Should Investors Get Their Real Estate License?

Are you an investor considering obtaining your real estate license? 

Many real estate investors wonder if they should get their real estate license. While there are several perks to having one, it all depends on whether it is worth it to you. Acquiring a real estate license is a time-consuming and expensive investment.

Therefore, it helps to learn the pros and cons of getting a real estate license.

The Pros of Getting a Real Estate License

1. Gain Access to MLS

The major benefit of having a real estate license is your access to MLS (multiple listing services).

While looking at investment properties, MLS can provide you with valuable data on potential properties. However, this shouldn’t be your only reason to obtain a license since the MLS isn’t free. 

Yet if you don’t mind paying the fees, the MLS database will be an invaluable resource for your investment business. 

2. Make Your Own Commissions

Each time an investor sells through a buying agent, the investor has to pay the agent a commission on the sale. 

However, a real estate license means you get to represent yourself and receive a portion of your commission. This extra income is nice to have, especially on larger dollar deals.

3. More Control Over the Deal

When working with an agent, they’re in control of communication with the involved parties. Additionally, they control your property’s marketing and presentation, impacting the buyer’s perception of the property’s value.

With your own license, you will be more in control, speeding up your offers which is crucial in such a competitive market. 

The Cons of Getting a Real Estate License

1. It’s Expensive

Real estate agents can pay out of pocket for various annual fees, which could dip into your profits as an investor. 

However, it depends on the negotiation of your payments and expenses with your broker. The fees involved in being a real estate agent typically include:

• MLS

• Lockboxes

• Office expenses

• Realtor Designation

• Percentage of commission that goes to your broker. 

When you don’t have any investment deals for the first year or two, these fees can significantly impact your income each year. 

2. The Timing to Get a License

Becoming a licensed real estate agent is no easy feat. In fact, it takes much dedication and work to obtain one. 

For example, it can take up to 120 hours of class time before passing the test – depending on your state. In addition to acquiring a license, you must earn continuing education credits through dozens of hours each year to retain one. 

With all these hours in mind, you take time away from actual investments in your business. 

3. Handling Paperwork

The more deals you close on, the more paperwork that’s involved. For example, you’re responsible for writing and submitting forms to agents, brokers, lawyers and the MLS.

However, if paperwork truly bothers you, many people outsource this work to those who can handle it for you. Still, some investors find the paperwork part daunting due to the time constraints.

Should You Get Your Real Estate License

Getting a real estate license has its benefits. However, it also has downfalls. So the question you must ask yourself is, is it worth it to you? Do the pros outweigh the cons? If so, then it might be what you need to do to move forward.