Investor · New Waterford, OH · Member since 2015 · 81 posts · 14 votes
I've read and heard in podcasts several times about people getting their RE licenses for the intent of investing. While I understand it is not necessary, I can see the potential benefit. At least in Ohio, what I've read is that you need to be sponsored as an agent by a broker for 2 years before you can go on your own.
I'm wondering how people have gone about doing this in the past? Are these brokers people with their own established practice or other investors? Why would they even be willing to help you out? Are they receiving a commission split on your deals by being your sponsoring broker?
Also, what's different between the agent and broker that allows brokers to go it alone? I'm guessing becoming a broker is what most investors are ultimately striving for?
Ultimately, you can't get your license in Ohio without having a broker sponsor you. Why? Cause you don't know what you're doing and they are there to help. You need experience in the field before you can consider going out on your own, that's why the 2 year time limit and number of transactions before the board will approve your application.
Ultimately, you can't get your license in Ohio without having a broker sponsor you. Why? Cause you don't know what you're doing and they are there to help. You need experience in the field before you can consider going out on your own, that's why the 2 year time limit and number of transactions before the board will approve your application.
I've read and heard in podcasts several times about people getting their RE licenses for the intent of investing. While I understand it is not necessary, I can see the potential benefit. At least in Ohio, what I've read is that you need to be sponsored as an agent by a broker for 2 years before you can go on your own.
I'm wondering how people have gone about doing this in the past? Are these brokers people with their own established practice or other investors? Why would they even be willing to help you out? Are they receiving a commission split on your deals by being your sponsoring broker?
Also, what's different between the agent and broker that allows brokers to go it alone? I'm guessing becoming a broker is what most investors are ultimately striving for?
Thanks!
In Ohio before you could be a broker at your own brokerage you would need to handle 40 transaction sides and be an agent for at least 2 years. There is also 2 years of college with some specific business class required.
A broker would be ok with an agent who's only intent was to buy their own homes off the MLS because the broker would retain the brokers cut of the commission on said homes.
Example:
You are hired by a broker at a 60/40 split and you buy 10 houses a year off the MLS. Each house cost an average of $100k. The co-broke on each house was 3%.
In each of those 10 transactions you walked away with $1,800 and the broker walked away with $1,200. For the year this puts $18,000 in your pocket and $12,000 in your brokers pocket.
I actually just finished up the courses required to get a real estate license. Just waiting on my completion certificates so I can send those to my "sponsor" and sign up for the exam.
When I interviewed with companies, I made it clear that my goal was to become a full-time real estate investor, therefore, I wanted to spend a majority of my time as an agent working strictly with investors.
I had difficulty finding the value in my current 9-5 job besides saving up for deals, whereas being an agent, I can make money buying/selling houses for investors, all while obtaining a great wealth of knowledge that I can use when I become a full-time investor myself!
Just the knowledge gained from taking the courses is worth the time!
@James Wise So is it pretty common for brokers to be sponsoring an investor that they know isn't ultimately going to be working for them or does it matter? Because I'm assuming that in order for everything to be proper with splitting the co-broke you would have to technically be an employee of their company?
@Theo Hicks Congrats! Aside from the experience portion (which is a huge benefit) while making money, did you see that you weren't going to be able to be an agent and complete the requirements while holding a full-time job elsewhere? I'm asking because I make a pretty decent salary at my current job that I'm pretty sure I wouldn't be able to replace very quickly as an agent.
@Reese Thompson I let them know that I will continue working full-time for about a year.
As for the requirements, the realty company isn't paying you anything while you are paying them yearly fees (depending on where you go) so as long as you keep paying the fees, you can still be an agent.
As for replacing my salary, the only reason I need the salary is for funding deals. Since I now know that personal capital is just 1 of a million different ways to fund deals, I am focusing on a job that teaches me the skills I need to be a great investor!
So is it pretty common for brokers to be sponsoring an investor that they know isn't ultimately going to be working for them or does it matter? Because I'm assuming that in order for everything to be proper with splitting the co-broke you would have to technically be an employee of their company?
You would be working for them as an independent contractor. You would be 1099'd and the commissions earned on the properties you sold (to yourself) would be split according to the split you and the broker agreed to.