Investing and Being a Real Estate Agent

[Carson Sweezy]

I am just getting into real estate investing, and will be purchasing my first property this year. I plan on using this property as a buy-and-hold, and "house hacking" it. In the future I would like to explore other avenues of investing. Becoming a realtor has crossed my mind as a way to generate more income while staying active with real estate, but I have heard that having a license limits what you can do as an investor. 

That being said, what are the restrictions a realtor has on types of investing they can personally do? Specifically, what types of investing (wholesaling, flipping, etc.) is a realtor forbidden from pursuing themselves? Is this an ethical issue, or are there laws in place against such actions? Do the laws vary by state, or are they imposed nationwide? 

Thank you for your reponses. 

[John Barnette]

realtor, investor, flipper here.  I do find having multiple income streams to be very helpful and prosperous.  As an agent you are or should be very aware of values and day to day market conditions and changes. This of course helps. Plus can brainstorm with other agents you work with.

However it can be a challenge to balance ethics and what is in the spirit of the law and looking for a good deal for yourself.  I have encountered situations where I could have gotten a "steal" from my market knowledge, condition of home, etc.  BUT would be in serious hot water plus have to live with my own ethical standards and reputation, etc.   Instead I put on my Realtor hat and listed the property and worked my butt off to get the seller the best possible price and best possible terms...a fiduciary duty.

In one instance a seller in need interviewed me, and didn't hire me. Then the agent he did hire did a horrible job, was not being marketed during holidays, etc.  I swooped in and picked it up a few days before Christmas for a very good deal representing myself. Got paid the commission.  Fixed and flipped and made another $20,000 or so.  That I have no problem with at all and neither does the code of the profession.

If a seller has other representation, go for the best to represent YOU.

Other possible conflict of interest situation could be where you have a buyer actively looking for property and 123 Main Street meets their criteria.  I always show first, allow buyer to (quickly) decide if y or n.  If N, or some really stupid lowball offer, then I make my move.  Can be a bit of a gray area here, so be cautious.

Remember if there is a regular old Joe consumer with a legal issue confronting you as a professional Realtor....guess who will loose.

Play fair and honest and should be in good shape.