Rental Property Investor · Queen Creek, AZ · Member since 2020 · 69 posts · 10 votes
Hi BP --
I am a full-time employee and recently started investing in real estate on the side.
I am considering getting a real estate license primarily to avoid commissions when I buy and sell future properties. But had a gfew questions to see if I can make some additional income w/ 1-3 deals/year as an REA?
-- Would I need to join a broker and commit to a certain amount of deals/hours (it is my understanding they take a % of the commission)?
-- How many deals is realistic to do a year part-time as an REA (with limited marketing)?
I decided to get my RE license to save on commissions in 2012 before I purchased my second property. I'm in California so things may be a bit different in your state but here is what I did.
Take the required courses online - This was easy but time consuming, I was required to be logged in and actively reading, taking quizzes, final exams, etc. on the course website for 135hr. This took about a month of daily dedication.
With certificates of completion in hand I registered for the state exam. I think my test date was about a month away. The week of the test I bought a crash course book on passing the state exam and spent 2 days cramming and working the practice tests. I passed the state exam no problem.
In California you are required to hang your license with a broker to act as an agent in RE transactions.
I found a low cost broker, 90/10 commission split that was ok with me waiving my portion of the commission on purchases and sales (He would still collect his 10% so he was fine with it). My broker dealt 100% through email and phone calls, there was no training or lead generation but he did provide transaction coordination services at no charge. The TC services were a huge plus since I wasn't familiar with the contracts and documents needed to execute a transaction. TC services usually run about $350 per file, affordable and extremely worth it if you are a new agent.
I made it known to all of my family and friends that I was available to represent them in RE transactions but did not do any advertising.
In my years as a part time agent I averaged $12,000/yr in commissions from friends and family and have saved about $60,000 on my personal purchases and sales. Annual expenses are less than $1,000 for the Realtor designation and MLS access. I am a DIY sort of person and willing to figure things out myself. My first few transactions involved lots or research on preparing contracts and the necessary documents for a transaction.
I have transitioned into being a full time agent now and love all things real estate.
If you have the time and are willing to put in the effort you can save a lot of money and maybe even make a little money too.
I decided to get my RE license to save on commissions in 2012 before I purchased my second property. I'm in California so things may be a bit different in your state but here is what I did.
Take the required courses online - This was easy but time consuming, I was required to be logged in and actively reading, taking quizzes, final exams, etc. on the course website for 135hr. This took about a month of daily dedication.
With certificates of completion in hand I registered for the state exam. I think my test date was about a month away. The week of the test I bought a crash course book on passing the state exam and spent 2 days cramming and working the practice tests. I passed the state exam no problem.
In California you are required to hang your license with a broker to act as an agent in RE transactions.
I found a low cost broker, 90/10 commission split that was ok with me waiving my portion of the commission on purchases and sales (He would still collect his 10% so he was fine with it). My broker dealt 100% through email and phone calls, there was no training or lead generation but he did provide transaction coordination services at no charge. The TC services were a huge plus since I wasn't familiar with the contracts and documents needed to execute a transaction. TC services usually run about $350 per file, affordable and extremely worth it if you are a new agent.
I made it known to all of my family and friends that I was available to represent them in RE transactions but did not do any advertising.
In my years as a part time agent I averaged $12,000/yr in commissions from friends and family and have saved about $60,000 on my personal purchases and sales. Annual expenses are less than $1,000 for the Realtor designation and MLS access. I am a DIY sort of person and willing to figure things out myself. My first few transactions involved lots or research on preparing contracts and the necessary documents for a transaction.
I have transitioned into being a full time agent now and love all things real estate.
If you have the time and are willing to put in the effort you can save a lot of money and maybe even make a little money too.
Getting your license to save on commissions is not the best reason to get your license as an investor. Just because you have a license does not mean you know how to list your own properties and get the most for your house. The best reasons to have your license as an investor is for 1. access, you can see any properties you want, when you want. 2. education, the course is much more valuable to investors because as a regular residential agent you don't deal with most of the stuff in the class like easements, riparian rights, etc, but as an investor you need to know it all, 3. comps, the only way to really know ARV is to have MLS access.
There are plenty of brokerages that are investor-friendly on fees, but you will be paying MLS fees and office fees anywhere, you just find a brokerage that suits you.
@Nicole Holcomb, thanks for providing your experience. I live in San Diego county as well, and I've gone back and forth in my thinking on this topic. I'm a newer investor (own one duplex OOS).
Years back, I had already taken the RE courses. I never did anything with it. Now, coming back to RE as an investor, I've gone back and forth thinking it would be worth getting my license. I went as far as starting to study for the exam. I talked to my local realtor about fees in CA to keep the license. I also realized that for now most of my plans center around investing OOS. Inn the short term, I don't think I would be conducting transactions in CA. I like my job and don't have plans or necessarily time to be trying to do RE transactions on the side.
Do you still see a point in possibly obtaining my license? I thought about first getting my CA license with intention to try to add states I would invest in.
@Jonathan Greene, I appreciated your points as well. Having back-end access to MLS was another appeal to getting a realtor's license, but what is your take whether it is worth it for someone not currently trying to conduct transactions as a realtor?
Besides the fees, I wondered if I was trying to take on a portion of RE investing that I would be better off continuing to use a realtor for, and focus on other components.
@Keegan Darby Hey Keegan! I am in a similar situation as you are in my investing career. To get a license or not to get a license?? That is the question...I gathered a bunch of info and actually wrote about why it's both beneficial and not beneficial to get your license. I wrote a couple articles on my member blog that might be good for you to check out!
@Account Closed a lot of investors I know say that will never use it for realtor business and then I ask them what will you do when your family member or best friend wants to sell a 500k home or buy one, or both. Do you want a random agent to take care of them or could you, in your spare time, and collect a check? Or if you are an investor, what about your friends who are also investors who you meet at REI events, wouldn't it be fun to look at crap homes together and also help them close a deal? So even if you plan on investing OOS, it doesn't hurt to see REO properties in your market for practice and also collect money by helping people you care about.
