All Forum Posts by: James Trautz

Whether or not Investors should have a RE License seems to be a question getting a lot of attention these days. As both a Real Estate Agent and an Investor, let me answer by simply saying “YES.” Here’s why:

As we all know, there is no requirement to have a RE License, and in fact, there are many, Many, MANY (especially on this forum) who are extremely successful without being a RE agent, There are many benefits to having one as well. 

As Investors we rely on information – information about ARV, taxes, amount owed on a property, Repairs required, etc. If you look hard enough, you can find almost all of this information through some innovative footwork on your part, or through the web "Somewhere" at "Some Point." But that takes time and time is money. Additionally, many of the tools that new (and seasoned) investors use are the websites that EVERYBODY uses – Zillow, Trulia, Redfin, etc. While these are great tools, many have found that the information provided through these resources tend to be lumped together through the algorithms these companies use, and the most recent information (e.g., new Comps) is not always readily available. For example, if you were to go to Zillow and look at the house where I live in Plainfield IL, you would find that the Zestimate is ~$218K. However, by narrowing down my search in the MLS and by being specific in the filters I use, my home actually Comps out at ~238K (a difference of almost $20K). For us as investors the $20K delta could be the difference in whether or not we accept a deal based on the ARV - or worse, shortchanging ourselves in the amount of money we could actually earn. In short, as a Realtor I have access to the MLS which allows me to save time, more accurately determine comps, acquire tax and mortgage information not readily available approximate value to be approximately by these companies and that the information is not always updated in a timely manner. In my opinion, access to the Multiple Listing Service is GOLD, and if you yourself have it, it's even better!

Another reason I chose to get my License is because it provides both me and my Clients options. For me, it’s another stream of income, but more importantly, it provides my clients with more than just one option. In my years of selling, I’ve always believed that selling is not selling – it’s providing multiple options with a pre-determined outcome. Here’ what I mean:

When I sit down with a client, my desire is to do what’s best for them, not me. Regardless of my client’s motivation (which tells me what I need to know beforehand), I’ll typically present them a couple of different scenarios: The first, as a Realtor – giving them the information they need to see if it makes sense to List their home. If it makes sense to list their home, I’ll do so. But, what if they can’t? What if they don’t have the money they need to make the repairs necessary to sell their home? What if they need to sell NOW? What if they only have $3,000 in equity in their home, but need $11,000 to close and don’t have the cash to make up the difference? Then I talk to them as an Investor.

Zig Zigler once said, “Honesty and integrity are absolutely essential for success in life – in all areas of life.” In my business, I make sure to disclose that I am both a Real Estate Agent and an Investor. I want clients to know that I’m there to provide a service. Yes, I make money doing it, but I want them to know that my purpose is to create a win-win situation where we’re all comfortable with the outcome. But it’s THEM making the decision and THEY are the one’s doing the choosing – I’m simply providing the options.

Let me end by saying there are many more successful and seasoned Investors out there who would disagree with me. That’s fine, and I respect their opinion. But for me, I’ve found that this is what works best for me. In my opinion, there’s no downside to being an Investor with a Real Estate License. In fact, by doing both, I’ve been able to save time, be more accurate in my analysis of properties, add another stream of income that may not be available to me in certain situations, and provide multiple options to my clients. I hope this answers the question…  

Nice article Wendell. I think we all have a lot to be grateful for this year - thanks for JV(ing) with me as well!

Thanks Brian. I've got a license, but to your point, I will be on title first. Thanks for the input.

I'm super STOKED these days! For almost a year, I've been attending REI meetings, listening to webinars, watching POD Casts, etc., all to no avail. About 3 months ago I ran into a guy at an REI meeting that really seemed to click with me. I told him my story and asked if I could buy him lunch. We met the following week and I asked him if he was willing to mentor me. Of course I had nothing to offer, but he was willing to give. Here's the sweet part - he wanted nothing in return (okay, no money up front). Instead, what he offered was to JV with me on a couple of deals - I would learn and get a small piece of the pie and he would expand his network. On top of that, he told me that once I felt comfortable with what I was doing, I could go out on my own anytime I wanted... "just don't forget your friends." :)

Jump ahead to this week...

I've been implementing his marketing strategies, and what do you know? IT WORKS! This week alone, I bought a 235K SFH for 149K; I'm facilitating a Lease Option Contract on another home next Tuesday (deal is already agreed to - just need the documents) and I'm meeting with another potential client tomorrow which will be a perfect Rent to Own situation. On top of that, I've been talking with my neighbor (who had no idea I was an investor until I started marketing correctly) who's about to lose his home and looking for a way out. Of course, not all of these deal will pan out, but I'm pretty sure that 3 of the 4 will, and if you're playing baseball, those are Hall of Fame Stats!

BUT... here's what's really cool to me: In the 235K home, I'm helping a guy out who can't pay his back taxes and is about to lose his home. The Lease Option Facilitation I'm working will allow a retired Army Vet. to transfer to the DC area for his dream job without worrying about what's going to happen with his home, and my neighbor... well, we just may be able to help him out of his foreclosure. 

Wow, what a life! I get to do all this and make money while doing it. Not many people can say this, but I truly LOVE what I do for a living! 

Also, not how far you're willing to travel, but one of my associates, @PeggyLiu is doing the same thing in the LA area... she encountered the same issue, but just recently closed a large deal. 

Have you considered other Strategies (i.e., Rent to Own, Lease Facilitation, etc.)? I've found that there's always more than one way to skin a cat... In other words, rather than looking at Wholesaling as your primary means of business, perhaps you could JV with someone close by to work on another strategy (using Wholesaling as an exit strategy instead).

... just trying to think outside the box a bit.  

Jerry, not sure I can answer all your points, but I can help you with the home your Mother has been renting. Have you considered a Rent to Own situation? As a first step, run the numbers to make sure that the margins are there to make the deal. If they are, consider this: Income can be derived three different ways: First, from the Non-refundable consideration a Tenant Buyer could provide you (In my market about 8-10% of the current ARV of the home). Secondly, from the rent you derive during the term of the Lease Option (let's say the mortgage is $1200 and you rent it for $1500... the delta or profit each month is $300). Lastly, you can also Option this property for 8-10% more that what it's worth (ARV) now, 12-18-24 months from now. One property - 3 different streams of profit. After you've worked these numbers, look here on BP for people in your immediate area willing to JV with you. As a means of leverage, they may be able to provide the funding you need for a piece of the Pie. Talk to the owner, make him a creditable offer and see what he says (you're making money on the consideration, rent and end ARV of +8-10%)

This evening, I'm going to do the exact same thing with a property I'm buying. The property is being purchased at 150K and the ARV is 235K. The owner has some tax problems which we're going to take care of for him (his motivation for the great deal), but based on the spread, I've JV'd with a partner who is willing to put up the money for the purchase, the back taxes and the repairs (about $4K). Both of us will market the property to end buyer (Tenants) and both of us will make some money. Btw, the total potential profit for this particular property will be ~$15,000 non refundable consideration; about $4,500 in rent ($250/mo. X 18 mos.) and $89K (~252K ARV 18 mos. from now -150K purchase Price -13K in back taxes) for a total of $108K. Keep in mind this is an 18 month process and there are a number of people splitting this pie, but it's still a tidy little profit for all, AND we get to help a few people out along the way.

As always, great info Wendell. I feel fortunate to know somebody like you who not only "knows" the information, but puts it into practical use. Thanks again for the tips!

Looking forward to a great event with great speakers. I'll be there!

Hi Jordan, 

I just saw your article and wanted to congratulate you on your success. To some, 8K may not seem like much, but you're "moving forward" and any step ahead is better than "marking time." Good luck to you in the future!