I was told by a REI, that if you would be in the REI industry, it would be best not to get a RE license, especially since you will be looking for distressed home owners that may need to sell their homes fast, because as someone that is licensed, you should know better; and that you should not be taking advantage of such deals, because doing so... you will be liable to the gov't or to the law... something like that. Does anyone have any related experience or information?
You will learn alot by getting licensed. It will also make viewing houses easier. It will also save you money cause you get a commission on what you buy.
I think if you want to invest in real estate, do that. If you want to sell real estate, do that.
While the two things can complement each other, I think the time spent getting your license would be better spent learning about the niche of investing you want to pursue.
I can see where if you're flipping houses it could be useful as the amount of purchases and sales will be higher than a "buy and hold" for example.
I didn't pursue law so I could write my own will and legal documents. Think about how much getting and maintaining the license is going to cost vs the amount of financial benefit it's actually going to net you. Being able to "show myself" properties is not anywhere near enough incentive for me as I have a responsive Realtor I work with who is responsive to our needs.
Welcome to BP your in the right place if your looking to network with other investors. My mentor thought me up to this day to always be in compliance with the law of the state your doing business in. He thought me to understand wholesaling is not commission base, but instead a property contract you control and assigned to a buyer who close with the seller.
I don't have a license but I intent too. My mentor thought me to invest in foreclosure REO banks owned property having license is a requirement.
p/s : wholesaling is legal there must be investors compliance with the real estate law
When in doubt consult with your real estate attorney.
I hope this little sincere advice helps!
I'm looking at getting a license myself. I agree with the posts that say take a look at your local laws, but I would be surprised if it's illegal/unethical to get your own license. Is your mentor also your RE agent? If so, there could be a conflict of interest with their advise.
As for cost, around Ohio, the estimate is ~$1,500/year. High level thinking: $100,000 purchase @ 6-7% commission = ~$6,000-$7,000. Assuming 60/40 split, and you end up with 40% (to be conservative) = $2,400 - $2,800, of which the house (broker) gets 20% - 50%, leaves you with at least $1,200 - $1,400 before taxes.
I'm not a CPA, but you might be able to write off your license fees as business expenses. Also, if you note above, one transaction at even $100k will essentially cover your annual costs. This excludes the benefit of MLS access, seeing houses whenever YOU want, etc... My mentor, also an agent (and MY agent), not only recommended I get my license, but offered to sponsor me.
Best of luck to you, and let us know what you decide to do.
@Verna Doniza what the person is alluding to is taking advantage of a seller in a licensed capacity... its all about disclosure... the cost of a license is minimal anyone who thinks the cost is a hinderance or the yearly is thinking very small ... If you can't afford a few grand then you really are never going to make it anyway.
even if you are out their on your own to be proficient you need to spend money on your own advertising etc. access to MLS and used correctly alone will pay for the license many times over.. and you never know when you may become a rock star agent top end agents make far more money than 99% of wholesalers you will listen to on this site especailly the part time investors LOL.. they are part time for a reason.. they are not RE professionals.
Thank you all for your comments! I really do appreciate them! The REI that I was referring to --also have a RE license. She said that she didn't know any better at that time. She said, she thought that it would be nice to have a license because she's dealing with real estate and at that time, she was thinking that she would look more reliable since she has a license and the education, but she said -she then realized that if let's say she bought a home for a wholesale price (w/c means it was about 20% below market value). If let's say after a few months or so, after the transaction has closed, then suddenly, the seller had realized that he/she made a wrong decision in selling that home for that price, even though he/she knew it was below market value, and if they try to collect money or the difference by suing the investor/realtor --they may win the case because, she then told me that, the law will be more favorable to the one that didn't know any better, which in this case, it's the seller.
I don't have a license and do not intend to get one. but, it really depends on what your strengths and weaknesses are. We all have people who do things for us and we use a local realtor who knows what I like and what I don't and let's me know when thing are available. It is also nice to have a second set of eyes when I look at properties. We do mostly buy and hold and do many cash sales so I am not paying a lot in commissions on retail sales - so it all depends but I have no interest in getting a license and do not think it slows me down much at the rate we are going now (about a house a month).
I am sure there will be people that argue against this point, but I think I make more money than my realtor and I don't want to trade how I am making money now to get the piece he gets.