Last Updated on August 22, 2019 by Mark Ferguson
When I became a real estate agent in 2001, I was not a real estate investor. I focused on selling houses for and to people, but when I became an investor the license was a huge help. When I started investing in rental properties my real estate license saved me thousands of dollars on commissions and I found more deals. Now that I flip houses and buy rentals the license saves me hundreds of thousands of dollars a year in commissions. The license also allows me to find many more deals because I can act faster and pay more than other investors.
How can you become an agent?
I discuss how hard being a real estate agent in this article. You must take pre-licensing classes and then pass a test in most states to get your real estate license.
My assistant got his license through Real Estate Express, which also has a great licensing program in all 50 states. Real Estate Express also has some of the lowest prices I have seen, although I have not researched every real estate school.
Why becoming an agent saves money
Being a real estate agent has helped me tremendously in my own investing strategy. I have purchased 20 long-term rental properties, and I am making at least 15 percent cash-on-cash returns on all of them. One of the reasons I am earning such high returns is that I save thousands of dollars on each transaction by being a real estate agent. I also do 20 to 30 fix and flips per year and save thousands of dollars on each of those transactions as well. I estimate that being a real estate agent saves me over $100,000 in commissions on my flips and rentals per year. That does not include the profit I made on deals that I would not have gotten if I were not an agent.
How can you save on commissions?
If you plan to buy more than one or two rental properties per year get your real estate license! If you do nothing else with your license except buy your own rental properties, you will save thousands in commissions per year. On every rental property I buy, I save a ton of money because I am paid a commission as the buyer’s agent. The commission may be 2, 2.5, or 3 percent per deal, but in the end that adds up to a lot of money. If you buy three houses per year with an average price of $100,000, being a real estate agent can save you $7,500 to $9,000 per year.
If you fix and flip those houses, you will more than double your savings because you will save a commission when you sell the house as well. On a recent fix and flip, I bought the home for $105,000 and earned a three percent commissions as the buyer’s agent. I am going to fix and flip this property and most likely sell it for $160,000. When I list the home, I will save another three percent commission that I would have had to pay another agent. On this one deal, I will save $7,950 because I am a real estate agent.
How can you get better deals?
There are many other advantages to being an investor with a real estate license. Being an agent allows me to get more deals as well. Here are some other ways that having a license is a huge advantage:
Access to MLS
As a real estate agent, you have access to MLS and can do your own searches for properties without having to rely on an agent to find you the right deal. Having access to MLS gives investors a huge advantage because they do not have to wait for an agent to send them listings. I search for listings at least five times a day, and I routinely make offers on the same day a house is listed. An agent can also easily pull sold comparable information from MLS to calculate values on properties. Calculating accurate values is one of the most important things an investor needs to do in order to be successful.
As a real estate agent, you can fraternize with other agents and people in the real estate world. The more people you know in the business, the more people you can tell that you are looking for property. Sometimes the best deals are those that are brought to you, not the deals you find yourself. Let everyone you know that you are looking for investment properties and you never know what will turn up. I have purchased a couple of properties that were never listed on the MLS because of my contacts in the business.
The IRS has limits on how much money you can deduct on rental properties if real estate is not your primary job. If real estate is your primary job, you may be able to deduct many more expenses. For more details, please see the IRS tax code.
If you are a real estate agent that does many deals, most agents will know who you are. If you bring a good reputation for getting deals done, sticking to your word, and being dependable, other agents will want to work with you on tough deals. Many properties that we buy have major issues and are tough to sell. Other agents know me and know I will do my best to get the deal done.
I already mentioned the commission savings on investment properties, but there is another advantage besides just the money savings. If I save $8,000 in commissions on a fix and flip deal, I can buy that property for $8,000 more than an investor who does not have their real estate license can. That savings allows me to pay more money and get more deals than other investors while still making a profit.
How much money can you save?
This year I will come very close to fix and flipping 30 homes. That means I will sell 30 houses that I flipped, I will buy close to 30 houses, and I bought a few rental properties as well. Here is how much I think I have saved this year alone:
- Selling 30 flips I save 3 percent commission on each flip because I can list the home, instead of another agent. My average flip sells for $225,000, which equals $202,500.
- I will buy close to 30 flips, but not all of them are MLS deals. If I assume half of them are MLS deals and I buy them for $125,000, I save $56,250.
- I will buy three rentals totaling about $500,000 which saves me another $15,000.
- I will save over $270,000 by being a real estate agent this year on my own deals alone.
I have a great set up with my broker where I get 100 percent of the commissions and pay him a flat fee every year. If you have to pay your broker a split of your commissions you may not save as much money.
How else can you make money?
I am biased, but I think being a real estate agent is one of the best opportunities out there. There are many forms of income in the real estate business. If you are motivated and dedicated to making it in the business, you can make serious money. I will not go into details in this article, but here are some of the different areas that can generate income.
If you want to be a serious investor, you will want a property manager to handle your rental properties at some point. If you start your own property management business, you can manage your properties and other properties as well. Not only are you saving ten percent per month on your rent coming in by doing your own management, but you can also make extra cash by managing other investors properties.
This is the most common way to earn money as an agent. Retail sales involve listing houses for private sellers and selling homes to buyers. If you are dedicated and treat this as a real job, you can make a lot of money. Many agents make over $100,000 per year and the very best make much more than that.
Commercial real estate requires much more experience and knowledge than residential. It is difficult to break into commercial unless you start with a commercial firm that can mentor you. Experienced and successful commercial agents can easily make hundreds of thousands of dollars per year.
REO properties have been foreclosed on and they have gone back to the bank. REO agents list and manage these homes for the banks. Agents can make a very lucrative living if they work with the right banks. It can take years to build up your business and the supply is determined by how many homes are foreclosed on. REO agents are not allowed to buy their own listings, as it is a conflict of interest.
Short sales homes are listed by private sellers who are selling the home for less than they owe the bank. There is a huge market for short sales and many agents make a great living specializing in this field. It takes a lot of patience and diligence to close a short sale since the banks have many requirements and they can take months to approve a short sale.
Broker Price Opinions (BPOs)
A BPO is a one to three-page report used to determine value on properties but is not an appraisal. Licensed agents can complete BPOs for various clients including banks. The agents are usually paid between $30 and $80 per order. Some agents make a living only completing BPOs. It is a great way for agents to supplement their income while learning the business.
Real Estate Express is a real estate school that provides online classes in many states. Three agents on my team…
There are many ways to make money as a real estate agent. Even if you just want to buy or sell a few of your own listings each year, I believe becoming a real estate agent is well worth it.
House Flipping 101: The Complete Guide to Fix and Flips
How to Make $30,000 a Month Flipping Houses
How I Got Started Flipping Houses
Can You Make One Million Dollars a Year Flipping Houses?
Ten House Flipper Tips That Will Help You Be Successful
85 thoughts on “Should Real Estate Investors Get Their Real Estate License?”
You forgot to mention that you need to give some money to your broker or you need to be a broker to get all 3% of the commission.
True, there are many different ways agents and brokers get paid and state laws are all different on what it takes to be a broker or agent or combination. Many companies let agents hang their license for very minimal fees and many investors are their own broker
Hey Mark, why did you choose doing REOs and HUD homes as a real estate agent?
For a number of reasons.
1. I like email and I can deal with almost everything through email with HUD and REO
2. It is relatively steady income compared to retail sales.
3. There is less emotion involved with the seller.
4. There is a great supply of work coming in(usually) and I don’t have to call people or go out looking for business, do open houses, etc. I can farm for wok online through email, or registration sites, conferences
You also need to remember the rules for Agents being property managers. It has to b ok with the Broker and they get a little piece of that pie too
True, good point.
I think you are right. There are a lot more positive than negative to having your license. Thanks for the article
I have 2 rental homes now and may pick up a 3rd but I also work F/T with my office job. Will getting a realestate Lic help me if I don’t buy and sell homes to others? I have been told no in CA but I can’t seem to find the facts even from the IRS. I don’t put all my time into just 2 rentals and I do keep a F/T job
I know the$25K help when with a realestate Lic but have been told I have to be trding and selling homes active to make it work
It really depends on how many deals you want to do. The biggest benefit to me is getting a great deal because I am an agent. That may save me $20,000 on one deal or make me $30,000 on a flip. I am also able to look at properties at any time and make offers right away. It would be tougher if I had a full time job. You would also save money on commissions, but again it will take time to find the deals and write the contracts.
I just got my license mainly for investment purposes but I want to go all in.
My question is: how do I get leads if I want to sell or rent properties?
I’m with a broker that charges me a tiny flat fee every month but the down side to that is that I don’t get any leads, support, training, etc…
How should I go about that? Should I switched brokers?
Hi Helga. You can get leads on your own, but it is easier with a full service broker. A few suggestions are open houses, advertising in local house magazines or the newspaper, build a website for yourself, Facebook advertising and I have a lot more info in my E Book.
There is no way to be a professional real estate agent part time. It requires a full time commitment. There are way too many wannabee agents out there who have no idea what the real world is all about, and they tarnish the reputation of professional agents. If you are serious about this, you need to start with an agency that will offer you training and above all, support. You absolutely must have a least 9 months of all your expenses saved up before you start, as well as a large chunk of money for initial fees to the National Association of Realtors, State association of Realtors, your local association, your local MLS, and your training, If you have all this ready to go, go for it! Good luck! If you don’t have it all together, or you question whether you want to make a full time commitment, do not start because you are setting yourself up for a dismal failure! Did I mention you need money for initial signs, business cards, website and hosting, website design and maintenance. social media and search engine optimization, training again, printing, distribution, postage…. the list goes on and on. I know agents who make a lot of money, but also spend a ton of money leaving them with a net income of not much more than minimum wage. Some try to justify their income, but forget to count all the hours they put in, all the family outings they miss, all the time away from spouse and family. Remember, there is no shame in saying its not for you!
Thanks for your post. I really like the information which you have shared in your post about the real estate agent
Thank you Harvey!
I just got my real estate license. I was interested in bpo side business, since I’m pregnant. How can i can I find leads to do banks bpo?
https://shop.investfourmore.com/product/reo-starter-kit/, my reo starter kit includes many tips on BPOs and BPO companies
Thanks for this because I moved from ca to va to get mentored by a agent to be a investor…but he wanted me to be just a agent and I just want to be a investor, because I’m weird around people, I think I don’t smile enough and give good vibes…plus I don’t want to be tied to a desk for hours on hand and shelling out money for everything. I wanted him to be a investor, since I see he is not at the level that he should be in life as a long time agent.
Glad this helped I think there are benefits to being an agent and investor and it is possible to excel at both.
Hi Mark, I’ve been whole selling property for the last 3 years and am currently studying for my real estate license. How did you find reliable contractors for your fix and flip deals? That is the next thing I’d like to jump into. I’m pretty good at estimating repairs but am very nervous about finding good help that would finish the job on time at the right price and well. Any advice would be very helpful. Thanks, Tina.
Hi Tina, Have you seen this article? https://investfourmore.com/2014/03/10/find-great-contractor-fix-home/
Hi mark, if I get get my real estate license, do i have to sell houses outside of purchasing my own rental properties?
You don’t. you don’t have to sell any houses at all. Different brokers will want different things from their agents.
It takes a lot of skills and experience to be both agent and investor. It can work for some but as for me, I’d like to focus more on what I do best and provide my service with undivided attention.
True, sometimes it is best to start out with one aspect and then include another once you are successful. In the case of investing in real estate I think they go hand in hand.
hello good sir,
thank you for sharing your knowledge and wisdom, i think your website and info are ammmmmaazing !!
i have a question, when you mentioned becoming a (licensed real estate agent ), what did you mean? i live in the philippines and im still new in this field and planning to start investing but im choosing to follow your advice also,
but when i started researching about getting the license i found out that there are alot of terms that (real estate agent) might mean! for example i found that a real estate agent includes : 1- Real estate consultant 2-Real estate appraiser 3- Real estate assessor 4- Real estate broker 5- Real estate salesperson . (being a licensed broker would require more pre licensing class hours than real estate sales person) so which category should i apply to be licensed to so i can follow your footsteps sir???
thanking you in advance and waiting your reply.
Hi, I am talking about being a real estate salesperson who sells houses.
thank you man
Thank you for the information! Answered a lot of questions for me! I am interested in becoming a real estate agent to have access to MLS to find my own deals and to learn more about the business. I have a FT job, but really can’t work for a broker selling homes due to my schedule. When you pass the test, Do you have to work with a broker to get access to the MLS? Should I tell them my true goals? I don’t have time to sell or show homes, I truly only want to invest in rental properties and fix and flip.
Yes you have to work for a broker. i would be completely honest so you find the right broker.
Man! This is an awesome site. I’m getting pretty hyped for school to start. I cant wait til im in this buisness.
Hi Victor, glad to hear it! You should check out our forum http://community.investfourmore.com/
What a great information resource Mark. My question to you is: Why don’t you get your own broker’s license??
I do have my broker license.
Before you got your broker’s license, where did you “hang” or activate your sales associate license in order to get the needed experience requirements to become a broker? How many years passed before you got your brokers license and what fees did you pay to your sponsor? I think this is a hurdle for future investors who want a real estate license too. You have to work several years for a broker sponsor and give some commissions to them before you can become independent.
I have my brokers license, but I am not the managing broker. I would rather pay him and let him handle the hassle of the office. There are many options for investors looking to get their license like limited service brokers.
Wow mark this site is awesome for starters. I’m really getting into being an investor you buying, flipping, and selling. My wife and I watch these TV shows and are hooked I really want to start you know leave the 9-5 and do this full time. What would you recommend on just trying to start something..?
Hi Albert! If you want to flip houses check out my flipping articles. I also have a couple programs for investors. if you’d like to email me [email protected]
Hi Mark, when you start making serious money how much free time do you get like could you work a couple ours of week and still make serious money? Thank you and God Bless
That all depends on what your definition of serious money is. I could sit back now and work only a couple hours a day and be just fine. But I can’t do that, my personalty makes me keep driving
Does it make sense and is it worth to get the agent license in order to save commission money from future sales of my 3 properties, $4M, $2M in CA, and $2.5M in NY ? I don’t intend to use the license to buy/sell more properties for myself nor do transactions for others. I understand that I have to get 2 licenses for the 2 states. Is it risky to sell properties at those prices without experiences? Should I just use a real estate lawyer for a few thousand $ expense for each of those 3 transactions and do the open houses myself or with friends? I appreciate your advice in advance.
Hi, If you are only using an agent to sell those properties and that is it, I would use an agent. They will have the experience and knowledge to get you the best price.
Thanks Mark for your time and energy on this article. Very important information. I just want to add that your real estate license is a major asset. Once you have it, you can go on the MLS and find all-cash buyers for properties that you’re selling when looking at the previous properties that were sold. I’ve made a great deal of money with my real estate license and wholesale real estate investing.
When you become an agent, do you have access to the MLS only in your city, state, or the entire U.S? Thank you for your response.
Most MLS systems cover parts of a state depending on how big the state is. Some work together and some do not. You won’t get access to nationwide listings.
i’m so excited to get my license soon, thank you very much for taking your times writing this article.
I just became a Real Estate agent here in NJ. My question is do you think it makes sense for me to list my own home through my Agency and I act as the listing agent?
I’ve been giving this a lot of thought, but I wanted to know if you are required to do an apprenticeship once you pass your test? My purpose of getting my license would be only for investment opportunities.
No, you would just have to have your license under a broker
I plan on getting my license for investment opportunities only. Would you recommend getting a licensed broker that charges a monthly fee or a split commission broker? If I had to split the commission, would the broker would still get part of the buyer/seller agent commission, correct?
Yes, they would., I would go with a transaction fee brokerage if you are only doing your own deals.
I am an experienced real estate investor, and am thinking of becoming licensed. My question is about Realtor(tm) ethics. Can a licensed Realtor locate properties not currently for sale, and make below-market offers? This is common practice for investors, but I have heard it violates the Realtors code of ethics, because they are required to divulge the full fair market value, which makes bargain hunting just about impossible. Any thoughts on this?
It depends on your state laws. Personally I do it, but I disclose that I am buying the house below market value. I explain why with no commissions, etc. Personally I wouldn’t feel right buying houses from people when they didn’t know the true market value anyway.
I’m a new RE Investor in Az. Can u give an advise. I don’t have s.s. I’m financing my deals. I created an llc. I don’t have any credit. My question is can I get a REA license with no s.s? Can use my ein to get it?
I have no idea. You would need to check with your state
Great article! I am an inactive real estate agent. I work a fulltime job but I am seriously considering becoming a wholesaler. Is it a good idea to activate my license again?
I think so
My wife is getting her license next week. Do you have any suggestions on what she should look for in a real estate agency? What questions to ask and what to avoid?
Hi I am very interested in real estate for the investment part but I have no idea on where to start and do I have to have a lot of money to start ? Or is there way’s I can do it with out having a lot of money?
When you try to sell/list the house that you flip, do you give 3% commission to selling agent? Can I list the house that l flipped on MLS with zero percent of selling agent commission to max my profit? I am not sure if I can list FSBO on MLS? Thanks!
Yes I do. I would be very careful about being to cheap to try to save money on commissions. Usually it ends up costing you more money. https://investfourmore.com/2014/04/16/always-use-real-estate-agent-sell-house-2/
If all you want is to be on the MLS, there are flat fee services to get your listing there, and they are far less than paying 3% commission
Flat fee services are illegal in Colorado and many other states.
hi mark .my question is,can my record make it harder for me to find a sponcer?If so what do i do to insure i get my licenc
DO you mean criminal record>? yes
Hi I was wondering, is it okay to become a real estate agent that serves a 500 km range? or just stick to one area?
Can you be a market expert in that large of an area?
Hi Mark. Great video.
I’m interested in the turnkey company that you spoke about. I live in southern California and am interested in turnkey properties in promising areas outside my area (incl Chicago, Indianapolis, and the Southeast. My contact information is below. Thanks in advance for sending me the information.
Hi Mark, i’m looking to get into the business of finding distressed home and passing my information for a profit. What can you tell me about this business? And where can I find people in the business of paying for distressed houses?
Are you talking about wholesaling?
If I’m licensed in California, can I still gain access into other states’ MLS? Or something equivalent to MLS?
You would have to be licensed in that state and a member of any MLS you want access too.
I was wondering how it works being under a Broker. If I’m buying, flipping, and selling my own homes as a sales person; what does my Broker get out of my own deals? I wouldn’t have to split my sales would I?
Yes, you might.
Are you a broker, or an agent with RE license.
Assume I become the RE agent with a license. And there’s a property that’s listed.
Can i become the “agent for myself”and go see it, get buy side commission?
And buy it with same name as agent’s?
Next, when selling it – how do buyer’s perceive it when they come to know this is your own property that you’re selling as an agent?
Yes, you should be able too depending on state laws. You must disclose when you buy or sell as an agent and I have never had any issues with it.
I am looking to get into the fix & flip market on a part-time basis (i.e. a weekend warrior). I already have a job that pays 100K, so I’m definitely not looking to switch careers yet. But I’m not certain if getting a license would help me much at this early starting point.
Should I rely on a seasoned agent this early in the game instead of messing with obtaining a license?
I would try out a couple before you get your license.
This is very interesting and informative article. I am planning to start a real estate business as a side business. Is a license is important for me?
Thanks in advance!!
It depends on how active you will be