A common question that arises for new investors is “Do I need to have a real estate license to be a real estate investor?” And the answer is No.
Having a real estate license allows for you to sell other people’s properties and receive a commission in the state you are licensed in. It gives you access to the Multiple Listing Service, also known as the MLS, and puts you in contact with other people in the business such as title companies, attorneys, mortgage brokers, lenders, etc. When you’re a real estate agent, you are typically self-employed, earning income as an individual from selling a property. You typically make money one way—either through representing a buyer or seller in a transaction, or by receiving a referral fee for referring a client to another licensed agent. While some real estate investors are also real estate agents, having a license is not a requirement to be a real estate investor.
Real estate investors purchase real estate either as an individual or through a business to be able to create income from the property, whereas an agent lists, markets, sells and profits on properties owned by other people. They make their money when they sell the property. In order to list, market, sell and profit on someone else’s property, you do need to have a license. However, to list, market, sell and profit from your own properties, you do not.
Having a real estate license can be an advantage to you, as it may put you in a position to have relationships in the industry that a new investor may not. It may give you access to properties that others may not be aware of and may allow for you to be up on new developments or projects within the community. It has its advantages but do keep in mind that having a license holds you to a higher standard. In any transaction, you would be a licensed professional and would have to disclose that you have a license and ultimately, this means that you should know the laws and rules of the game better than any person acting on their own behalf in a transaction.
As a real estate investor, there are several ways to make money. You can earn it by trading time for money like flipping a property. You get it passively by having assets that cash flow, like rental properties. You earn it as a product of what we call portfolio income, which means your money is making money. A good example of this would be if you become a lender, and you lend money out at an interest rate and earn money on the money you’ve lent out. There are also advantages with tax and asset protection, which helps leverage your investments properly.
If you have interest in becoming a real estate agent, you can certainly take your state exam and get your license, but it is not necessary to have a license to be a real estate investor. Many of Legacy’s students who have been agents for a while eventually want to become an investor because they like the idea of creating passive income, and Elite Legacy Education can teach you all the different aspects of investing that you may want to take advantage of.
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