Is it worth it to become a RE appraiser?

Question

At the summit, a lot of the presenters and people I talked to mentioned it would be a good idea to get my real estate license.  Others mentioned taking some appraisal classes, which got me wondering.  Would being a licensed appraiser help my investing business? Is it worth it?

In Arkansas it takes 2000 supervised hours to become a licensed appraiser. If I spent 20 hours a week, that would be two years.  The time doesn't bother me.  I am a new investor and only have 2 rentals so far.  I don't have a day job and our other business supports me, my wife and kids.  I could still put in 5 hours a day building my RE investing business and I think I would like to have the credentials in the future.  I know there are a lot of hugely successful investors that aren't realtors or appraisers, but I thought it might be a good way for me to learn more about different sides of the business, keep up with new trends, and a way to make contacts.

What do you think?

Bill Gulley · Answer

I am an advocate for formal education in any accredited school, not guru courses. A good business understanding will help an investor more than any guru strategy every time. One does not need a degree (although states are moving toward a degree requirement for Realtors) but taking several business classes will provide an investor with tremendous tools for success.

IMO, there are some basic undergraduate courses that would serve anyone contemplating working real estate .

Personal finance, provides an understanding of investments and personal business consumption, like renting vs. buying

Business finance, provides consepts of financial leverage, sources of funding, corporate entities and cash flow

Accounhting 101 and 102, basic business accounting, the language of business

Economics Micro and Macro, provides one with an understanding of alternative choices, economic factors that drive individual decissions in commerce

These courses will really assist you in getting it, especially in appraising.

While mentioning this I'd like to suggest too that any college or university provides classes without being enrolled for any degree program. You can "audit" courses at reduced tuition rates simply sitting in on classes, generally being tested, but not receiving a grade. How schools provide such adult education differs, but they all provide something along these lines.

BTW, anyone who got through highschool can make it through these classes, they are not difficult!

While I'm on my soap box, anyone strating off in RE should go down to any state approved real estate school and buy the text and workbook used for the agent examination. You can do a self study from that and ask (almost) any Realtor to explain something you don't get. And you can attend these classes and never sit for the examination.

You can atke all of the above classes for less than many guru courses and walk out better prepared to get in the business than ANY guru course out there.

Strategies from the guru guys should come after a basic education.

Account Closed · Answer

I guess I can throw a few cents in.
I've been through all the courses I can, appraisal, home inspection, real estate agent, re broker, etc.
I hold no licenses.

One thing to think about, if you are a real estate investor and you have or have had a real estate license of any kind, this could set you up for liability if a deal goes south.
My wife has held a re agent license from another state. I don't let her get involved with any creative deals that I do. The fact that a licensed person knows better than to pull a subject-to or something else creative, if things go bad, the court my see it that you should have known better and unwind the deal at your expense.

Joel Owens · Answer

Appraiser is a waste of time.Take that 2,000 hours to source deals and you will make much more money and be further along in your real estate investing career.

Many appraisals I have seen are junk and have nothing to do with a correct value.Now commercial properties based on the income approach that would be interesting to learn about.

Residential is straight forward and simple to value.

Juan Beltran · Answer

Wow! Thank you all for all these great answers! I was undecided if becoming an appraiser was going to be a beneficial  avenue to better my understanding and knowledge in REI. I came along this post and thanks to you all decided to self study RE books and business classes for my investing career.

Darcy Valle · Answer

Thanks! I was looking for this exact question to be answered!

Gracie Brown · Answer

lots of good insight here, thank you to everyone! 2,000++ or 2,500++ hours of shadowing seems so extreme.

Tom Jones · Answer

Glad I found this post and the questions has already been asked.  I was wondering if this would be a good avenue as Ray was thinking.

Now that thought is no lnger a thought.  :)

Ray Johnson · Answer

Bill Gulley - Thanks for the post!

What types of "schools" are you referring to?  Do you mean "guru" courses or any local community college course?

This was more along the lines of what I was thinking.  Moving towards doing larger things in real estate and being able to take advantage of unseen trends.  I too don't think I need 2000 hours just to comp a SFR.  I was thinking in the broader terms of real estate.  Also, a lot of the comments have been about not making any money as an appraiser.   I wasn't really looking to make a living from being an appraiser, but using the experience in other aspects of investing. Thanks again for your post.

Any other former or current appraisers with two cents to add?

Bill Gulley · Answer

IMO, stay away from any investor "school" until you get past the state RE license.

Mark made a good point (and notice he said past, lol). Having an appraisal business is like any other service business and you should look at the market and need for the service in the Sherman area (nice area, BTW).

While most RE types think that appraisers just do RE loan deals, the business is much bigger. There are different reasons for an appraisal. I use to do appraisals for FDIC as an examiner and later commercial.

Appraisals are done for government, county assessors may hire temporarily at times, they are often required in bankruptcy, estate planning and settlements, corporate valuations, subdivision development, assessing fair market rents for large property owners, law suits and lending fraud, insurance underwriting and agricultral development, just to touch on a few areas.   The profession is more broad than doing bank loans.

A good friend and neighbor of mine has a national appraisal company specializing in commercial properties, mostly retail development and he has been very successful. It's like anything else, a few will be in the top 10% of the industry, most will do okay and some will always struggle to put food on the table. The top money makers are not just appraisers as you think ofthem but also have other business specialities, construction management/development, aviation, oil and gas, minning, etc; they have other unique knowledge of industries that compliment what they specialize in.

Going that route will give you a heck of a better base line for investing for yourself! RE investing is not just about cash flow as profits can be obtained in changing the use of properties, developing areas and manipulating growth in an area to improve valuations, not so much speculation (but can) but designing future appreciation. As an appraiser you would understand such influences.

Good luck!

Ray Johnson · Answer

Thanks for the replies!  So I think the polls are in and NO ONE likes the idea of me getting my appraisal license.  :)  I figured that would be the feedback I would get.

On a side note, how cool is it that I have sat down and talked with most of the guys that replied to this thread?

So it looks like Realtor School starts in 2 weeks.  I will be signing up for that.  Are there any other types of education (besides the school of hard knocks) that I should look into?  Keep in mind, being a landlord is just part of what I want to do when I grow up.  :)

Is it worth it to become a RE appraiser?

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