4 Advantages of Keeping a Real Estate License as an Investor

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Most people who are starting out are looking at becoming a real estate agent as a job instead of as a way to get an edge as a real estate investor.

On the other side, I often hear investors talking about whether or not it makes sense to be a licensed real estate agent, especially if they plan to invest in real estate long-term or even in notes.

From an investor standpoint, I’ve experienced many positive game-changers over the years, largely due to the fact that I held onto my real estate license.

So, here’s my take on some of the advantages.

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4 Advantages of Keeping a Real Estate License as an Investor

1. Save Commissions

Saving commissions is one of the first advantages that comes to mind. I saved thousands of dollars in commissions over my 30 year career as a licensed real estate agent, and this includes referrals and property management fees too. When I first started out, I lived off of my day job’s income, and I was able to bank all my real estate commissions to invest in real estate.

Sometimes I hear folks say that being an agent can be detrimental to getting a good real estate deal since they have to disclose that fact to all the parties involved.

I’ve found the opposite to be true. Even on private deals, by disclosing that I was an agent, it had the opposite effect. It actually gave me credibility and a sense of trustworthiness, and when I knew what else was needed to complete their transaction, it demonstrated a certain level of expertise. There were even times when being an agent helped me get the deal. For example, I was able to get an REO deal when there were other competitive bids involved by forgoing my commission.

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Related: Should I Get My Real Estate License As an Investor? A Look at the Benefits

2. Deal Access

For me, access to deals may have been just as valuable, if not more valuable, than the commission fees that I saved. After all, it’s all about finding and having enough deals.

To be quite honest, I never had a problem finding enough deals at any time throughout my career. As a real estate agent, not only can you look for properties online 24/7, but you can also be alerted when something you’re looking for hits the MLS.

You can find estates, administrators (nursing home situations), and handyman specials. Also, you have access to public records, expired listings, and lease-option candidates. Days on the market (DOM) are critical as well. I can track deals that have been with multiple real estate agents without selling and have reduced their price on numerous occasions. These are all great areas to mine for excellent deals, and by being an agent, I could easily submit multiple offers, as well as letters of intent.

Another advantage of being the agent with MLS access is having the availability to review comparable properties near my subject property. This is extremely important not only when buying properties, but also when buying notes. Real estate values are so subjective, so you really need to do your homework in advance, whether that’s trying to determine the ARV (After Repaired Value) on a rehab project, or if it’s trying to figure out how much equity is backing the first mortgage you’re trying to buy.

3. Industry and Market Knowledge

Although this advantage may be overlooked sometimes, by being an agent, not only are you familiar with all the paperwork and the buying and selling processes, but you also have the inside scoop on the local market and the overall industry.

You’re able to have a pulse on things like mortgage financing, which can be huge, especially since real estate is finance driven business. But you’ll also learn about other things, such as title and homeowner’s insurance. This has been another added bonus that’s saved me a fortune over the years.

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4. Tax Savings

Now, being able to save on taxes is a big advantage. Today, it’s one of the primary drivers for me continuing as a real estate agent.

Sure, you can write off your office expenses, membership fees, meals, and mileage, but the biggest advantage for me is the depreciation deduction on my rental properties that can offset my earned income, and I’m not capped at $25,000 of passive losses like most individuals since I am a full-time real estate professional. This alone has been a tremendous tax savings strategy for me over the years.

Related: #AskBP 002: Should You Get Your Real Estate License?

Clearly, there are many advantages to keeping a real estate license—besides buying all the listings that aren’t selling (my favorites) or that others aren’t buying.

As my buddy always says, there are no bad houses, just bad prices.

So, if you want to get more deals, you just have to make more offers, and doing that has been much easier for me by being a licensed real estate agent.

To all the BiggerPockets folks out there, what are your thoughts on this strategy?

Let me know with a comment!

About Author

Dave Van Horn

Dave Van Horn is President at PPR The Note Co. - an operating entity that manages several funds that buy/sell/hold residential mortgages, both performing and delinquent. Dave has been in the Real Estate business for 25 years, starting out as a Realtor and contractor and moving onto everything from fix and flips to Raising Private Money.

23 Comments

  1. Vincent Aiello

    This question seems to come up frequently on the forums so now we can just point everyone to this well-written blog. Nicely done, Dave.
    My wife and I are a real estate investing team–she is a licensed agent, I am not. The only point I would add is I don’t see a need for both members of a married team to be licensed; as long as one is, both reap the benefits.
    Thanks for sharing your expertise with us.

  2. Bill Roberts

    My wife and I are both taking classes to obtain a real estate license. The main reason is to learn the process of buying and selling before we start investing. Does anyone know if you have to be an active real estate agent in order to obtain MLS access? Or can you get access once you pass the test? We are in Texas.

    • You do need a valid (active) license and you will have to pay fees to get your MLS access once your feess are paid You will take a few tests online through the MLS, these help you navigate the MLS later. If you can go your local association of realtors, they will help you with any questions of tests and fees. Good luck with everything.

    • Dave Van Horn

      Bill,
      Yes, I agree with Carlos that you normally need a license to access the MLS. Also, the MLS fees are usually separate from your license fees. There’s often continuing education required by the board of realtors, which if you don’t complete you may not be able to continue with your MLS subscription.
      Hope this helps!
      Dave

  3. Douglas Skipworth

    Great article! I completely agree.

    If I may, I’d like to point out a fifth advantage of being an investor and an agent (Disclosure: I am an investor and a Realtor).

    I believe that being a licensed real estate agent demonstrates a level of professionalism and commitment to the industry, which oftentimes translates into increased credibility when dealing with other investors, sellers, wholesalers, vendors, agents, etc. Personally, I have found that having a real estate license brings an investor more respect in the marketplace.

    I truly believe that I’m a better investor because I’m an agent. And, I also believe that I’m a better agent because I’m an investor!

  4. Bobby Eastman

    I had my license in CA several years back and it has lapsed. I am now in TX and considering getting it again. The test in CA wasn’t all that hard but I didn’t learn very much.

    My question is what is the best way to gain the knowledge about title and paper work and so on?

  5. Licensed Real Estate Agents definitely have good advantages and evidently they seems to be the best investors as well. I have this friend who wishes to not renew his license well I’ll be telling him otherwise or better yet i will make him read this article. Thank you for sharing Dave.

    Jason

  6. I am a licensed broker in Delaware, Maryland, and Pennsylvania. I am a listing broker for Fannie Mae, HUD, VA, Bank of America, and some banks. I have been licensed for 37 years. I see some great deals as a listing broker but I cannot take advantage of them because these sellers won’t allow me to buy my own listings or listings of other brokers that work for these folks. They won’t let my immediate family, friends, or partners buy or let me participate. I love working with these companies and make a lot of money in commissions. When I am looking for investment properties, I have to look elsewhere and you know how tough those opportunities are to find.

    • Dave Van Horn

      Hi Richard,
      I understand your challenge, as your scenario may make participating in the deals a conflict of interest. Today, I’m focused more on the investing side than I am on practicing as an agent. That being said, it’s really a personal decision whether or not you want to make the switch.
      Hope this helps!
      Dave

  7. Cory Damon

    Thank you Dave! I’ve been on the fence as I’ve been reading both sides of the debate. But it’s hard to argue with the long terms benefits of having a license. I’m not all that interested in being a practicing agent, except for the experience. My focus is on investing and your article makes a great case for getting the license. Much appreciated.

  8. Tomas Gutierrez

    Thanks Dave for the write up. A lot of this topics that you go thru are really the main points that I am contemplating. Plus you did give me more ideas on how to maximize the license aside from what I have in mind. So definitely helped and this would be my goal for next year. I really appreciate your article.

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