Should real estate investors get a property license?

Should real estate investors get a property license?

One of the most frequently asked questions from new investors every day is whether it is beneficial for them to get their property license. I spent many years as a real estate investor for wholesale, rehabbing, fixation, flipping and rental without obtaining a license. In the end, I decided that it was beneficial to get my license and that having a license does not hinder your ability to act as an investor.

If youre wondering whether to get your license or not, here are some points to consider

Why are you thinking about getting your license?

Do you need a license?

How will it be a license or hinder your ability to act as an investor?

The first question you should ask yourself is why you are thinking of getting a license. If the answer is that you want to be an agent and show properties for buyers and sellers in exchange for a commission then you obviously need a real estate license. But for most investors who are interested in investing for themselves, the lines become much more blurred.

The second question for you to ask yourself is if you need to get a license? Many investors are not aware of when and if they need a license and often assume they do not when they do. If you are a full time trader and you assign contracts to other investors for a task fee or if you double close your own transactions for a profit then you probably will not need a license. However, you must have a beneficial interest in the property, which means that you must have a valid agreement stating that you are the buyer of the specific property and that you have a fair interest in it. If you do not have a good interest, it means you can not find buyers for other wholesalers.

If you are an active wholesaler with an active buyer list, you will be able to network closely with other active wholesalers in your area. If you do, you will find yourself in a position where you know buyers who are looking for a house in a particular area and one of your wholesalers can have a house on contract in that area. In this scenario you would cross the line because you have no interest in the specific property and you promote it. This requires you to be licensed. Keep in mind that this applies regardless of whether your partner authorized you to find a buyer for his business. Do not rely on joint venture agreements or preferential interest rate agreements to help you get around this regulation. Local property licensing authorities may ask you about your beneficial interest and they will look for your name on either the act or the contract. So briefly if you market your own offers, you do not need a license, but if you promote others offers, you do it. If you do not have a property license, you can not find buyers for other investors. You can not help other investors to sell their properties. or a property for someone else with some exceptions.

The last question that you should ask yourself is how to have a license will prevent or benefit you as an investor. If you only engage your own offers, manage your own properties or fix and browse your own properties, you do not need a license. But the more active you get as an investor, the more opportunities it will be for you to benefit from having a license. You will be able to list properties, manage properties for others, wholesaler other investors offers, find sellers for other investors, find buyers to other investors, save money on purchases and sales, and access MLS. In short, there are many advantages to having your property license.

What are the disadvantages of having your license? I really do not see anything. You must disclose that you have a license and you will be bound to act ethically as you should already do. Having a license gives you more opportunities to make money and if you are considering a full time real estate investor, it will be licensed to you in the long run.

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