SS81: Should I Get My Real Estate License?

A question we continually receive is “should I get my real estate license?” Usually, the answer is not cut and dry. In this episode, Charles discusses the pros and cons of becoming a real estate agent as an investor.

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Talking Points:

I am a Florida licensed real estate agent; I am not a realtor though; I got my license during the height of 2020 COVID. However; helping others buy and sell properties is not something I focus on but having a license allows me to legally get paid on real estate deals; usually when I refer a buyer or seller to a realtor.
I personally like the idea of getting paid on referrals since they do not require much time and since I am not a realtor; it forces me to stay in my lane because I do not have the same access to the MLS as I would if I was a realtor and my annual fees to be a licensed Florida real estate agent are less than $50 per year. Typically, when I make a referral; I make $2,000-$4,000 for not doing much work. I have a list of realtors in Florida that I know, who work mainly with investors, and when someone asks me for an agent; I make the introduction and my work is done.
Another reason why I got my license was that we have another business we started years back that markets to home sellers that want to sell for cash; similar to making a referral to an agent; we would send these leads to cash home buyers we work with throughout the State of Florida and having a license made this a much cleaner transaction since I am a licensed real estate agent and I am able to be paid on real estate transactions because in most situations I am not a principal in the transaction so it would be a 3rd-degree felony in Florida for the unlicensed practice of real estate in Florida; which includes marketing someone else’s property for compensation in other words; representing buyers and sellers of real estate.
My last reason is that there is a possibility I will open a real estate management company down the road for smaller Florida properties; after 2 years of being a real estate agent in Florida, I have the ability to become a broker; which allows me the ability to manage other people’s properties.
The question I normally hear is “Should I get a real estate license?” and it depends.
- What are your goals within real estate? I have been a real estate investor since 2006 and I just got my license in 2020. It is definitely not a requirement but if your business is around wholesaling property or working with investors normally; I would certainly suggest getting it. Wholesaling without a license is a grey area and if you normally are working with investors; it will allow you the ability to make referrals and earn additional income without doing much work.
- Speed is a big factor for investors; you do not need to wait for a real estate agent to walk a property if you are a realtor.
- Access is another big factor; if a property comes up for sale; you can literally access that property right away, by yourself, without another agent since you can get access to the lockbox and then enter the property.
- Receiving a commission on properties you are purchasing or selling. Most properties being sold in the US are sold with a 5% commission; 2.5% to the buyer and 2.5% to the seller. You can now receive or save a portion of the property commission if you are listing the property or purchasing a property since you are representing yourself.
This all sounds great; right?
- The downfall is that getting licensed takes time. In Florida, you need to take a 63-hour course and then pass a state exam.
- You are required to take another exam within 2 years of getting your license and there is continuing education every 2 years after that.
- You are held to a higher standard when compared to normal non-agent investors; which I feel is not really a huge deal because it would not change how I do business but some investors do not like this.
- You must disclose you are an agent in any real estate transaction. I put it into my real estate email signatures as well. This might be construed as a disadvantage but I disclose it right away and it never seems to be an issue. If I am contacting an owner directly to purchase their property; I disclose it right away and tell them they are not paying any fees since I am purchasing the property without listing it.
Getting my license was a great way to maximize my income from real estate across the board. Even though I am focused on syndicating large commercial and multifamily properties with passive investors; I am continually having people reach out to me online or face-to-face that want to purchase their own property and that allows me to make a referral and then move on.
The real estate license also allows you to double dip on your own transactions; as a buyer or as a seller.
My goal on this show is to teach people how to obtain financial freedom through real estate investing; do not make the mistake of becoming an agent and thinking you will automatically have financial freedom; yes if you reinvest your agent earnings correctly into real estate; it will allow you to become financially free but becoming an agent does not mean you are an investor since you are still trading time for money.
Lastly, when you hang your license with a broker; make sure the broker and their brokerage and fees complement what you are trying to achieve. My broker charges me $100 per year and $100 per deal. It is very simple and they are a very hands-off brokerage that is not going to train you or provide you with leads.

Transcript:

Charles:
Welcome to Strategy Saturday; I’m Charles Carillo and today we’re going to be discussing should I get my real estate license?

Charles:
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Charles:
This is a question I commonly get from new investors that are wondering if it’s worth their time to get a license. I am a Florida license real estate agent. I’m not a realtor though. I got my license during the height of 2020. COVID however, helping others buy and sell properties is not something I focus on, but having a license allows me to legally get paid on real estate deals. Usually when I refer a buyer or seller to a realtor, I personally like the idea of getting paid on referrals since they do not require much time. And since I am not a realtor, it forces me to stay in my lane because I do not have the same access to the MLS as I would. If I was a realtor and my annual fees to be a licensed Florida, real estate agent are less than $50 per year. Typically when I make a referral, I make 2000 to $4,000 for not doing much work. I have a list of realtors in Florida that I know and who work mainly within investors.

Charles:
And when someone asks me for an agent, I make the introduction and my work is done. Another reason why I got my license was because we have another business. We started years back that markets to home sellers that wanna sell their home for cash. Similar to making a referral to an agent, we would send these leads to cash home buyers we work with throughout the state of Florida and having a license made this a much cleaner transaction since I’m a licensed real estate agent and I’m able to be paid on real estate transactions because in most situations I’m not a principal in the transaction. So in Florida, it’s actually a third degree felony for unlicensed practice for real estate, which includes marketing someone else’s property for compensation. In other words, representing buyers and sellers of real estate. My last reason is that there’s a possibility.

Charles:
I will open a real estate management company down the road for smaller Florida properties. After two years of being a real estate agent in Florida, it allows me the ability become a broker, which allows me the ability to manage other people’s properties. Not just my own. The question I normally hear is should I get my real estate license? And it depends. So what are your goals within real estate? I’ve been a real estate investor since 2006, and I got my license in 2020. It is definitely not a requirement, but if your business is around wholesaling property or working with investors, normally I would certainly suggest getting it wholesaling without a license is a gray area. And if you normally are working with investors, it would allow you the ability to make referrals and earn additional income without doing much work. Speed is a big factor for investors.

Charles:
You do not need to wait for a real estate agent to walk a property. If you’re a realtor access is another big factor. If a property comes up for sale, you can literally access that property right away by yourself. Without another agent, since you get access to the lockbox and then enter the property, receiving a commission on properties you are purchasing or selling most properties sold in the us are sold with a 5% commission, usually two and half percent to the buyer and two and a half percent to the seller. You can now receive or save a portion of the property commission. If you’re listing the property or are purchasing a property since you are representing yourself. This all sounds great, right? Well, the downfall is that getting a license takes time in Florida. You need to take a 63 hour course and then pass a state exam, which I imagine is pretty similar.

Charles:
In other states, you are required to take another exam within two years of getting your license. And there is a continued education every two years after that, which I believe is about 15 hours. You are held to a higher standard when compared to normal non-agent investors, which I feel is not really a huge deal because it would not change how I do business, but some investors do not like this. You must disclose you are an agent in any real estate transaction. I put into my real estate, email signature as well, and this might be construed as a disadvantage, but I disclose it right away. And it never seems to be an issue. If I’m contacting an owner directly to purchase their property, I disclose it right away and tell them they’re not paying for any fees. Since I am purchasing their property. I am not listing it now.

Charles:
Getting my license was a great way to maximize my income from real estate across the board. Even though I am focused on syndicating, large commercial and multi-family properties with passive investors, I’m continually having people reach out to me online or face to face that want to purchase their own property. And that allow me to make a referral and then move on the real estate license allows you to double dip on your own transactions, as well as a buyer or as a seller. My goal in the show is to teach people how to obtain financial freedom through real estate investing. You know, do not make the mistake of becoming an agent in thinking you automatically have financial freedom. Yes. If you reinvest your agent earnings correctly into real estate, it will allow you to become financially free. But becoming an agent does not mean you are an investor since you’re still trading time for money.

Charles:
Lastly, when you hang your license with a broker, make sure the broker and their brokerage fees compliments what you’re trying to achieve. My broker, for instance, charges me a hundred dollars per year and a hundred dollars per deal. Whether that’s, if something I sell or something I buy or whatever it is, it is a straightforward and there are, and there are, you know, very hands on brokerages and very hands off brokerage. This is a very hands off brokerage and they’re not gonna train me and they’re not gonna provide leads. Now you can go to some that are very hands on and they will have leads ready for you. It’ll be, but you’re gonna be giving away more of your commission, but also it allows you to walk in and get started right away, not having to build a brand first and then start getting clients. So I hope you enjoyed. Please remember to rate review, subscribe, look forward to two more episodes next week. See you then

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