It is not uncommon for investors to debate whether or not they should get their real estate license. While you certainly don’t need one to be successful, every advantage helps. Getting licensed, however, may take more than most realize. Getting licensed takes both time and money – not something every new investor has. If you can use your real estate license for deals, networking or to simply save or earn more money, it is worth the investment. Of course, you can always work with someone that is licensed, but sometimes having your own avoids a lot of hassle. Here are five advantages you can gain on the competition by getting your real estate license:
1. Extra Income: If you are just starting out, there is a good chance any extra income will be welcomed. Even if you don’t intend to make a career out of being a real estate agent, it can provide you with supplemental income. Listing one house every few months or completing one broker price opinion will not help you retire any time soon, but it will generate a little income here and there. Additionally, it is a great way to learn the business from another perspective. You can see how real estate agents work and what they need to be successful. All the while, you can work the contacts you have to make money and learn the investing business at the same time. Your first rehab or wholesale deal may take months before you get going. A real estate license will help supplement your income during that time.
2. Access to Deals: One deal every few months is nice, but it is not the primary reason you would get licensed. Getting your license opens doors to deals that you may have never thought of in the first place. Instead of waiting on your Realtor to alert you of any new deals, you will be the first point of contact. As soon as a new listing hits the MLS you will know about it. You can quickly see properties in locations you like and make an offer by the end of the day. The access to new deals is the primary reason to get your license.
3. New Contacts: Being a real estate investor and Realtor can be a delicate balance. There are some who are skeptical in working with an investor who also wears a Realtor hat. This number is small compared to the amount of new contacts that being a Realtor can help you make – not only in your own office, but at open houses and local networking functions. You can also develop contacts internally at banks that could give you the inside track for bank owned properties. No matter how you slice it, the more people you can meet, the greater the chance that you will close more deals. Meeting the right real estate agent or being in the right office can completely change your investing business.
4. Education: The more you know about the business, the greater the chance of you becoming successful. Almost every investment deal you get involved in will have some contact with a real estate agent. Knowing how the real estate side works will give some insight on how to structure a contract, and even what to look for in a property. You will have a better feel for what is really needed to get your deal closed. Even if you have closed a few deals, you may not really understand what goes into an addendum or what is legally binding in a contract. Being a real estate agent will give you a different perspective: one that can save you time and money down the road.
5. Commissions: In addition to making money on the deals, you will also save commissions on your own personal deals. If you close just six investment deals a year and act as the Realtor, you are saving, and making, over $10,000. Since you would buy these properties anyway, it is extra income that could be put back into your business. If you flip these properties and quickly list them yourself, there is another 2.5 percent on the sales side. After you pay your broker split and taxes, you are still making money that you would paid out to someone else.
Being a real estate agent takes more than simply wanting to get licensed. You need to first pass a local real estate class. Only then can you take the test. Even experienced investors sometimes have trouble with these tests if they do not put the proper study time in. Next, you have to find a broker that is willing to hold your license. On top of all this, there are application fees, expenses and annual renewals that must be met. It is far from easy to get licensed, but is often worth it. A real estate license is not necessary for every investor, but for the right investor it could completely change your business.