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Pros and Cons of Getting A Real Estate License As An Investor

Real Estate Agent Sitting At Desk With Face MaskAs either a first-time Berwyn single-family rental property owner or an experienced investor, you might have considered getting your real estate license. Long-term success in investing is dependent on your ability to reduce costs wherever you can. You could also be considering the value of insider information, especially in competitive markets. If you really believe that getting a real estate license can save you money and give you the access you want, you need to think it through first. You should first consider both the pros and cons of getting a real estate license as an investor.

One major reason investors want to get a real estate license is to save on commissions. It can often feel unpleasant to have to pay a big percentage fee to someone else. And, if you are planning on selling a lot of properties (when flipping houses, for example), you could save yourself money.

However, those savings are an illusion for Berwyn rental property investors who plan to buy and hold properties. The reality is that it is the seller who pays the real estate agent fees, not the buyer. Real estate agents are also required to work under a broker and these brokers charge either a flat fee or a percentage of your commission for every transaction. These fees will further reduce any perceived savings.

Aside from the idea of saving money, the idea of having access to the Multiple Listing Service (MLS) makes getting a real estate license attractive to investors. The MLS is an important resource for properties on the market. You can get the free version of the listing service but it wouldn’t give you the comprehensive data that makes the MLS valuable to investors.

If access to the MLS is your primary reason for obtaining a real estate license, you might want to reconsider. A licensee’s rental property could be subject to new laws that do not apply to private investors. Being a real estate agent also does not give you free access to the MLS. You also have to pay for the required licensing course, licensing test, and the license itself. Other costs include fingerprinting, brokerage fees, Association of Realtors dues, state fees, and so on. You also have to pay for the MLS. In all, your real estate license may actually cost you up to thousands of dollars. Many of these costs are ongoing so that means you must factor them into your plans.

Finally, you must ask yourself how much your time is really worth. Can you afford to spend upwards of 100 hours taking a pre-licensing course and studying for the licensing exam? In many states, even the minimum number of hours required to certify can take months to complete. If you already have a good investment business or other commitments, getting a real estate license can become a huge challenge. Every hour you spend on licensing is an hour away from growing your investment portfolio. If you see real benefits in getting your real estate license, it still might be worth the investment in the short term. It is, therefore, very important that you calculate all the costs involved and figure out how this will all fit into your plans so you do not jump into something that might not work out well for you.

Would you like to learn more about how to grow your Berwyn investment portfolio without a real estate license? Contact us online or give us a call at 773-904-7700.

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