All Forum Posts by: Kyle Kline

Hello, all!

I am new to REI and have loved learning more about the process through Bigger Pockets. I do not yet have any properties, but am spending as much time a I can learning until I feel confident enough to purchase my first property. However, I find myself questioning whether or not I can be successful whenever I consider the fact that I will have to act as a landlord. I am hoping that someone may have some advice in regards to overcoming the fear of being a landlord with no experience. Any personal experience/advice, helpful books, etc. would be greatly appreciated! Thanks in advance to anyone who is willing to share.

First things first, listen to the chorus of Nas-I Can. Then you will have your answer. 

My thought is...just take the classes to get a better education, but you don't need a license if you're only going to do 1-2 deals a year.   It's expensive to maintain and if you're just doing a transaction here and there, most people probably are more dangerous with it, overthinking they're doing themselves a deal.  I mean you could go get your mortgage license, and and insurance license, and an inspectors license, right....but if you're only doing one or two home inspections a year instead of one or two a day, or a loan or two a year, verses 3-4 a week, you're probably not going to be that good at any of it.

I'd only get it if you plan to sell to other people....maybe 10 or more a year....that's probably the basics of staying competent.   To me real estate is a team sport...get people on your team who are the experts....and you're the conductor...or the GC....GCs do the same thing....they don't go get a master license in each discipline....electric, plumbing, HVAC, etc....they just run the show.

Do you want to sell real estate? Do you want to represent buyer and sellers in their transactions? If not, then a license may not be what you need. Have you looked into what it takes (education, fees, expenses) to obtain and maintain a license in your state? Weigh those costs against how much you want to do activities that require a license in your state. 

I got my license after doing 6-7 deals of my own. I was transitioning away from a career in public education, and got licensed so that I could help other people and earn commissions in between my deals. I honestly can't say that my license has helped me as an investor. I know for certain that my experience as an investor helps me represent my clients. 

@Kyle Kline hi there.  I'll chime in on why not to get your license.  Depending on your strategy for buying, it may be best to be able to say you are not licensed to sellers who feel they can't or don't want to pay commissions. In case you didn't know licensed agents must disclose the fact that they are licensed ASAP when meeting a new person and discussing their real estate transaction.  

I am licensed now but was not for the first 4-5 years I invested. I did pay for a mentor who taught me how to market and talk to motivated sellers (not in the MLS) and saying "no commissions" was invaluable. Now that I am licensed I say "I am licensed, However, no commissions will be paid because this is for/within my personal RE portfolio." Off market deals are usually a better buy, but not always.

You can always get to know a good agent who will want a long time relationship and who will be willing to reduce their commission bc of the volume. I bought and sold mostly HUD homes to flip at the time. Plus there are other sources for information about properties.

If you want to have your face on bus benches and sell retail (through the MLS) getting some experience under your belt with transactions is invaluable. I maintain my license but only work on referral and for my own deals.

@Kyle Kline - well, you have to wait long enough to have built up enough equity to borrow from the value of the house. If you don’t have enough equity in there, you won’t be able to do it. Example - I bought a house for $62k, with a loan for $50k. Several years later, I refinanced the loan to be a $90k loan and took out about $30k which I put down on another property purchase. Now, I still own the house and it is worth $175k. I could actually refi it and take money out again if I choose as the loan balance is about $88k now. You can generally refinance about every 6 mos.

Does that help?

Kevin - this is the place to ask questions you may be too embarrassed to ask elsewhere! Typically, you would refinance a property for a couple of reasons:

1. To get a better interest rate or better terms (like changing from a 30-year loan to a 20-year loan, for example).

2. To be able to access your equity in the house and "cash out" when you do the refinance. Essentially, if you bought a house for $200k, did some improvements to it so that it was worth $300k, you could then refinance it and pull out up to 70-80% of the Loan-to-Value amount. That means you look at being able to pull out most of the difference between your loan amount and the new appraised amount of the home.

Typically, in a BRRRR situation, refinancing to pull cash out allows you to then take that cash and put it down on a new purchase so you can increase your portfolio. Keep in mind that when you refinance a loan you do start the clock over on the loan, meaning you get a new 30-year term for example. However, if the numbers make sense and you can afford the new payment it can be a great way to finance future purchases.

Hope that made sense for you. If not, please ask more questions!