I have a license but never use it...Pros/Cons of keeping it?

Question

Hi BP,

A few years ago, when first getting serious about investing, I had the time and opportunity so I got my North Carolina real estate license.  Since then, as I have learned more, I have determined that having a license isn't necessary for the type of investing I want to do. I also do not think the lifestyle of a professional full time agent will ever work for my family and me, so I do not plan on ever jumping in with both feet as would be required to be a successful "conventional" agent.

The fees just to maintain the license are only @$50/year, so that is not a deciding factor. I plan in the future to just use a skilled and experienced investor-minded agent and gladly pay their commission.

I've heard there are additional liability issues if you are licensed, but it sounds like those issues usually involve defrauding or taking advantage of a seller and concealing the fact that you are an agent. I will always conduct myself with integrity and honesty, so I would not hide the fact that I am licensed.  I also put that fact in writing on all my contracts and leases and have the other party sign to acknowledge.

The only advantage I can foresee is one day in the future, when I am experienced enough to buy without using an agent (assuming I find the deal myself), is I could pay myself a commission to either use towards a down payment or just keep.

Any licensed investors out there that aren't part of a bigger brokerage/agency? Let me know your thoughts!

Thanks!

Sean McDonnell · Answer

@Joseph Roberts No I am not saying that. I think it really depends on what strategy you use to invest and what your other employment options are.

Sean McDonnell · Answer

@Matthew Wilson

Are you still a provisional broker? If so, even if you decide to activate your license and start practicing real estate, you will have to complete the post-licensing classes which are around $750 total and 90 hours that could be much better spent..

Also, even though your license is "inactive" you could still be punished by the NC Real Estate Commission if you conduct and real estate activities that require a license. All the laws regarding Trust Accounts still apply to you.

You can probably tell by the comments above but I would not keep my real estate license (even in an inactive status) if I am not currently practicing real estate.

On a side note, do you attend the real estate investing meetup in Wilmington?

Charlie Cameron · Answer

@Matthew Wilson I assume you are buying mostly off market?  I'm no expert on buying property not using your license while also being a licensed agent, but there are lots of good threads on that topic.  But if you are buying MLS deals, you could be keeping an extra 2-3% on each closing.  Why NOT keep it, you already did the work!

Matt W. · Answer

Charlie, I do BRRRR of small single family homes in NC.

Patrice Boenzi · Answer

@Matthew Wilson If money is not option and it is only $50, it could be a huge benefit to you in the future when you are buying and selling. Like you said, you could potential use your commissions toward purchase. The other thing to keep in mind is that since you are licensed if you refer a client to another Realtor you can ask for a referral fee. Referral fees range in percentage, but it could be another way to make some money!

Charlie Cameron · Answer

@Matthew Wilson What kind of investing do you do?

Joe Roberts · Answer

@Sean McDonnell

Are you saying you think it IS helpful for a “full-time Investor” to have their real estate license?

Matt W. · Answer

@Sean McDonnell

Yes I’m still provisional and have not completed any continuing education so I know I would have to work past that if I were to decide to become an active agent.

And yes, I attend the coastal REIA often and have learned a lot from it! Can’t wait for it to start meeting again.

Patrice Boenzi · Answer

@Matthew Wilson If money is not option and it is only $50, it could be a huge benefit to you in the future when you are buying and selling. Like you said, you could potential use your commissions toward purchase. The other thing to keep in mind is that since you are licensed if you refer a client to another Realtor you can ask for a referral fee. Referral fees range in percentage, but it could be another way to make some money!

Huy N. · Answer

Hey Matthew,

It will be a choice you need to make and I tell you what, I see great investor without RE license, and great investor with RE license so either path will lead to success. you just need to pick one and stick with it

For me deciding to get my license came from necessity, I could not find any realtor that focuses on doing investment properties or actually invest in real estate, or wanting to serve a demanding client like me, lol. So I get the license to 1st serve myself. There is a saying "you are your best client". This allows me to freely go see the house and put an offer in the home myself and not have to rely on other people's schedules. Having a license will open up to other sources of income than non-licensee can't have as well

Let me know what path you decide to take!