Should Investors Get a Real Estate License? (Updated for 2024)

Investing in real estate can be lucrative. Although you can make bank by owning shares of public companies holding income-producing properties, buying and selling realty has higher profit potential. However, you usually have to absorb losses before scoring wins. Can you mitigate the risks in this venture by obtaining a real estate license? 

Having a license to assist others in buying, renting or selling real estate can be instrumental in achieving your business goals — or be a complete a waste of time. Weigh the advantages of being a licensed agent when investing against the disadvantages to make a sensible decision.

The Pros of Getting a Real Estate License

Being a real estate investor slash licensed agent comes with these perks.

1. Building a Useful Network

Who you know is as important as what you know. Working for a real estate brokerage lets you meet valuable friends in the business who can mentor you. The more connections you have, the more doors will open for you.

Real estate also has the largest trade association in the United States. The National Association of REALTORS^® has over 1.5 million members — joining this massive community translates into countless networking opportunities.

2. Gaining Access to Multiple Listing Services (MLS’s)

Having a real estate license grants you access to MLS’s. These private databases give you firsthand knowledge of all the properties for sale in a given location. If you want to target specific houses and commercial buildings, starting your search on MLS’s can save you considerable time driving around rural areas, suburban neighborhoods, uptowns and downtowns.

Each listing includes many intimate details about a property, which you can’t learn by simply driving by it. MLS access supercharges your research, giving you the upper hand over investors.

3. Getting the Latest Scoop

Being a business insider gives you access to pocket listings — properties for sale not advertised on MLS’s. Their sellers want them on the down-low. Being privy to them expands your investing prospects.

4. Making Your Own Commissions

Representing yourself in real estate deals allows you to pocket more profit. This strategy usually backfires on ordinary people who forgo a professional agent’s services to reduce commissions. Nonexperts aren’t competent enough to negotiate higher prices, so they lose more cash than they save.

Sitting at the negotiating table with a real estate license can yield a gainful outcome. You can’t claim 100% of commissions since you must split them with your broker and counterparties’ agents. Still, earning instead of paying commissions on more significant deals can make your bank account several shades greener, especially when your brokerage firm lets you take home a 70% slice of the pie.

5. Earning Cash Through Referrals

Juggling real estate investing and agent duties can be too much to handle. Fortunately, you can still make money without assisting clients. Your broker will compensate you for sending those you can’t represent a fellow agent’s way, whether or not this professional also works in your firm. Referral fees add up and can be a regular source of passive income.

6. Having More Control Over the Deal

Agents are in charge of communication with the involved parties. Additionally, they control your property’s marketing and presentation, impacting the buyer’s perception of its value.

With your 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

Being a licensed real estate professional isn’t all roses because of the profession’s less-than-exciting side.

1. Jumping Through Hoops

Becoming a licensed real estate agent can be challenging. It requires dedication and hard work to obtain one.

Learning the ins and outs of real estate principles, relevant laws and contracts takes dozens of hours. Education requirements vary from state to state. In Nevada, the magic number is 120 hours for nonlicensees because out-of-state real estate license holders only have to sit through 90 days of education.

Getting a license is one thing — retaining it is another. Continuing education is a must to stay current with the latest in the business. Burning the midnight oil to maintain your designation will take time away from growing your investments.

2. Wearing Many Hats

Although you can work part-time as a real estate agent, the profession’s demands are a full-time job. Many agents, Realtors and associate brokers also act as brand managers marketers, prospectors, local property market researchers and analysts, home stagers, and open house organizers, hosts and hostesses.

Buying, renting and selling properties can be emotional rollercoasters. You may have to support and comfort your clients when necessary. Their situation may still affect you in one way or another, even if you’re not in their shoes.

Empathy goes a long way toward nudging clients in the right direction. However, you may experience compassion fatigue when interacting with a traumatized individual, like a battered divorcee or an aged-out foster young adult.

3. Dealing With Various Expenses

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

However, it depends on how you negotiate 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.

4. Handling Paperwork

More deals mean more paperwork. For example, you’re responsible for writing and submitting forms to agents, brokers, lawyers and the MLS.

However, if paperwork bothers you, you can outsource this work to others. Still, some investors find this daunting due to the time constraints.

Should You Get Your Real Estate License?

Getting a real estate license has its benefits and downfalls. 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.
Original Publish Date 10/14/2022 — Updated 10/1/2024