seems pretty hot right now, and I'm hoping that things will slow down a little before I'm ready to take the plunge. 

Originally posted by @Steve Haight :

Kayla,

Welcome here to b/p, I have been here for close to 6 years and have met some great connections here on b/p. Your question is popular with people getting started in real estate. I started in real estate when I was your age 27 and I found a mentor that was a land guy with no real estate licence. So he taught me how to operate as a principle not a realtor. There are pros and cons on both sides of the fence. The first question to you is you want to invest or sell real estate and make a commission, start with that question first and go from there. If you have a licence someone can always take it away from you? I have been doing deals for close to 40 years and never had a licence and did many deals. Hope this helps some.

 Steve, I definitely appreciate this perspective. If I were in the financial position to invest right now, I would probably not be thinking so much about getting my real estate license. However, I want to utilize this next year the best way I can. My goal over the next year is to pay down as much debt as possible and learning more about the Minneapolis real estate market to best prepare me to make my own investment. I'm hoping that getting my license can help me prepare myself and also make some extra money to pay down debt. 

@Kayla Wagenmann from personal experience I can't start something and not try to do my best in it.

Having a Realtor's license has certainly hurt my other business and sometimes distracts me from my own investing.

That being said I love doing it and will continue to do it. If you're going to do three things at once (investing on your own and being an agent are not related) you'll either have to get really good at time management or be ok with 60+ hour weeks on a regular basis.

I'm ok with the lifestyle and have worked like this for a long time, putting in longer hours and sacrificing social life. Being an agent is great but not necessary at all to invest in real estate.

@Kayla Wagenmann I'm not sure if being an agent will really help you in learning the local market.  You can probably learn it on your own and I'm not sure how being an agent would help.

I think starting out as an agent with no experience in selling or even owning real estate would be a difficult endeavor.  It might be hard to get someone to pick you over others with a lot of experience.  If you search on here, you will find other threads about people looking to start out or their struggle.  Seems like being a good agent is really a relationships game and it might take a while to build up that base.  Just about everyone I know is related to or knows someone that is a realtor.

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