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

Real Estate Agent Sitting At Desk With Face MaskDoesn’t matter whether you’ve just gotten your first Tempe single-family rental property or are an experienced investor, you may have wanted to know if you should get your real estate license. As an investor, your long-term success relies so much on reducing costs anytime and anywhere you can. You’re moreover seriously thinking regarding the value of insider information, primarily in competitive markets. But take note, if you’re relying on a real estate license to save you money and give you the access you want, you may need to think carefully first. There are both pros and cons to obtaining a real estate license as an investor, all of which should be taken into account before determining whether it’s good for you.

One of the major reasons why investors want to get a real estate license is to save on commissions. Oftentimes, just the thought of paying someone else a hefty percentage fee can be unpleasant. And, if you plan to sell a lot of properties (when flipping houses, as for example), you may be able to secure yourself some money.

But having said that, those savings are just an illusion for Tempe rental property investors who wants to purchase and hold properties. That is because it is usually the seller who pays real estate agent fees, not the buyer. It’s additionally critical to realize that real estate agents are mandated to work under a broker, all of whom will need either a flat fee or a percentage of your commission with every single transaction. These fees will further reduce any accumulated savings.

Side by side with saving money, some investors like the idea of getting a real estate license to secure a way to gain access to the Multiple Listing Service (MLS). This service is certainly highly coveted given that it is such a valuable resource for properties on the market. There is a free version of the listing service, though it lacks the comprehensive data that makes the MLS so valuable for investors.

If having access to the MLS is your primary reason for wanting a real estate license, however, you might entail thinking carefully for a moment. As a licensee, you may be subject to new laws regarding your rental property that you are not subject to as a private investor. Even as a real estate agent, access to the MLS is not free. You will be required to pay for the required licensing course, pay to take the licensing test, and pay a fee actually to get the license itself. Various expenses include fingerprinting, brokerage fees, Association of Realtors dues, state fees, and the like. And on top of that, you have to pay for MLS access, likewise. All in all, gaining your real estate license could cost you thousands of dollars. You may be able to reclaim that cost over a period of time, but remember, many of these charges are ongoing and must be factored into your plans.

One last point, it’s significant to ask yourself how much your time is worth. Can you afford to spend upwards of 100 hours taking a pre-licensing course and studying for the licensing exam? In a lot of states, even the minimum number of hours required to certify can take months to complete. If you are, by this time, engrossed with your investing business or have many different demands on your time, deciding to get a real estate license can be a serious challenge and problem. To top it off, every hour you are spending on licensing is an hour not growing your investment portfolio. But if indeed you determine real benefits in obtaining your real estate license, it surely might be worth the investment in the short term. Though remember, it’s critical to crunch the numbers carefully and be truthful concerning your objectives prior to jumping into anything that might not give you the desired return.

 

Would you like to learn more about how to grow your Tempe investment portfolio without a real estate license? Contact us online or give us a call at 480-658-0869.

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