do I really need a real estate license to make money investing ?

Question

Do i really need a license to make money investing on real estate? for wholesaling you dont need it, am i correct? if so is any other way to legally make deals and make money without a license?

Brett Snodgrass · Answer

Great questions Nicole.  Having a license has helped me immensely as a wholesaler.

1. I have full access to the MLS, so I can look and compare Sold properties (Comps) in the area I am buying in.The software exceeds any other public software out there like Zillow or Redfin.

2. Saying I'm a broker gives a level of trust to people selling you their property. It gives a level of professionalism.

3. If you don't sell your property to a Cash Buyer right away, You can list it on the MLS and save your broker fee.  and it gets your property out there for all to see.

I have done Doubles Closings Yes, and you can assign the contract as there isn't as much as a gray area in that as you are aloud to receive commissions.   I usually use my own funds to purchase, or get private $ from a private lender who does transactional funding. That is my favorite way, to actually close using my own $ or private $, and then reselling. That way you control the property, the showings, and all of that. You have to pay a little extra for closing fees but I think it's cleaner.

It depends on your state how long you have to work under a Broker, but yes I did for 1 year.  Try working with an investor friendly Broker.  One that also invests and knows about your strategy. That will make it easier.

Thanks so much and good luck getting your license.

Brett

Brent Coombs · Answer

No, you don't need a License to BUY property, take title, then sell that property.

If you don't take title, but just wish to buy contracts for say $100.00, and sell those contracts to flippers for a say $5,000.00 pay day when THEY close on the property, it's up to you whether you want to take the RISK that the RE Regulator in your state allows such marketing of contracts to Buyers, when you are neither the owner nor are you Licensed to broker Real Estate!

Do you know the penalties for brokering without a License? Do you feel lucky?...

Nicole Graves · Answer

@Brett Snodgrass Thanks, Brett for the feedback. Very helpful!

Shari Peterson · Answer

It is imperative that you become educated on the laws regarding licensing and wholesaling in your state and county. That will keep you professional and compliant. BiggerPockets is a great source for learning and especially with connecting with people knowledgeable about the laws in your local area. I'd also recommend you look into participating in your local REIA (Real Estate Investors Association) or Real Estate Investing Meetups.

Austin Youmans · Answer

No, you do not need it.

As a wholesalers are selling contracts not properties. So you get a property "under contract " that says you or someone you a sign will buy the property.  then sell that contract to an investor. Just be careful with how you advertise and word things.

Or do a double close and buy the property then sell the property you own. More expensive this way.

Austin Youmans · Answer

I  guess I should add onto my answer and say that you don't need one but it could still help you as I agree with Brett.

@Brett Snodgrass - I am actually taking the class to get my license. Any suggestions on interviewing brokerages? Nation wide or local? Training? Commission spit? anything else you think I should ask?

My plan is to be an broker part time and still keep my day job for a while until I build some momentum.

Nick Sabat · Answer

I don't know, always wondered that myself - without a license you stand a chance of going to jail or paying a big fine. With a license, you stand the chance of doing the same, when wholesaling houses.

With a license, you by law, as far as I know, are required to get the seller the best possible price for their property. This is why you have to do "cost analysis", "comparative market analysis", etc. etc.

Telling a seller "you" will "buy" any house in any condition knowing that you are not the one to keep it but are immediately going to flip it - is well in my opinion, it's not only unprofessional but fraudulent. You have intentionally low balled the price so you can pick up any major difference in the market price and you are also collecting on the brokerage fee. Unless you are brokering on the buyer and seller side for just what you get out of the deal. The fraud comes in by manipulating the price and telling the seller "you" are buying the house.

Now, if you are buying houses, fixing them up, then selling them - totally different story - than just flipping paper. If the laws in your state permit making paper deals without a license, totally different story here, also. But I would believe in most states, if not all, they highly regard and protect the sellers interests in their property, so that namely they are not cheated out of what is just and fair, when selling their properties.

Now is there a workaround to any of this? I am sure there is, but you will have to familiarize yourself with your state's laws or hire an attorney. This to me is the best way to get the information you need.

Then there is taxation - which is better to do for you? In all manners of business we have to consider paying higher or lower taxes. Not to mention double closings - in some states they are illegal? I don't know if the double close is illegal or they are just frowned upon. But, again the best suggestion anyone could make is, if you are not familiar with your states laws, then the best thing is to get familiar with them, by reading or hiring an attorney.

Good luck - nothing here is legal advice or offered as such, It is for informational purposes only and to put forth my ideas on the subject matter discussed.

Brett Snodgrass · Answer

Hi @Miguel Manzano,

It has been my professional experience that having a real estate license has done nothing but helped me in business. The biggest advantages are that you get full access to the MLS and can save a ton of money on brokering your own deals instead of having to pay out commission fees on each deal you buy or sell. The disadvantages I hear people say, in my opinion don’t hold that much weight. Having to disclose everything in your transaction is a GOOD thing and having a higher standard of professionalism over your head will only help you serve people better. If it was up to me, I’d say get your license it’s far worth it!

do I really need a real estate license to make money investing ?

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