HMW #119: Should I get a real estate license as a real estate investor?Sep 13, 2023
Read Time: 6.5 minutes
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Does getting a real estate license make you a better investor? As someone who was a real estate investor for a decade before I (Alan) became an licensed agent, I can definitely say I'm a much better agent because of being an investor first.
However, I've found that being an agent does not make me a better investor. And "should I get my license?" is a very frequent question I get from all new investors across the board. Why is that?
Ok, I can see that logic! But let's break down what an agent is trained to do.
Ask: will this training help me reach my goals of being the best real estate investor I can be?
Unfortunately most people don't know the name of the license you have to get is called a "Real Estate Salesperson License" which means one thing:
You are getting trained to sell real estate and represent others.
You're not really learning more about real estate, except how to calculate metes and bounds and the odd acreage conversion, which is now easily done for you online. You are mainly trained on:
- What issues need to be discussed or avoided with a third party
- Ethics around showing properties and homes to a third party
- How to correctly represent another party in a transaction
- How to protect yourself from getting sued by other parties
Exactly! It's a whole license and education around how to avoid those third-party poopers that ruin a deal.
But here's the thing, you can represent yourself without a license and do whatever you want, unless you are the type to sue yourself. (For the record, I'm all for adding a little spice to deals, so have at it!)
Some other things to consider about getting a real estate license:
Consideration 1: It's not going to save you much (or any) money
Getting a real estate license takes time and money. Maintaining a real estate license takes time and money. You have monthly desk fees at brokerages you have to pay as you are required to be apart of a brokerage. You have required continuing education classes (on how to be a better salesperson) that take both time and money in order to keep your license active.
You should, however, consider your license if you want to help others with their real estate. If you are in it to help yourself the time, money, and effort is not going have the best ROI for you.
But the most expensive thing about having a license? It will kill your deal flow.
Once you have your license, there is no incentive for any other licensed agent to bring your a deal. If fact, they are incentivized to keep it from you. You are now their competition. Well, unless you agree to waive your 3% agent fee, but that is why you got your license in the first place!
We all do! And you can be. But you can only have one priority: Are you going to be rich focusing mainly on investing and surrounding yourself with great agents? Or are you going to get rich focusing on being an agent and surrounding yourself with investments? This is the way.
Consideration 2: You think you know more than your agent does
Many people take this approach to get a license as they learn quickly they know more about real estate than their agent. But this is also misguided. ou know more about real estate investing, agents know more about real estate selling. They are masters in:
- Nuances of deal making to win bidding wars, get deep discounts, and keep a deal alive
- Networking with other agents, lenders, and attorneys to expedite routine processes
- Long-term relationship building with sellers and soon-to-be sellers
- Emotionless, stress-free, and creative ways to make it feel like everyone wins
You can only master these skills doing this full-time and having someone with these superpowers in your corner makes for a great real estate investor partner.
Perfect. You may have had different expectations of your agent to this point. But let them shine in their own light for best rewards. Also, if you do want a real estate agent that understands investing, there are plenty that do that too. Like me!
Consideration 3: You probably will suck at being an agent
Practice makes perfect. The agent doing 30-40 deals a year improves more than the agent doing 1-3 deals a year. It's just more reps, and with that, comes more gains.
Do you want a sh*tty agent to represent you? Well, no matter what, you'll be a sh*tty agent for your first dozen deals. And those dozen deals you are going to be your own client!
You will be taken advantage of during that time frame, I promise you. It's the other agent's responsibility for their client to get you at every loophole, nook, and cranny in a contract. Why would you do that to yourself?
Ok, I'm not sure that's true. You may just hate feeling like you aren't maximizing your money on a real estate deal, but know you know you are when have an agent by your side.
Congrats! Now, go focus on killing it as a investor and stop all this side-quest nonsense to be an agent. Your checking account and social calendar will thank you.
- Being your own agent is not going to save you as much time as you think.
- Being your own agent is not going to save you as much money as you think.
- Focus on being an investor. You don't need to be the agent, roofer, or plumber too.
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