Considering becoming a Realtor.

[Ted Phelps]

I am at the very beginning stages of my realty/investing career. I have only just started looking into investing in Wisconsin and have not purchased my first property yet. But I have found mixed reviews on becoming a Realtor in Wisconsin and if it is worth it to aid in investing. Just a little background info on myself and my situation to start. I am engaged and have a beautiful 5 month old son. We just purchased our first home and we close in May. I work at a body shop 40hrs a week and no weekends. I make about 30-40K and my wife stays home with my son. And we are going to spend a good majority of our savings on closing costs and getting the home ready to live in. I am not 100% on our budget for once the mortgage kicks in and we have home owner costs but we will not be able to save thousands a month like we do now. We will be on a pretty strict budget. Anyway I understand there are costs involved with being a Realtor and that starting out can be difficult and then money may not come in right away (or for a long time) depending on how you do. From what I understand if you only have a few properties and do not plan on growing that the cost of being a Realtor may not be worth it. But I think that if you plan on really growing your investing career, that being a Realtor can really save you on commission costs and access to the MLS is a very great feature. But how do you know when you have invested enough to make it worth it? I would also love to become a full time Realtor and invest on the side. But I think this time in my life will make that very difficult to do. There is also considering being a Realtor's Assistant to get you feet in the door and have a consistent income. What are some possible routes I can take or does anyone have any suggestions for ways I could get into becoming a Realtor and/or realty investor. Thank you.

Ted      

[Jason Green]

Ted,

There are certainly costs involved in being a realtor. The biggest initial cost for me was simply the cost associated with getting licensed actively. Online classes, license fees, etc. The biggest recurring cost is MLS and Realtor association dues. I am sure it varies wildly by city and state but in my city, you cant be a member of MLS and not be a member or the Association of Realtors. Quarterly dues for both run around $250 bucks.

Again this will vary by state so check with your real estate commission for Wisconsin. In Alabama, to have an active license, it must be held with a brokerage. By doing this, you incure brokerage fees. These can range from very little to very high. It is usually in line with the commission split with your broker. For example, a 90/10 split with a broker would cost you very high monthly fees and only top producers would go this route. A 65/35 split and I know brokerages that charge $80 bucks a month in office fees to hold your license.

For new agents that don't plan to do a lot of business, the Keller Williams franchises are very friendly in terms of monthly outlay in my opinion. You are on a cap rate and you pay very low monthly fees. This model is appealing to part time agents.

If you plan to do any investing at all and you are an agent, you can either negotiate out of the price your commission, if your broker approves or you can simply take a commission. This is assuming your brokers E&O insurance will allow you to represent yourself. Usually it just has to say in the contract that you are a licensed agent purchasing for yourself.

I would say to be a fully active licensed real estate agent, you are going to spend on average about $2500 per year just to be licensed.

Hope that helps.