Quote:
Originally Posted by mike ski
The poster below you mentioned the need to report to a broker if you have a real estate license. Can you elaborate a little on this?
Also, I remember reading that you are legally obligated to tell potential sellers that you have a license. Has this ever been a problem in REI for you?
The real estate laws are different in every state, but as far as I know, in EVERY state a licensed agent must "hang their license" with a qualified broker. The relationship can either be employer/employee or independent contractor, but in the vast majority of cases the agent is an independent contractor to the broker.
Yes, it does require some work to find and maintain your relationship with a broker, but there are LOTS of brokers out there who work with investors and are geared towards part-time real estate agents that don't do anything other than their own deals.
For example, the brokerage my wife and I are affiliated with is semi-large (about 3000 agents), but we're not required to do any deals, we never have to come into the office, and nobody cares if we drop off the face of the earth for months or years at a time. As long as we're maintaining our license (which requires continuing education classes) and as long as we're paying our monthly dues (about $65/month for the lowest tier), everyone is happy.
Along with the $65/month at the lowest tier, each transaction costs about $350/month at that tier (you get to keep the rest of your commission). So, if you do just one transaction per year, you'll pay $65 x 12 plus $350, you'll pay under $1200. And if that one transaction is for more than $40,000 and you get 3% commission, you've now pretty much paid your annual costs for being a licensed agent (there are some insurance and MLS fees too, but they are small).
So, while it's a good bit of work to get your license and take the continuing education requirements (average of 6 hours/year in my state), the actual cost the way we do it is essentially non-existent if you're doing even one or two deals per year.
And yes, you are legally obligated to disclose to your buyers and sellers that you're licensed. In my experience, this is a BENEFIT, not a hindrance, as it gives the person on other side of the table the reassurance that we're experienced and serious, and aren't just fly-by-night scammers looking to take advantage of them.
Of course, it means we always have to act ethically as well (you're held to a higher standard if you're licensed), but if you're not planning on acting ethically in everything you do, you have bigger problems than whether or not to get your license. I've heard many other investors talk about the drawbacks of having a license, but haven't found any that can give me a concrete example of how it hurt them in a situation where they were acting ethically.
Here's an article I wrote that goes into more detail on why you should (or shouldn't) get your license:
http://www.biggerpockets.com/renewsb...nse-investors/