Should Real Estate Investors Get Their Real Estate License?
Rob Arnold is a good friend of REIF. He is a Real Estate Broker who specializes in working with Real Estate Investors and is an investor himself. Here are the positive reasons on getting your license. Tomorrow, we will publish the reasons you might not want to get it. (Just to keep it simple, Rob uses Realtor® to mean real estate broker, agent, or Realtor).
I have had hundreds of investors ask me whether or not they should become a Realtor® in order to invest in real estate. There is no quick and easy answer to this question. The answer really depends on what you plan to do in your investment career.
A real estate license is typically for someone who wants to work for other people to help them buy, sell, or lease their real estate. That is what a traditional Realtor® does. Most investors are not planning on working for others, but I do know many Realtors® who invest in real estate as a side business.
There are really three main reasons to get a real estate license outside of doing traditional Realtor® services.
Reason #1 is to obtain access to the local MLS. The MLS is the database used by nearly all residential Realtors® to advertise their listings to other Realtors® and to get their listings posted onto major websites like Realtor.com, Trulia, Zillow, etc. The MLS has information on all listings past and present in the area including solds and expireds. It makes checking for comparable sales easy. MLS access can only be obtained by dues paying Realtors®, licensed real estate appraisers, and their employees.
Reason #2 is to legally get paid commissions or referral fees without being a principal in the transaction. In all 50 states you need a real estate license to get paid for assisting others in buying, selling, or leasing property. The licensing laws are on a state-by-state basis, so every state has its own rules and definitions on exactly what you can and cannot do without a license.
Reason #3 is access to all the online contract forms. The local Realtor® association contract, all the various addenda, listing agreements, and dozens of other standardized forms are available to dues paying members. Most of the forms can even be filled out online and signed electronically as needed.
Here are a few of the other “pros” for obtaining a license.
#4 – The educational benefits from courses offered and trade magazines and newsletters. Until you take a real estate pre-license class, you will be surprised at how much you do not know about real estate law.
#5 – The ability to show properties to yourself without needing another Realtor® to accompany you. This is a big obstacle if you are making lots of offers on listed properties.
#6 – Favorable income tax rules regarding active versus passive income and tax write-offs. (Ask your CPA.)
#7 – You can offer to list properties that do not make sense to purchase as an investment. Many times we offer to buy the property first and then list the property second – depending on the deal of course. With the license, you never have to turn away a deal just because the numbers or terms do not work.
Robert Arnold is the investor-friendly real estate broker/owner of Sand Dollar Realty Group Inc., Sand Dollar Referrals LLC, and Sand Dollar Property Management all headquartered in Altamonte Springs, Florida. A broker since 1996, his business caters to the needs of investors and investor-minded Realtors®. His firm is a member of the Orlando, Tampa, Pinellas, Northeast Florida, Fort Lauderdale, Ocala, Daytona Beach, and Space Coast Association of Realtors®. He is a lifelong resident of Florida and a graduate of the University of Central Florida. His real estate designations include Accredited Buyer’s Representative (ABR), Certified Real Estate Brokerage Manager (CRB), Graduate Realtor® Institute (GRI), and Preferred Housing Provider (PHP). In his career, he has sold over 1000 homes for his customers. He has structured lease options, contract assignments, seller financing, discounted note sales, and many other creative transactions. Additionally he has wholesaled or rehabbed over 100 residential and commercial properties through his websites WeBuyHousesFlorida.com and WeBuySinkhole.com. He is married with two daughters and in his spare time enjoys traveling, watching movies, reading, fishing, and spending time with his family.