6 Advantages of Getting a Real Estate License as an Investor
Real estate investing is challenging work that has the potential to be lucrative and rewarding. If you plan to make a career as a real estate investor, getting a real estate license is one step you can take to set yourself up for success.
Obtaining a real estate license will help you understand real estate jargon and make more educated decisions about your investments, but there are many other advantages of getting a real estate license as an investor. Here are just a few:
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Advantages of Getting a Real Estate License as an Investor
1. On-The-Job Training
One of the major benefits of getting a real estate license as an investor is the on-the-job training you’ll receive. As you study for your real estate exam, you’ll be putting valuable insights to work immediately as you look for new properties and manage the ones you already have in your portfolio.
As a new agent, you’ll likely be supervised for a period of time. This is helpful because more experienced agents can show you the ropes and help you avoid any missteps. It’s also a good opportunity to build your referral network of insurance agents, contractors, and other service providers.
2. Potential for Additional Income
Once you’re licensed, it’s possible to earn additional income with your Realtor certification. This includes income from:
- Earning a commission by representing buyers and sellers.
- Working as a consultant to identify potential investments for other investors.
- Flipping houses to finance new purchases.
3. Insider Tips on More Deals
If you’re new to real estate investing and you wonder how successful investors get the good deals, a real estate license might be the tool you need.
Realtors routinely locate deals through word of mouth and refer properties that don’t make it to the market.
4. Direct Access to the Multiple Listing Service
The multiple listing service is about more than the details of a listing. Used properly, it can also find deals based on:
- Multiple price reductions
- Repeated removal and relisting
- Historical data on neighborhoods and properties
- Access to comparables
If your investment search is focused on a particular area, you can even set the MLS to send you auto alerts whenever new properties are listed.
When it comes to actual investments, the MLS is not necessarily a great tool for data on local rent prices, but it can help you determine which neighborhoods are on the rise and which might be trending down. However, you’ll need to calculate the potential rental income of a property yourself.
5. Networking Opportunities
In virtually every industry, networking is an invaluable source of information. Real estate is no different.
Getting a real estate license as an investor expands your network exponentially. Once you make connections with other Realtors who know you are also an investor, they may be more inclined to send deals your way.
6. Earn Fees From Referrals
Even if your real estate license is a tool for learning, rather than a side hustle, buyers and sellers will gravitate toward a licensed agent.
Once you build your network, you can refer clients to other agents, who may offer to pay you a referral fee once a sale is made. This is a type of passive income that costs just a small fraction of your time.
Disadvantages of Getting a Real Estate License as an Investor
As with anything, getting a real estate license as an investor does come with some downsides.
In some cases, investors, buyers, and sellers may be hesitant to work with a licensed real estate agent. This might be because of the commission Realtors charge or because they’ve had bad experiences in the past.
2. It’s a commitment of time and money
Becoming a licensed real estate agent is not free, and it does not happen overnight. Enrolling in a class, purchasing the necessary books, and paying exam fees can cost between $600 and $1,200. After that, you’ll need to pay to access the MLS, and there’s also a fee to join the National Association of Realtors.
You also have to consider how much time it takes. Most agents spend two to four months studying. Others take longer if they work another full-time job. In total, you might spend $2,000 or more, plus a year of your time, to get your license.
3. Disclosures Are Required
If you moved under the radar as a real estate investor, get ready to dot your I’s and cross your T’s as a realtor. Disclosures are the rule of law for all sellers and buyers, even down to posting “cash for houses” signs.
4. More Responsibilities
As a real estate investor, the main person you have to protect is yourself. However, as a licensed realtor, you have responsibilities that reach far beyond your own portfolio.
Buyers and sellers will look to you for sound advice on transactions. This includes everything from scheduling showings to negotiating a sale price. In some cases, any errors you make as an agent can come back to you in the form of lawsuits.
READ — What Real Estate Investors Need to Know to Reduce Litigation Risk in Transactions
It’s important to note that real estate investors are also bound by rules governing delaying or canceling sales. Representing clients just comes with an additional layer of responsibility.
Should You Invest in a Real Estate License?
Only you can determine if getting a real estate license as an investor is right for you. It’s critical to look carefully at the return on your investment of time and money before taking this step.
Luke Babich is the Co-Founder of Clever Real Estate, a real estate education platform committed to helping home buyers, sellers and investors make smarter financial decisions. Luke is a licensed real estate agent in the State of Missouri and his research and insights have been featured on BiggerPockets, Inman, the LA Times, and more.