Three Reasons Why Investors Should Get Their Real Estate License

Featured Articles October 30, 2019

Three Reasons Why Investors Should Get Their Real Estate License

One of the largest questions I get asked by investors is, “Should I get my real estate license? What if I’m just wholesaling?”.

Getting licensed is not something I would recommend doing lightly. You are applying for a professional license that comes with fiduciary requirements, financial repercussions, and accountability.

That being said, accountability is by no means a reason to avoid getting licensed, unless you’re not planning on operating with integrity.

I personally believe that anyone who is even somewhat serious about investing should go through the process of getting licensed as a real estate agent in their state.

Credibility

Getting licensed shows bankers, lenders, title companies and other industry professionals that you’re a legit player. A lot of new investors (especially newbie wholesalers) play fast and loose with contract law, the rules, and relationships.

I remember pitching a new private lender last year on investing with me and I could tell that it wasn’t going well. His body language had him positioned away from me and you could tell that he wasn’t super interested… until I mentioned that I was licensed as a real estate broker. He has now invested over $300,000 with me.

Getting licensed lets folks know that you are accountable, committed to learning, and care about professionalism.

The gentleman who sold me my second rental in Indianapolis only sold to me after his realtor signed off. He asked me why he should tell to me and I was 100% transparent with him. I sent him comps, closing costs, tax prorations, estimated repairs, and holding costs estimates. I (at length) compared selling to me vs listing on the MLS. He forwarded me an email from his realtor where she agreed with my #’s and told him that because I was licensed she would recommend he take my cash offer. He did! It’s pictured to the top right.

As a side note, Investor Carrot recommends having 3 or more credibility badges on your motivated seller website. We use the state’s professional license stamp as one of ours.

Access to the MLS

Getting access to the MLS is HUGE for a real estate investor. You can’t expect to accurately make offers if you can’t pull comps. No realtor worth their salt is going to be your comp monkey. No investor worth their salt is using Zillow to pull comps. The MLS also gives you access to things like expired listings (which I’ve bought several rentals off of!) tax records, and some advanced tools that require you to be licensed.

The cost of getting and holding your license in most states is roughly $2,000. If you do even one deal a year… It pays for itself… See below!

Getting Paid To Buy Houses

As if you needed more reason, getting to represent yourself as a buyer in a transaction entitles you to the buyer’s agent commission. If you get licensed and just buy one house a year this will more than pay for itself. If you’re a flipper and not licensed yourself… You’re nuts! I did two wholetale deals last month and saved myself over $13,000 in selling costs.

An Alternative:

When I was first starting out in real estate I didn’t have the $$$ to be able to afford the fees, courses, and test. I was extremely fortunate that my in-laws mailed me a check to pay for all of it. Honestly, their 2k investment has had an incalculable return. That being said, I’m the king of bootstrapping businesses from nothing and can relate to being there.

If you can’t afford to get licensed I HIGHLY recommend checking out PropStream. It’s effectively an MLS for the unlicensed + a prospecting tool. It allows you to run comps, pull lists, and more. Even though I’m licensed we use Prop Stream for a few niche’ lists, some advanced prospecting, and for our acquisitions managers.

You can check them out here with a free 7-day trial: Claim Your 7-Day Free Trial

**Note: The above link is an affiliate link. I only set up affiliate deals with tools that I personally use and have made money with. I REALLY like Prop Stream and will be putting out some content on some Ninja Stuff I do with their software like: Finding Private Lenders, Finding Cash-Out Refinance Banks, Finding Buyers, and more.

Recap:

I have done a few hundred off-market deals without a single complaint or issue with being licensed. I have only gotten value out of being a licensed broker and the rewards outway any perceived risk. Being able to also legally refer listing leads to brokers for a kickback isn’t a bad 4th reason ;)!

It was fun to dig up the cover picture for this. The dorky kid grinning in this pic had no clue what real estate would do for him and his young wife.

+ COMMENTS (2)

  1. Hey Ryan this is a great article and very very true… We were trying to go it with out getting one of us licensed… (my wife and or I ) She ended up getting hers and its made a world of difference … and she signed up with a great re company and has learned a whole other side to the investment world

    Reply
    1. Glad to hear you guys got it figured out. It’s a small price to pay for the perks it brings.

      Reply

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