Should I get a real estate license?

Question

I currently work as a self employed business owner and have made over $100k for the past two years. I found a niche that has worked so far, however I don’t think it’s something sustainable or will last forever. I have no idea what my income will be for 2024. It could be $20k or $50k or $100k. Separately from my business, I have invested in real estate deals out of state which provide me some income.

Even though I would say I am doing well, im still not satisfied. I have a 5 year plan for myself and I need more income to accomplish my goals. Despite my work and projects out of state I still have a lot of time on my hands. I often feel frustrated because I want to be doing more with my time. I thought about getting a real estate license and selling real estate in Los Angeles county and Orange County. I have a relative who is a real estate broker and pretty successful. I’ve been told he’s not an easy person to work with but I tend to get along well with him. He’s also almost 80 years old which means eventually he will need more help and someone to take over his clients.

I thought it would be a good idea to get my license and work with him in his niche. However, I don’t want to be dependent on him. I would want to know that I am capable of selling houses by my own skill too rather than simply assisting him with his already existing block of business.

Does anybody want to comment on my situation and share some insight on what it’s like being a real estate agent in Los Angeles? Was also wondering if I should go straight to the broker exam or start with the normal agent exam first. Another concern I had was how a real estate agent is supposed to find clients on their own.

Brian J Allen · Answer

@Mike Boss. I have both my agent license and have passed the broker test in MA.  But I am not a broker.  I pay a flat fee to my broker and then i get the extra level of protection if there is an issue.  I also get a transaction coordinator, insurance, office and some other agents to hang out with.  Being an agent or a broker is a lonely profession as a lot of people are competing for the same clients and deals.  Be careful what you wish for.  If you are just trying to buy for yourself, hire an agent.  If you want to make it a career some day then become one.

Brian J Allen · Answer

@Mike Boss You will need E&O insurance, but typically the broker gets that for cheap.  Also keep in mind that when you are a new agent, the broker likes to take about 70% of your commission for hosting your license and the minimal help they give you.

As for the class and the test prep.  You can and will pass the test if you want to.  But the question is if having a license is a benefit to what you want to do in real estate.

Julie Sisnroy · Answer

@Mike Boss I JUST went through the licensing process in Nebraska.  As an investor, I always wanted to accomplish this.  However, I would say, it is a lot different being on the other side.  I don't know the market in LA, but I imagine it is competitive.  I am sure you have heard all the statistics on the failure rate of real estate agents. Don't let it discourage you, but also understand it is going to take a lot of work in the start.  Treat it like a business.I don't know the broker rules in CA, but typically you need experience as an agent first, which makes sense, before you can even sit the broker's exam.  You may not even want to be a broker once you get in the business and realize all the repossibility that comes with it. You may stay a sales agent and meet your financial goals that way.  Focus on that first and learn the business, all aspects, and figure out your way.  Also, have reasonable expectations on number of tranactions for your first year.  I am not saying don't reach for the stars, but make sure they are the lower ones in the sky.  Fpcus on your sphere and building relationships.  Ultimately, that is what it is all about.Speaking of financials, it is not cheap to be an agent as there are fees associated with it.  Every brokerage is different, so the fees will vary - mine covers the MLS, the E&O, the CRM, and the Supra locks, and there are NO other fees until I sell, and then they are minor transaction fees.  My splits are pretty good, too.  But all brokerages are all going to be different and MANY will not cover those costs.interview atleast 4-5 brokerages to find the right fit for your goals.  Ask a lot of questions and look at not just the numbers (splits, fees, etc), but the culture, the training, availability of a mentor, etc.  Teams CAN be good (but not all are equal), but you will trade that support for a smaller split - you can decide if you think it is worth it.  I didn't, but the jury is still out.  Check with me in a year.  :)There are a LOT of solid Facebook groups to join, youTube videos, and FREE information out there.  Tap into that, as there is a lot to learn about the business, but don't chase shiny objects and get too bogged down.  Focus on one or two things at a time.Lastly, understand you will have to stand out as there are a LOT of Realtors, so you have to be different in some way - get a niche.  It doesn't have to be ultra specific, but you will find your tribe.  It doesn't mean you can't/won't sell or list with others, but become "the" expert in a certain area, especially in a market as large as Los Angeles. Market the heck out of yourself, consider social media.  If you have ANY questions about the journey as rookie, reach out to me as it is still fresh in my mind!

Tim Ryan · Answer

Mike, yes. Your broker will provide that insurance when you sign up with and agency.

Rick Albert · Answer

100% pay for the crash course. The exam is total BS and 99% of what's on the exam isn't practical in every day practice. First Tuesday has one as well as others. I got my Broker's License in 2015 and my salesperson's license in 2010 so not sure how much has changed. I believe it is still the 150 for the salesperson's license.

Brian J Allen · Answer

@Mike Boss. There are lots of positives to being an agent, the most important of these is the ability to help others purchase places and make commissions.  There are downsides as well.  Whenever you are involved in a real estate transaction for yourself you need to notify all parties that you have your license.  Also, if you choose to cold call in a particular area looking for properties for yourself, you are required to disclose to potential sellers that you are an agent.  Often times, if your goal is to purchase for yourself, it is better to use an agent.  This allows you to have that agent work on your behalf when you are doing other things as they are motivated by their commissions.  Additionally you are able to approach sellers directly without having to notify them that you are an agent.  There is a huge subset of property owners who simply hate agents, this allows you to make those transactions happen on your own.

Rick Albert · Answer

There are pros and cons to being a Realtor in Los Angeles. Obviously because of the higher sales price, higher likely of getting decent income. However, it is highly competitive and we are heading towards a market where I believe there won't be enough business to go around. It is doable and I think anyone can make it, but you will have to put the work in.

One way to look at it is how you much sales you would need to do to accomplish $100K. Let's assume as a new agent your split is 70/30 and you have expenses. Let's exclude taxes and assume 25% of revenue for expenses (whether it is photography for listings or gas and mileage for showings).

Average commission: 2.3% (some are 2% and some are 2.5% and even less oftentimes)

Gross Commission Income: $190,000

After Broker Split: $133,000

After 25% for expenses: $99,750

You would need to do approximately $8,260,869 in sales. It is definitely doable, but you just need to be aware of how the breakdown is. Plus this requires nights and weekends.

If it were me and I was in your position, I would double down on real estate investing. Passive and monthly income is where it's at. I'm working on doing both the agent and investing side.

Tim Ryan · Answer

I say go for it. I got my real estate license recently also. I have been using it to get my own deals and finding deals for other investors to flip. But starting to work with retail clients now also. Why not? With prices so high in SoCal it's a no-brainer. Working with your uncle could be amazing to help launch your career.

Should I get a real estate license?

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