Becoming licensed as a Mortgage Loan Officer and also as RE Agent

[Victor Drazen]

Hello,

This is my first post, so I hope it complies with the rules. I've been doing a lot of digging and reading everything I can. I am about to close and acquire on my first multi-family investment property (Hartford, CT), and had a question about the licenses in the title of this post as an investment in future dealings. Having jumped into the deep end of the pool, I am exposed to all of the agents that skim off a real estate transaction: real-estate agent, loan originators, attorney/title fees, appraisers, etc. (Note: I am not disparaging the valuable work a lot of these agents do by any means; everyone deserves to charge what they believe they are worth).

 I'm wondering if I can integrate these all under one person (myself) and therefore absorb all of the costs by eliminating these middlemen. It makes sense in the plan in my mind, but I really wanted to run it by the more experienced and nuanced folks who frequent this community.

I am looking to my next deal later this year (another buy-and-hold multi-family 3-unit), and before that time I would like to become licensed as a (Residential Mortgage) Loan Originator, and as a Real Estate Agent. Supposing that my sponsoring brokers hired me as an independent contractor and gave me favorable terms such as:

Loan Originator: No fees/no salary/Split commissions: 3% of loan amount and split: 85% originator (me): 15% Broker (employer)

RE Agent: same, but 3% of sale price split 50-50 with RE Broker.

If I were to act as just the buyer's agent and loan originator, at a $300,000 sale with 25% down, I would be looking at pocketing 300000*.75*.03*.85= $5737 (loan) + 300000*.015=$4500 (RE agent) = ~$10000 or a full 3.4% of sale price.

On top of all of this, I am looking to act in these capacities entirely as my own agent - not to service others' sales. That would include originating my own loans, as well as acting as my own buyer's agent (and, eventually, selling agent).

I understand that there are significant upfront costs, which I estimate at $1000 per license just to get licensed at all, as well as 21+60 hours of classes and exams, etc. And then the hassles and costs of annual continuing education. For argument's sake let us estimate the total costs at $5000 for the first year for both.

It all seems very straightforward and something that is a no-brainier for someone who wants to start doing multiple investments per year. That 10k per transaction that I save will go into future properties and it will be a great cycle of investment.

Again, this is my first post and I wanted to find out what you all thought; your insights are invaluable.

Thanks!

[Rick Santasiere]

My vote is to leave the financing piece to the pro's and get licensed.  With a real estate license you can do a lot more to create wealth than becoming a loan officer (unless you decide to do loans as your primary "job..") Getting a real estate license will give you a snapshot of the loan process, but more importantly will allow you to do so much more with investing, helping others, etc. Portfolio lenders or small town banks from my understanding don't pay out a ton in commission to their officers anyway. They typically offer a much higher pay rate, and a very small commission to ensure that they are providing "service" over being a "transactional" guy.. Like the car dealers that don't pay their guys to sell cars by the car, but by the hour... Same concept.. Good ideas out here. No one mentioned the conflict of interest, and I am surprised.  I bet an attorney would most likely know.. I don't think you can do both.. But even if you can, you definitely cannot write the mortgage for a deal that you are also representing the buyer (or seller) in the same transaction. I know that with certainty.  Good luck, your ambition is awesome!!