Do I need a real estate license to be a successful real estate investor?
I get asked the question all the time "If I want to become a successful real estate investor should I get my real estate license?" Well, pay attention because my answer might shock you.
There are so many myths about becoming a real estate investor. For example, you need to have a lot of money, connections, good credit and know a ton about construction. The biggest myth of them all is that you have to have your real estate license in order to flip houses. Well, my friends, this simply just isn't true. You do not need to have money, good credit or a real estate license in order to become a successful real estate investor.
Most of you guys know my story. When I first got into the business, I focused on a real estate investing strategy called wholesaling. So, each day I would go out and I would source the best, deeply discounted real estate deals and I would serve those deals up on a silver platter to landlords and rehabbers in town. I would get paid a nice matchmaker fee for putting the deals together. Did I need a real estate license to legally do this? The answer is NO.
You can legally flip contracts as long as you have the right paperwork. Even though, I was doing this without a license, I realized about one or two years into the business, that if I was going to maximize my abilities to make money from every single angle of a real estate transaction, that getting my license might be a good idea. So, I went to a real estate school and I got my license. You see, having your real estate license gives you the ability to gain access to the MLS (Multiple Listing System). This is the system where all the other real estate agents in town list their client's properties for sale. Now, this made my ability to do market research, run companies, make offers on MLS properties easier. I wasn't always having to call my power team members for help. Plus, I knew that there was always going to be some good deals on the MLS. Having the ability to call another listing agent, talk several agents, made it easier to get the real scoop on a deal.
Lastly, I knew that I could save money on my own listings if I wanted to list one of my rehabs for sale. Cool thing is that if I ever wanted to list or buy a property for friends, family or some of my clients, I can earn a nice commission too. Overall, having my real estate license made a ton of sense. I made a lot more money, it saved me time because I could quickly move in and out of transactions without having to wait on anybody else.
Now, with that being said, I think it's important to talk about the downsides.
It can be expensive. Just going through school, paying all your fees and your dues, it could cost two to three thousand dollars to get up and running. Having a real estate license means you have to hang out with a broker and they have to understand wholesaling. They might get frustrated at you for not focusing on traditional deals where they can earn a commission split. Finally, if you're going to have stricter, ethical and disclosure rules, which could slow you down, prevent you from going after certain deals and could potentially get in trouble if you screw it up.
Evidently, I got my license, I had it for about five years. I finally stopped paying my dues because as I grew my investing business, a couple of my other team members had their license and we didn't all need to be licensed. Right now, my partner is actually licensed, which is awesome because he gets to deal with all the fun stuff like continuing education classes, dealing with your broker, disclosures and having to share things with your broker all the time. I still get the MLS perks and everything else that comes along with that.
Truth be told, I'd probably still be licensed if I was doing more traditional agent stuff, but after Clever Investor took off, I started focusing on my YouTube, my other social platforms, my real estate investing business and everything else -- I wanted to focus in on and dominate. So, if you were to ask me, "should I get my license?" I would say "yes, as long as you disclose everything properly and you really try to maximize the benefits for both the traditional agent stuff and the creative investing stuff." Otherwise, focus on getting just an investor friendly real estate agent on your power team to help you with getting access to the MLS.
I hope this helps you. Until next video, I'm Cody Sperber, the Clever Investor signing off for now. Take care, comb your hair. Sperber out.