Is it Worth it?
The most common questions that I am asked on a daily basis from new investors is whether or not it is beneficial for them to get their real property license. I spent many years as a real estate
investor wholesaling, rehabbing, fixing, turning and renting without getting a license. Eventually I decided that it was beneficial to get my license and that having a license does not hinder your ability to operate as an investor.
If you are thinking about whether you should get your license then here are some points for you to consider:
Why are you thinking about getting your license?
Are you required to get a license?
How will having a license benefit or hinder your capability to operate as an investor?
The first question you should ask yourself is the reason why you may be thinking about getting a license. If the answer is because you want to be an agent and show properties to buyers and sellers in exchange for a commission then obviously you want a real property license. However for many investors that are interested in investing for themselves the lines become much more blurry.
The second query for you to ask yourself is if you may be required to get a license? Many investors are not aware of when and if they need a license and quite often assume that they don’t when they do. If you are a full time wholesaler and you assign contracts to different investors for an assignment fee or you double close your own purchases for a profit then you probably do not must get a license. However you need to have beneficial interest in the property meaning that you need to have a appropriate contract indicating you are the consumer of that particular property and that you have equitable interest in it. If you do not have beneficial interest then this signifies that you can not find buyers for other wholesalers.
If you’re an active wholesaler with an active buyers list then you probably network with other active wholesalers in your location. If you do then always you will find yourself able where you understand buyers that are looking for a home in a certain area and one of your wholesaling associates might have a house under contract in that area. In this scenario you would be stepping over the line since you do not provide an interest in that property and you may be marketing it. This would require you to be certified. Keep in mind that this applies irrespective of whether or not your associate gave you permission to find a buyer for their deal. Do not rely on joint venture agreements or beneficial Interest contracts to help you to get around this regulation. The neighborhood real property licensing authorities might ask you for proof of your beneficial interest plus they is interested in your name on either the deed or the contract. So in summary if you may be advertising your own deals you don’t want a license but if you are advertising other people’s deals then you do. If you do not have a real estate license then you can not find buyers for different investors. You also cannot help other investors sell their properties. or perhaps a property for somebody else (with a few exceptions).
The final question that you need to ask yourself is how having a license will hinder or benefit you as an investor. If you simply wholesale your deals, manage your properties or fix and flip your properties then you do not need a license. However, the more active you get as an investor the more opportunities there will be for you to benefit from having a license. You will be able to list properties, manage properties for others, wholesale other investor’s deals, find sellers for other investors, find customers for different investors, cut costs on purchases and sales and get access to the MLS. In short there are a lot of benefits to having your real estate license.
What are the disadvantages to having your license? I don’t really view any. You will have to disclose that you have a license and you will be bound to act ethically (that you simply should already be doing). Having a license offers you more opportunities to create revenue and if you may be considering being a full time real estate investor then having a license will benefit you in the lengthy run.