Real Estate License for an investor

Santa Cruz, CA · Member since 2017 · 26 posts · 3 votes

Hey there- I am interested in getting my real estate license in California, however, you have to work under a broker if you do anything that requires a license. If you aren't interested in working as an agent, is there any benefit to having the real estate license as an investor (buy and hold & flips)? If so, what are they (beyond more knowledge)? Any other suggestions related to the topic are welcome.

Thank you!

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Jake Roland

Rental Property Investor · Opelika, AL · Member since 2017 · 113 posts · 93 votes

I have my license and got my first property under contract right now. It helps to be able to put in your own offers and the freedom to go and walk and see properties whenever you want, be able to see things as soon as they pop up on the MLS, and take action quickly. Also getting the buyer's agent commission back at closing is also nice. And for flipping then you are able to take the listing commission back as well if you're going to list and market it yourself.

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Etienne Martel
Rental Property Investor · Los Angeles, CA · Member since 2016 · 130 posts · 69 votes
8y
Hey Kaylor,
I'm an agent & investor so I'm in that exact situation, however I also work as an agent. The benefits of having your license is that people usually trust you more (fiduciary duty), you have access to the MLS, and if used correctly you can get your foot in the door for off-market deals/pocket listings.
There are brokerages that have minimal costs for simply holding your license.
Happy Holidays!
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Jack LuzeckyPro Member
Property Manager · Saint Louis, MO · Member since 2017 · 76 posts · 56 votes
8y
Hey there Kaylor, I am also working towards my license, but will not be doing too much as an agent, but rather getting it to eliminate one player on my investing team. Everyone has reasons why you should or should not work towards your license. I am excited to receive mine so that I am in total control during the buying and selling process. I do not want my agent to relay information that they believe is the important info. I want to know ALL the info in regards to my purchase or sale. Good agents will give you the needed info, but there are many agents who are not as qualified as others would like for them to be. Also having a license will give me access to the MLS, which is the most powerful tool for investors when searching for local comps. Better yet, if a property that you have interest in purchasing, and is on lockbox, then you will have the freedom to contact the selling agent and gain access to the vacant units without having to rely on your own agent. In my mind, getting the license is going to be worth it. I wish you the best of luck Kaylor!
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Johnny Hastings
Investor · Stevens Point, WI · Member since 2017 · 75 posts · 61 votes
8y
I have a RE sales license in WI that I've never put to any use. We have the same restriction, that you have to work under a broker if you're a salesperson. I studied for it, and took the test on a whim 3 or 4 years back.
I wouldn't be any worse off at this point if I didn't have it. My real estate investing background is: I own and manage a 12 unit, a 3 unit, and a 2 unit.
It was definitely interesting subject matter for me, that's why I've done the training every two years and kept the license up. When working with agents I've been able to know exactly what they're talking about, and been able to ask educated questions throughout the purchase and prepurchase processes. I'd say it has helped to show agents and others I've interacted with that I'm smart, and it makes it easier for them to work with me because of my knowledge base.
If you have the time and the inclination, I'd say do it. It certainly isn't going to hurt you to expand your knowledge and skill set. I'd also say don't expect it to work any real magic for you, if you aren't intending to be employed in that capacity.
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OP
Santa Cruz, CA · Member since 2017 · 26 posts · 3 votes
8y
@Etienne Martel How would one go about finding a brokerage that is willing to "hold your license" without you actually working for them? Seems like a liability. Also, would you still have to pay them a percentage of anything you sold/bought?
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Account Closed
OP
Santa Cruz, CA · Member since 2017 · 26 posts · 3 votes
8y
@Jack Luzecky The lockbox reason is great! I totally forgot about that!
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OP
Santa Cruz, CA · Member since 2017 · 26 posts · 3 votes
8y
@Johnny Hastings Thank you! I was thinking the same... it won't hurt me to have it!
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Jonathan Minerick
Real Estate Broker · San Diego, CA · Member since 2015 · 725 posts · 129 votes
8y
@Account Closed I'm in the group where I do NOT believe a license is appropriate for most investors. Here's a BP post I did on the costs in California and another BP post which argues against getting a license.
What are the costs and steps to a California real estate license?
Don't get a real estate license
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Jake Roland
Rental Property Investor · Opelika, AL · Member since 2017 · 113 posts · 93 votes
8y
I have my license and got my first property under contract right now. It helps to be able to put in your own offers and the freedom to go and walk and see properties whenever you want, be able to see things as soon as they pop up on the MLS, and take action quickly. Also getting the buyer's agent commission back at closing is also nice. And for flipping then you are able to take the listing commission back as well if you're going to list and market it yourself.
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OP
Santa Cruz, CA · Member since 2017 · 26 posts · 3 votes
8y
@Jonathan Minerick Thanks for the perspective... I was thinking it could be a waste of money.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
@Jonathan Minerick I did not read or listen to your reason against.. but in my mind anyone in CA or west coast that is going to engage in this business and be successful should have the license.. the cost is nothing compared to the potential income.. all business's cost a little to run I can't think of one cheaper than real estate and with the potential to make huge money.
as an investor you get to save commish buying in CA that is usually a big number.. you have instant access to MLS which is huge.. and if your a flipper or builder contractor in my mind your absolutely foolish not to have a license on your team..
when you flip homes one of the major expense is selling commissions. So even the list side on the average flip in your area will save you well over 10k and that could be 20 to 50% of the profit..
then you never know when a friend wants to list a house with you.. listings are money in the bank and you never know when your career could change and you could be a uber great agent.. my wife sold over 15 million last year...
so anyway that's the pro's ... personally I don't use my licenses but I keep them active in CA and OR and inactive in MS.. for me its all about credentials.
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Jonathan Minerick
Real Estate Broker · San Diego, CA · Member since 2015 · 725 posts · 129 votes
8y
@Jay Hinrichs Yes, many of the items you brought up were addressed in the BP post I referenced and also in the costs blog I wrote. Please check out the articles if you find time.
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Account Closed
Downers Grove, IL · Member since 2017 · 366 posts · 165 votes
8y
Kaylor, I spent years debating your question, and managed to purchase 4 rental properties before finally deciding recently to get my license. The tipping point for me was the desire to have better information on value changes to my existing portfolio. Odds are You need to have a active license and most likely pay MLS dues to make sense out of the license effort. I really like being able to pick up the phone and talk to the sellers agent directly, much easier to flush out useful information.
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Ian WalshBusiness Member
Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
8y
M. L. S. - The big one.
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OP
Santa Cruz, CA · Member since 2017 · 26 posts · 3 votes
8y
@Robert R. @Ian Walsh Thank you for the feedback. I'm thinking I should do it. Seems like it's worth the cost.
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Christine Kankowski
Real Estate Broker · Temecula, CA · Member since 2014 · 992 posts · 782 votes
8y
Are you planning on representing yourself in transactions, even inf you dont represent others? If so, yo uwill need to hang you license with a broker. Find one that only charges you per transaction - ebroker, allison james are a couple.
I started the same way, but over time, people came to me looking for representation, so now I am a full fledged agent- focused mainly on investor buyer and sellers.
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Chris Armstrong
Realtor · Charleston, SC · Member since 2016 · 229 posts · 159 votes
8y
@Account Closed point, if you can make money from someone inside your sphere of influence using your license its a little extra icing on the cake.
BEst of Luck to you and your endeavors
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Jimmy Dudley
Real Estate Broker · Westminster, MD · Member since 2017 · 159 posts · 101 votes
8y
I don't know how you qualify "it won't hurt" but there are usually monthly and annual costs involved in hanging your license with a broker. If you are a serious investor and don't mind factoring those costs into your operating expenses then you are crazy for not having it. The information on MLS and access to properties coupled with the savings on commissions makes the investment worth it.
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Etienne Martel
Rental Property Investor · Los Angeles, CA · Member since 2016 · 130 posts · 69 votes
8y
Kaylor,
You still work for them, but there are minimal regular expenses. They most likely won't have an office, not many tools to offer... I'm guessing they would take a high percent of your commission if you did make a transaction. You will have to explore what the different brokerages offer!
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Ken D.
Investor · Boise, ID · Member since 2017 · 10 posts · 4 votes
8y
Check out the REAL ESTATE SOURCE, Inc flat fee brokerage, and Tony Deni ( the broker) is available by phone 7 days.
1 Reply
Account Closed
Downers Grove, IL · Member since 2017 · 366 posts · 165 votes
8y
Loads of low cost license sponsor options out there. The MLS fees are a probably a bigger deal for someone no transactions in a year.
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Hernell D.
Rental Property Investor · Los Angeles, CA · Member since 2016 · 67 posts · 35 votes
8y
I’m about to start studying for my real estate license in California too and I just figure having the knowledge, being able to represent myself, and access to the MLS is worth it. Why not ¯\_(ツ)_/¯
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Joseph M.
Flipper/Rehabber · Los Angeles, CA · Member since 2009 · 1k+ posts · 732 votes
8y
@Account Closed , I think it is a good idea especially in high cost and competitive markets like many CA markets , including Santa Cruz. Just looked up median home price in Santa Cruz and it's $829,000. At say 2.5% commission that would be $20,725 commission to you as the agent ..minus the broker commission of course...which would be low if you are with a 'flat fee' brokerage. But the commission from that one home would pay for several years of fees required for the license.
Even if you helped the occasional family member or friend buy or sell the occasional home once every several years you'd still be ahead.
M.L.S access of course is another big benefit, and in this competitive market being able to write your own offers and see property by yourself too. This gives an edge.
The main downside I hear is having to disclose you are an agent , but I haven't heard anyone say this has lost them deals.
Many might also feel more comfortable dealing with someone that is licensed. The license means you have some 'skin in the game' and something on the line ..your license. Even if you are not relying on the license for your full time income...most people will probably assume you are a full time agent and that it is your career.
I had debated this for a long time but finally took the courses and paid my fees to CA +background check and now just need to schedule for the exam.
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Cara Lonsdale
Realtor and Investor · Scottsdale, AZ · Member since 2017 · 1k+ posts · 1k+ votes
8y
Originally posted by @Account Closed:

@Etienne Martel How would one go about finding a brokerage that is willing to "hold your license" without you actually working for them? Seems like a liability. Also, would you still have to pay them a percentage of anything you sold/bought?
Agents HAVE to hang their license with a Broker for at least 3 years, at which point, they can become a Broker and go off on their own. Some states allow people to become Brokers right off the bat, but most of them require the provisional process to limit liability of inexperienced people handling RE transactions with no guidance or accountability. It's a huge risk.
When you hang your license with a Broker, they share in the liability surrounding any of your RE transactions. Therefore, you will need to submit every deal you do for them to review and approved. However, you are still an independent contractor, so you don't "work" for them. You work for yourself. It sounds like you want a 100% house. These are the brokerages that charge you a monthly fee, but then don't take a % of your commissions. Look for little boutique brokerages. They usually offer this. Some of the big ones will too, but the monthly fee may be substantial.
As others have already mentioned, as an agent, you have access to MLS in real time (not delayed IDX on sites like Zillow, trulia, etc), a lockbox for entry, access to tax records, deeds, comps, and a commission built in to transactions that you don't have to negotiate as a price discount.
Hope that helps.
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