Is there an advantage to getting your RE license as an investor?

7 Replies

I currently own and manage 35 rentals. They are a mix of commercial, single family, townhouse community, and 4 unit apartment buildings. I’ve been debating getting my RE license to gain access to MLS and save money when buying or selling (currently working on two flips). Would there be an advantage to getting my RE license? Or would it cause conflict for me to obtain deals in the future? Thanks for any feed back!

Matthew,

There are several advantages of having your RE license as an investor. You named two of the big three. The ability to access the MLS and negotiate your own commission, depending on the brokerage model and structure you create for yourself, are two of reasons many investors get a license. A third reason is to transact in real estate. My mentor bought and sold as an investor and got his license because he believed he could provide better service and have quicker access as an agent. He would create a buy and flip list and send it out to his colleagues for the properties he could not buy at that time. Today, nearly a decade later, his team does $25 million a year in closed volume with most of it coming from referrals, past clients, and investors from that list. When you invest, as I'm certain you hear now, people want to learn how you did it and get advice on their investment, which I'm certain you provide. Getting a license is not just about convenience, for you it could be another income stream.

@Matthew Teter thank you for the feed back. Those are great ways to look at it! I’m also debating opening a property management company once I get my license too. In my eye I could sort of tie it all together that way. Do you have an opinion there? Thank you!

Getting your license is very beneficial. Access to MLS, ability to buy/sell on your own, and you can find deals before they even hit the market if you network with other REALTORS regularly and let them know what you are looking for. My last two purchases were both off-market from an agent that knew I was looking for fixer-upper investments. I bought them well below market and got $200,000 in equity within months of closing!

Starting a property management company is a different ball game. I'm a property manager with 300 doors. I make really good money but I work hard and I'm tied to the job. Is that your goal?

My goal is to create a portfolio large enough that I'm able to pay others to manage it while maintaining my lifestyle. All I have to do is manage my managers, which should take only a couple hours a week at most. I will sell my business and be completely free to do whatever I want, when I want. At that point, I'll probably sell real estate for fun and spend a lot of time traveling around the world to help others with no worries about life back home!

@Nathan G. can provide a far more definitive answer on property management than I can.  What I can provide is an answer to your making it all tie together idea. Nathan asked a great question, what are your goals? Real estate has several businesses and products that stem from the practice of transacting in real estate. How you see them and how they fit your goals and lifestyle will vary for each person. Property management is a great business and a challenging one. Whatever you commit to understand that normally we have to master one thing and then we can layer another. That's not saying you cannot jump into everything at once and yet start with the one thing you are going to build your foundation with and pour everything into that. At that point, you will have an understanding of the other opportunities that naturally connect with it and you can begin building linear opportunities. If you want it all now, consider partnerships where you are working with an expert in the areas where you are not personally applying the majority of your time or money. As a title company investor, my partner is an expert. As a brokerage leader that focused on scaling a company to do 2500 transactions and $500 million in business the title business only made sense to invest in as a by product of the production we were creating in our primary focused business. Does this help?

My goal is to get the property management company running to the point where I simply manage the managers I hire. I know that will take time but there is a need for the service to be done properly in my area and believe there’s a great opportunity to build a self running business. I also have three full service restaurants that I own and manage so I have to keep the juggling act in mind. Do you recommend a property management software to use? That’s a big hurdle I’m researching now. Thank you very much for your feedback!

@Matthew Teter yes it’s very helpful. My goal is and always has been to create a vast personal portfolio of real estate. It hasn’t been till recently that I have been thinking about getting my RE license and starting the property management company. With that being said obtaining my RE license has just kind of made sense to me since I continue to buy and even sell Property frequently. The property management side has become more of a thought because other investors have asked me to manage there properties and it seems there could be money made if done correctly.

@Matthew Crawford let me share some experience from me and hundreds of other property managers.

You will probably be profitable when you are small and when you are big, but not in the middle. There is a black hole around 100 - 200 units where profit falls off dramatically as you hire employees, rent/buy office space, etc.

I know some manager that are killing it with 100 units. They handle everything on their own and are very selective about the properties they manage, limiting themselves to only A or B class. Once you get more than 100 units, you'll have to start hiring and your profits will drop. You can still make decent money, but you really need to get200 or more units to start making good money. I'm at 300 now and make really good money but it took a while to get there. 

My goal is to have two full-time managers I can supervise while focusing on growth, refining processes, and growing our sales team. That plan was going great until my manager of four years announced she is getting married this summer and moving away in the fall. Profit will go up, but so will my workload and stress as I try to find a replacement.

You're locking yourself into a job working for others. As you grow, your job may turn into 50+ hours a week, which is what I experienced for a couple years. Things are more stable and I'm pulling 40 hours a week with more time to work out, have lunch with my wife, or even take vacation for a couple weeks. But it took a long time to get here!

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