Will Becoming a Real Estate Agent Make You a Better Investor?

by | BiggerPockets.com

In my opinion, the answer is simple: yes. I don’t really see any reason why becoming a real estate agent could harm you or your real estate endeavors. If I could turn back time, I actually wouldn’t mind going through the whole course, sitting in for the exam and getting my license. A few things stand out for me where I can remember making mistakes and losing quite a bit of money, which might not have happened if I’d had my license.

Legal Issues & Compliance

The first way that becoming a real estate agent could help you in your investing business would be in the legals and compliance. There are a lot of things associated with putting together a contract, constructing a purchase agreement, or even selling a property that you definitely learn as a real estate agent. Unfortunately, you do need to have those book smarts or you’re going to be pretty raggedy like I was—writing bad purchase agreements and contracts. And once you put something on paper, you can’t really go back on it.


Related: Why You Should Stop Looking for an “Investor-Friendly” Real Estate Agent

As far as compliance, you have to know what you are saying and how you are saying it. In Australia, we are very friendly and say a lot of things that may be received in a different way here in the states. We like to hug people and all kinds of stuff that doesn’t sit right here sometimes. So as a real estate agent, you can definitely learn important aspects of the real estate culture, especially the legal and compliance needed to do a successful job.

Logistics

There are also logistical things that you would pick up immediately as a real estate agent—things like how to prospect for buyers, how to prospect for sellers, how to brand yourself, how to do marketing, how to do listing presentations, and how to come up with a description of a property. You’ll also learn better how to understand what a property is worth, how to do an appraisal or comparative market analysis, and how to go on to the MLS. I definitely think that those things are worth their weight in gold.


Related: What You Should Know About Registered Agents for Your Out-of-State LLC

Real Estate Team

Last but not least, the most important thing is the team. What I mean by that is when you become a real estate agent, you are going to have to put your license under a broker or brokerage. Hopefully, you will have access to that broker because they will likely guide and mentor you. They will be someone who has been in the business for five, 10, or 15 years. So the wealth of knowledge and level of experience they have will be extremely valuable. They have gone through market cycles; experienced disgruntled buyers and sellers; and worked with financial institutions, lenders, appraisers, and building inspectors. So just imagine what they have to offer to you. Then you’re probably going to be working with other real estate agents who also have a certain level of experience. It’s kind of a match made in heaven. I say that because I’m a big believer in your network equalling your net worth. As an agent, you have people who can pick you up and take you with them. As a real estate investor, you are kind of on your own. I moved here by myself—I didn’t have much money, I didn’t know anyone. I had to meet people and it was pretty tough.

To summarize, I definitely think getting a real estate license and becoming a real estate agent can help you become a better real estate investor.

Do you agree? Disagree?

I’d love to hear your thoughts. If you have any comments, please comment below.

About Author

Engelo Rumora

Engelo Rumora, the Real Estate Dingo and your favorite Australian, quit school at the age of 14 and played professional soccer at the age of 18. From there, he began to invest in real estate. He now owns real estate all over the world and has bought, renovated, and sold over 500 properties. He is currently in the process of launching an ICO that will “Decentralize The Real Estate Industry.” He’s also known for giving houses away to people in need and his crazy videos on YouTube. His life’s mission is to be remembered as someone who gave it his all and gave it all away.

14 Comments

  1. Thomas Phelan

    I agree that becoming licensed might educate you regarding the mechanics of buying and selling real estate but there is a tremendous trade-off. A licensed real estate Agent or Realtor is held to a much higher and stricter degree of disclosure. Tick one client off and you may lose your license.

    Also, consider this, there 45,000,000 Individual Retirement Accounts (IRAs) in America with Wall Street dominating 95% of the seven Trillion invested dollars. Real estate claims less than 4% of those trillions.

    If real estate Agents and Realtors were such great investors or teachers of investing in real estate why such a paucity of IRA dollars invested in real estate. I once asked an ex NAR President this question and all I got was a blank stare.

    Most real estate Agents and Realtors don’t own a lick of investment property and don’t know how to represent it.

    If it were my choice I would learn the academics and not become licensed and then find a savvy real estate Agent or Realtor who understands among others things; 1031 Exchanging and how an IRA can buy real estate.

    • Engelo Rumora

      Hi Thomas,

      Thanks for your comment.

      It’s a shame that most agents aren’t investors but rather just “sales professionals”.

      The marketing is shifting at a rapid pace with tech truly taking over the real estate industry.

      Real estate agents need to be prepared and start focusing on multiple streams of income through the real estate industry.

      Just my opinion

      Thanks again and have a great day

  2. Amy Iverson

    I have to disagree with this article. Real estate classes only teach you the terminology used in real estate. They might show you an example of a contract but they really don’t teach you how to actually practice selling real estate. Taking the classes, getting the license, and signing up under a broker is not that hard. (I did it when I was 19) But that’s as far as it goes. Brokers don’t mentor you on how to get up and running unless you are lucky enough to find a really good one or it’s someone you already know. Even then, the way they “teach” you is to sit you down with a phone book and have you cold call hundreds of people, or maybe they’ll offer classes once a week for encouragement.
    Also, the above comment is true. If you are investing and are a real estate agent, you are held to a much higher standard and have to disclose that information.

    • Engelo Rumora

      Thanks Amy,

      It’s very important finding and working with the right people.

      I know of many real estate agents that are even better real estate investors.

      The same holds true for brokers.

      Work with only those that aren’t dinosaurs and that understand how quickly the industry is changing.

      Much success

  3. Greg Jensen

    I am a Real Estate Broker/Agent I started real estate about 13 years ago, during that time I have purchased and sold over 100 properties, I currently have 70 income producing properties. picking the right broker/minter is a huge reason for my success, and as the comments above there is pros and cons. In my opinion the pros out way the cons. First being the commission that comes along with the purchase and sale of your properties, second the properties come to you, once you start buying word gets out and the sellers start coming to you, I always give them options this is what I can give you as an investor and this is what you may be able to get if we list it, 9 times out of 10 they just want to dump it and be done. I also found a broker that allowed me to manage other peoples property which has allowed me to have support staff and a maintenance crew. I have since been able to purchase the brokerage and am now the one mentoring others. Amy is right getting your license is not the answer its what you do with it once you get it that counts.

  4. John Silva

    I agree 100%. Especially being part of a well know reputable broker. The knowledge, guidance, and using the brokers marketing materials i.e. mailings and internet is priceless. Don’t forget when you buy and sell the property you will receive a commission!! Because your a agent. That is thousands back in your pocket.

  5. Katie Rogers

    I don’t understand why people nonchalantly toss off “become a real estate agent.” maybe it’s different in other states, but in my state, you can pass the licensing exam but you cannot be an agent unless you can find a broker to “sponsor” you. You have to work for that broker, not yourself. You might be able to find a broker who lets you rent a desk in his office for a couple thousand per month. that seems a poor use of money just to be able to call yourself an agent. Besides that broker will cut you loose if all you do is pay the desk rent, but do not otherwise enrich the broker

  6. Nathan G.

    Nice article, Engelo. Being a licensed REALTOR definitely helps understand things better as an investor. More importantly, a REALTOR can find deals before they hit the market. I currently own 19 units and all of them were purchased off-market by sellers that came to me specifically because I am an investor and a REALTOR. If I were just a REALTOR, they could have picked anyone else. If I were just an investor, they wouldn’t have given me the time of day.

    • Engelo Rumora

      Hi Nathan,

      Thanks for your comment and congratulations.

      This is so true:

      “If I were just a REALTOR, they could have picked anyone else. If I were just an investor, they wouldn’t have given me the time of day.”

      Great way to look at it.

      Much success

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