096: The Pros and Cons of Being a Real Estate Agent and Investor

I have been both a real estate investor and real estate agent for over 15 years. Being an agent gives me a huge advantage when buying flips or rental properties. Many people say being an agent and investor is actually a bad idea. There are some cons to being an agent/investor, but I think the pros are far greater. In this episode of the InvestFourMore podcast, I explain how beneficial being an agent and investor has been for me. I also talk about the cons of being an agent and investor, and I discuss when investors should become agents. I know there is no way I could have nearly as many flips as I do (currently 16) without being an agent. I also know that being an agent saves me a ton of money on each flip and each rental-property purchase.

How did I get my start as a real estate agent and investor?

I got into real estate right after college in 2001. I immediately earned my real estate license and started helping my dad flip houses. At the time, we focused on trustee sale houses, and our real estate licenses provided no real benefit. However, we did benefit when selling those houses because we saved a commission on each house that was sold. Over the years, we flipped more houses, and I eventually bought the business from my dad. Since then, I have flipped many more houses and switched from buying primarily at trustee auctions to buying from the MLS.

How much money can you save as an agent investing in real estate?

When I buy a flip from the MLS, I save a commission both when I buy the house and when I sell it. I might make 3 percent on the purchase of the home and save another 3 percent when I sell the house. If I buy a house for $100,000 and sell it for $200,000, I save $9,000 by being an agent. Since I complete 20 or more flips per year, that adds up to a lot of money. I don’t save that much on every house because I don’t buy some houses from the MLS, and I also buy houses that are more expensive. On a high-end flip that I sold earlier this year, I saved $15,000 when I bought it and $24,000 when I sold it. I have bought all of my rental properties from the MLS with the exception of my turn-key property in Cleveland. Being an agent saved me money on my rental properties as well. It is important to remember that I earn full commission because of the way my team is set up with my broker.

How does being a real estate agent get me more deals as an investor?

Not only do I save money by being a real estate agent, but I also get more deals. I enjoy numerous benefits from being a real estate agent:

  • I can act fast. I can view houses within hours of their listing and can submit an offer that day. Investors who must wait for agents to help them cannot act nearly as fast.
  • I have access to the MLS. I can view hot sheets and see new listings come up right away. I can also value homes much more accurately due to my MLS access.
  • I can offer more for a house. Because I save money on commissions, I can offer more than a regular investor can and still make the same amount of money.
  • I can network with many people in the business. As an agent, I network with other agents, investors, lenders, title companies, and many more. The more people I network with, the more deals I can get.
  • As an agent, I also meet wholesalers, who can bring me a ton of deals.

What are the cons of becoming a real estate agent?

There are many people who say real estate investors should not be agents. The primary reason for this is that there are more restrictions on how real estate agents conduct business. If you are buying off-market properties, being an agent means you must be very careful and follow certain rules. Here are some things you must do:

  • You must disclose that you are a real estate agent on all marketing.
  • You must disclose that you are an agent when making offers on houses.
  • In some states, you must disclose that you are buying properties below market value and may make a profit.

These restrictions do not bother me because I am fine disclosing all of that. In fact, I think being an agent gives me more credibility. I can see how some investors who rely on bandit signs or billboards may have issues disclosing they are an agent on their marketing.

Becoming an agent can also be expensive and time consuming. You must take classes, pass a test, pass a background check, and work with a broker as a new agent in most states. After paying for MLS access, being an agent can cost thousands of dollars per year. I don’t think every new investor should become an agent right away. I think you need to make sure you want to be a serious investor before you become an agent.