Do licensed investors have an advantage over other investors?

Question

I'm planning on starting my real estate investing career by buying my first property in the summer of 2020 when I get enough money saved up. I'm new to real estate investing and I want to learn everything I can in the mean time. One of the things I was planning on doing this year is getting a real estate license. Not because I plan on working like a typical realtor but because i'm thinking that the classes I'll take and the information learned could give me an advantage as an investor. I'm specifically asking the agents out there, is it worth it to get my license or is it unnecessary for what I'm trying to do? (Thanks in advance for you time)

Joe Villeneuve · Answer

I don't see any reason to get your license. There are a few financial advantages, but the restrictions on what you can do outweigh the "I can get a commission on my own deals".

Just work closely with REA's that are investor friendly (not automatic...no matter what they may tell you)...and respect them.

Bob Okenwa · Answer

@Pierre-Sebastien Beauboeuf

Are you trying to flip or do buy and hold? Getting your license takes time and money and it can be worth it if used correctly. The classes you will take do not teach you much about being an investor other than some basic math and a few key terms. You'd learn more from books, podcasts, and YouTube to be honest and it'll be a lot cheaper. The real estate classes are there to teach you how to pass the test.

Having your license makes a little more sense for flips as you can sell your own home and avoid the listing agent commissions on the back-end. On the front end for buy and hold or flips, you can earn a commission when buying the property or choose to waive it in exchange for a lower purchase price.

One of the bigger advantages is being able to view properties without waiting on someone else to make time for you. Time is money and getting into properties quickly to evaluate them can be the difference in making a deal.

Jay Hinrichs · Answer

Joe what restrictions are you referring to.. I have been a broker since age of 18 I found no restrictions.. and the license to me is mandatory if your going to do any volume in higher priced areas.. i get it if your dealing in low value asset properties..

but out our way with average deals 500k and more I think its mandatory if as i say your going to really want to do this as a career.

Frank Wong · Answer

The pre-requisite courses you have to take before getting your license will not help you as a real estate investor as Bob mentioned. The classes are good to learn the basic information. In CA all the fees will be about $800 or so and it will cost you about $2,000 a year to be a part of the local association.

Learn to how to evaluate a deal that's where I would spend my time. Make your first purchase and see how that goes. If you think you need to get a license after your first deal then go for it. I think its a waste of time unless you make your first purchase.

Erik W. · Answer

I got my license in 2000 and only held it for 2 years. Wasn't worth it. I can do everything a licensed agent can do except access the MLS directly and get into homes via the lock boxes. As others have said, the classes are relatively worthless for investors on than very BASIC information. I have a Realtor buddy who will pull comps on homes & get me inside quickly since I buy from him fairly regularly, so no worries about MLS or property access.

I think the best way to gain knowledge of the process is working with an experienced local investor who owns the kinds of properties you want to buy. Offer to do some grunt work for him / her for free and take knowledge as your payment. Who knows? If you prove enough value maybe you can go in 50/50 on a few and learn the ropes that way.

Last thought on agents: many of them are geared toward owner-occupant buyers and don't have the patience to work with investors. We usually make 20-30 offers for every 1 that closes, which is a lot of work without much "meat on the bone" for the agent. It's got to be worth their time, but sometimes the best deals are those you find after kicking over a LOT of rocks. Got to find an agent who is okay with that philosophy, and many aren't because they've gotten burned by tire-kicker investors who can't/won't perform at an acceptable rate.

Sebastien Beauboeuf · Answer

Wow. Thank you everyone for responding. I actually wasn't expecting an answers anytime soon given that I'm so new.

@Bob Okenwa I'm planning on buying and holding (single or multi family home). I can see how it'd be better for house flipping. And i understand the advantage of being able to see a property quickly. I guess in my case (a beginner) that won't be something i'll worry about too much.

@Joe Villeneuve noted! Thank you.

@Jay Hinrichs I understand. I'm starting small and probably won't look at anything over $300k. When i get more experience and doing more/bigger deals, i'll revisit that option. (really liked your BiggerPockets podcast!)

@Frank Wong yikes. Thats not cheap. Thanks for the advice. Im definitely trying to be better at evaluating deals. Since I'm not planning on buying this year should i look for leads on my own (trulia, realtor, redfin, zillow, craigslist) or should I look for an agent and ask him/her to send me leads base on my criteria?

@Rik Patel Thanks. Based on everyone's advice I think I'm going to try to find an "investor friendly" agent for my first deal and see how that goes. Once i get more comfortable and understand the business more, I'll be in a better position to make a decision on if i should get my license or not.

@Brandon Sturgill ok thanks. It seems like (i might be wrong) for what i want to do (buy and hold) it's not that critical to get my license right away. Like i said to everyone else, I'll wait to be a bit more knowledgeable in the Real Estate world and make an educated decision then.

Rik Patel · Answer

@Pierre-Sebastien Beauboeuf I personally think it's useful as having the license allows me to use certain tools that my association provides (of course with a cost) and having a broker to constantly ask questions about contracts, pricing, the market etc etc is very valuable that can help you make better decisions when investing.

Brandon Sturgill · Answer

@Pierre-Sebastien Beauboeuf It's priceless...sort of. You don't need a license to be a mediocre investor....but it really depends on what your investment strategy is. Maintaining your license is fairly expensive and involved...CEU's and such. One thing to pay attention to if you want to be a bum wholesaler is that your license will hold you to a higher standard...so, no raping old folks for their equity...and transparency is always important.

Sebastien Beauboeuf · Answer

@Chuks Erinne You make a good point. Thanks. Most people seem to think the same thing. I'll focus on learning the investing side of the business.

Chuks Erinne · Answer

@Pierre-Sebastien Beauboeuf If you want to invest in real estate, you don't need a license. If you decide to get one, cool but you don't need one. As an investor, hire RE agents to handle agent stuff while allowing you to focus on being an investor. If you want to be an agent and also an investor then get the license.

I don't care what anyone says - you don't need a license to invest in RE and do it well. You however need to spend money and time "edumicating" yourself and picking and sticking with your investment strategy. If that strategy makes sense to have a license then get one but definitely not needed .

Do licensed investors have an advantage over other investors?

Do licensed investors have an advantage over other investors?

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