Are you considering whether getting your real estate license is the right move as an investor? While it can offer advantages like deal access, saving on commissions, and credibility, it also comes with significant costs, potential distractions, and responsibilities that might not align with your goals. In this video, I share my personal experience of becoming a licensed agent, breaking down the pros and cons to help you make an informed decision. Plus, I discuss a crucial question you should ask yourself before taking the leap. Dive in to see how this choice could impact your real estate investing journey!
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Thinking about getting your real estate license as an investor? Before you dive in, let’s explore if it’s really the right move for you. Stick around to the end where I share a key question you should ask yourself as you make this decision.
It just might save you time and money. And no matter what path you choose, having a solid foundation for your real estate investing is key.
As someone who got their real estate license as an investor, I can tell you about this from my own firsthand experience. So, I’m going to walk through the pros and cons of getting your real estate license as an investor and how that affected me personally. This way, you can see how it is for another investor just like you.
First, let’s go through those pros. There are four pros I’d like to share with you. The first is deal access.
There is definitely the potential that as a real estate investor, you get access to deals first. I found that I was in an office where other real estate agents had deal flow—things coming in that maybe the owner didn’t want on MLS or was going on MLS, but I knew about it first because I was there in the office. So, there’s definitely access to deals that can happen because you’re a licensed agent.
Second, of course, you’re going to save on commissions. When you’re doing your own deals, you’re not paying the commissions. Now, that comes at a cost that we’ll talk about with the cons. But you are saving on those commissions.
Third, there’s the additional income potential if you decide to be an agent that helps other people. Maybe as an investor, you have investor friends and you’d be able to help them easily. There’s an opportunity to make money.
And yet, stick around for the cons too, because there are costs as well. Then fourth, there’s the potential to have a credibility boost.
When you are a licensed real estate agent, that could make you seem more credible when you’re going to homeowners and trying to get deals for yourself. There could be a credibility boost because you’re a licensed agent.
Now, as you think of those four benefits, which of them resonates with you the most? Is it the deal flow, the commission savings, the income potential, or the credibility boost that you think would make a difference in your investing portfolio?
As we think about what the benefits would be for you, let’s dive into some of the cons and see how they might apply to you as well.
The first con I didn’t think about a lot before I got licensed was the time and cost commitments that come with having a real estate license. Licensing isn’t free in terms of time or money. You’re going to spend time and money on classes, exams, and ongoing fees.
When you have a real estate license, you often, in most of the United States, must become a member of the Realtor Association to actually have MLS access and use the lockboxes to get into houses. So, you’re now paying those MLS annual fees every year. And they’re non-trivial, especially when you get started.
Your brokerage may also have ongoing fees. They may take it as a part of the commission, or they may have it as a fee. And there’s going to be continuing education, which costs time and money.
You’re going to have to do continuing education. A lot of it can be done online, but that does add up. Keep in mind, your license is state-specific. So, if you want to invest and be licensed in more than one state, you’ll have to do all of this in those different states or areas.
And there’s not one Realtor Association that covers the whole country. Usually, these are regional. Depending on where you live, you may end up a member of multiple Realtor Associations to access all the areas you cover. So, time and cost commitment are not trivial between licensing, keeping it up, brokerage fees, Realtor Associations, MLS, and all of that.
The second con is disclosure requirements.
While it can lead to a credibility boost if you’re a licensed agent, it also comes with increased disclosure requirements and potential liability. Being licensed comes with disclosure duties and obligations, and it could complicate deals. You have greater liability in doing your own transactions when you’re a licensed agent because you’re held to a higher standard.
This was something I didn’t love about doing my own deals as a licensed agent, especially on the sell side. On the buy side, it didn’t affect me as much. But on the sell side, you’re disclosing everything you know and being honest about it.
Yet, there’s a lot of liability when selling your own house. This is so notable that some brokerages recommend or even require their real estate agents not to represent themselves on transactions.
Now, the third con is that being a licensed agent can be a distraction from your own investing.
This is a whole other business endeavor. I found that in order to be a good agent and represent myself well in transactions, I needed experience, which meant doing deals for other people. That took time away from my investing.
Honestly, when I first got licensed, I thought I was going to use it just for my own deals. However, I realized I couldn’t represent myself well unless I was an experienced agent with deals under my belt.
The last con is that people overestimate the benefits. New investors think being licensed will solve a lot of problems.
Now, where does that leave us? Should you get licensed or not? Ultimately, whether or not to get licensed depends on your goals.
Ask yourself: What’s my primary focus—being an investor or being an agent? If you love real estate and the idea of doing deals, maybe it’s worth it. But if your focus is on scaling your portfolio without distractions, partnering with an agent may be better for you.
I hope this helps you decide what’s right for you!