If you are considering investing in real estate, you probably have many questions — including whether or not you need a real estate license to become a real estate investor.
In this article, we will explain why it’s important to weigh the advantages of investing with a real estate license and investing without a real estate license so that you can decide what is best for you as you take the next steps in your real estate journey.
What Is a Real Estate License?
First, let’s explain what a real estate license is.
A real estate license allows someone to represent a buyer or seller in a real estate transaction.
If you’re wondering how to get a real estate license, the process is simple. In order to apply for a real estate license, many states require:
- you to be 18 years old
- have a high school diploma or equivalent
- pass a background check before applying for a real estate license
- complete required course work
- pass the state real estate exam
Do I Need A Real Estate License To Invest in Real Estate?
The short answer is no. Some of today’s top real estate investors don’t have real estate licenses.
But there are advantages to having one.
In the next section, we will examine the advantages that come with having a real estate license, and also the advantages of investing without a license.
Investing With A Real Estate License
One of the main advantages of having a real estate license is that you can earn commissions from the seller when you make a purchase.
You will also save on commission when you sell a property.
This means more money in your pocket.
A real estate agent must work for a broker, and that broker can provide tremendous benefits, including:
- connections through networking
- guiding first time realtors through a deal
- access to the MLS
- access to licensed contractors and other real estate professionals
- and more
With a real estate license, you can have control over your real estate deals by dealing directly with all parties involved, including the lenders and inspectors.
Investing Without A Real Estate License
There are advantages to investing without a real estate license.
Getting a real estate license can be expensive and time consuming. Preparing for the real estate exam requires hours of coursework and studying and fees.
Many real estate investors with an entrepreneurial mindset may find it more useful to spend that time and money on their own real estate education, such as online courses.
By not having a license, you won’t have to abide by the mandates that are required.
For example, you won’t have to work under a broker, which means there will be no additional responsibilities like putting in “floor time” at the office.
The mandates that real estate agents must follow will not apply to you, and instead, you can spend that time and energy learning more about the real estate investing process and finding income-producing deals and properties.
Plus, you won’t have to worry about the additional fees and costs associated with keeping a real estate license, such as real estate association dues and dues to the brokerage.
Keep in mind that if you invest in real estate without a license, it’s important to form good relationships with licensed real estate agents and other real estate professionals who can, for example, inform you when an property you would be interested in goes on the market.
The Bottom Line: Do I Need a Real Estate License to Invest in Real Estate?
Though a real estate license is not required to invest in real estate, whether or not you need a real estate license comes down to answering one question: how do you want to invest in real estate?
If you prefer a systematic and traditional route, consider a real estate license. On the other hand, if you want to invest in real estate independently and on your own terms, then you can take the next step in your journey without a license.
Regardless of which route you choose, success in real estate investing is dictated by the amount of education you have. The most successful real estate investors have made learning about real estate a lifelong habit.