One of the most common questions I get is: “Should I get my real estate license?” It seems like a simple question, but the truth is it’s not a yes or no answer. It’s actually a yes and no answer.
The Inside Scoop on How it Can Help and Hurt
Let’s start with the No’s first.
Do NOT get your real estate license because you think it will make you a more serious investor. Having a real estate license doesn’t mean you know a thing about real estate investing.
I don’t care if you got 100% on your real estate exam, that doesn’t mean you know what you’re doing – it just means you did well on the test. A license is nothing but permission to legally practice your craft, but you’re not an expert until you do it for a long time.
Think about it: if you need surgery, which surgeon are you going to choose: the one who just got his surgical license (even if he did ace the test), or the guy who has performed this operation hundreds of times? Your life is in this guy’s (or gal’s) hands – you’re choosing experience every time.
I’ve already told you not to work with a Realtor whose license is less than a year old. That’s because they haven’t had enough experience.
Same goes for you. You’re still learning how to do the investing part, how to apply all the stuff I’m teaching you. You’ve got enough to worry about without trying to do the Realtor’s stuff too.
Do NOT get your real estate license because you want access to the MLS. Anyone can do that on Realtor.com. Enough said.
Do NOT get you real estate license because you think it will save you money in commissions. A lot of people think this way. But for beginners, the time you’ll spend doing the legwork will cancel out any savings you might get. You’ve only got so many hours to devote to real estate when you’re getting started. Spend those hours on things that are going to bring you positive cash flow month after month and lead to your financial independence.
Plus, in most places, you have to disclose to the seller that you have a real estate license and are working as your own Realtor. That’s perfectly legal, but many sellers are suspicious of this – they think you’re trying to pull a fast one on them. If you’re trying to get them to agree to a below market price and seller financing, this little nugget of information may not help you.
Now on to the Yeses. You may have noticed that most of the ‘no’s’ were aimed at beginners with limited time.
But you won’t always be a beginner – and, if your goals of financial independence include having the freedom to quit your job, someday soon you’ll be focused on real estate investing full-time. Once you’ve reached the point where you have a solid foundation of steady positive cash flow, you can take things to the next level – and that’s where the Yeses start kicking in.
DO get your real estate license to continue your real estate investing education. I’ve talked before about how you should approach real estate investing like any other profession – to succeed, you’re got to keep feeding your brain. Going through the real estate license course can help you better understand how Realtors think and how they approach deals. You’ll also meet lots of other people in your class – both the students and the trainers – who are interested in real estate. (Not all of them will be interested in investing, but some of them will be.) And with your license, you’ll be able to attend meetings and functions with the local Board of Realtors, another good networking opportunity. The more people you know, the more sources of leads you have. Leads become deals and deals become more cash flow – it’s a simple as that.
There have been points in my career when I’ve held a real estate license and other times, like now, when I haven’t. I don’t need the piece of paper to show that I know real estate – my financial statement and 30+ year track record prove that. But the knowledge that I gained taking that class 20-some years ago – helped me get to this point.