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by | 09, Oct 2022

New Investors: Should You Get Your Real Estate License?

A lot of new investors come to us with this question… Should I get my brokerage license to help with real estate investing?

There’s a lot of misinformation around this question. Some people are under the impression that you HAVE to have your brokerage license to practice real estate investing. This is simply not true. In fact… you probably shouldn’t get it in the first place…

There are a couple of reasons why… The first, golden handcuffs. A lot of people get their licenses, hoping to gain knowledge of the industry before they become investors. Makes sense, right? The problem is they get stuck, that capital they make often does not end up being invested, and they have to sell more to keep up with their new lifestyle, and the cycle continues.

Another great reason to avoid your license when investing in real estate… legal hoops. If you thought that getting your brokerage license would lead you to some treasure trove of off-market deals… think again. There are A LOT more legal hoops you have to jump through when approaching a seller as a broker.

Now, this isn’t to say that having your real estate license is pointless, not at all. Only that you certainly don’t need it to invest in real estate, and it might even hender you in ways that you hadn’t thought of.

Want to know all of the reasons NOT to get your real estate license?

Find out on this week’s episode of Multifamily Investing Made Simple, In Under 10 Minutes.

LEAVE A REVIEW if you liked this episode!!

Tweetable Quotes:

“I see brokers do this all the time. They get the money and then they start getting the nice car and the house, and then everything kind of creeps into their lifestyle and they can’t afford to invest. Now they have to sell just to keep the engine going.” -Anthony Vicino

“If your goal is to invest, don’t waste your time on going into the sales field because, honestly, you might do really well and get stuck.” – Dan Krueger

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five rules of investing

The Five Rules of Investing

*Transcript*

New Investors: Should You Get Your Real Estate License

[00:00:00] Anthony: All welcome back to another episode of Multifamily Investing Made Simple. Full Disclosure listeners, we are. Running this show today without a chap. We have no babysitter. He is not here. Manning the production studio, the cameras, us keeping us on topic, keeping us moving. He’s gone. Mom and

[00:00:33] Dan: dad are outta town and we are throwing a kegar.

That’s what’s happening.

[00:00:36] Anthony: So come on over to Invictus Capital headquarters. Don’t, we’re gonna have ourselves a, a shin dig. Yeah, it’s,

[00:00:42] Dan: We don’t actually want anybody to come over.

[00:00:44] Anthony: No. Um, mom, dad, party of two. Mom and dad said no parties. Yeah. Re is both mom and dad. Um, okay, so let’s get, let’s get to the topic.

Let’s do it. Um, one of the questions we get all the time might be one of the most common questions actually. From new investors, people who wanna get into [00:01:00] real estate, they think, I wanna buy a duplex. I want to get into large commercial multifamily. Like you guys, they like, I won’t be like you, but they’re maybe starting out and they don’t have any capital or they don’t have any industry experience, they don’t have any network or anything like that.

So one of the common questions we get is, Should I go get my broker’s license? And on the surface this makes a lot of sense. Like, oh, it’s in the, in. . Um, I would learn a lot about real estate probably by getting my broker’s license, and then maybe I will have access to more off market deals and I’ll meet more people in the industry and all that stuff.

Right? So on the surface it sounds good. , what’s your take on this? Cause I think there’s, there’s two directions we can go with this, but I’m curious, which, what, what comes through your mind initially when somebody asks you

[00:01:40] Dan: that? Yeah, I mean, this is a really frequent question. Doesn’t matter the age, but anybody who’s getting in is trying to get into real estate and trying to get in and, and be an active investor.

Um, this isn’t a question we get from passive investors. Yeah. But those people who wanna basically do what we’re doing, it’s very common, uh, perception to have that, Hey, uh, maybe I should get my real estate license. And some people actually think they. [00:02:00] Like they, it’s like almost legally, like a law fired law.

Yeah. You have to have your license to be transacting in this space, which is not the case. Um, my response is, uh, No, you don’t need to. I don’t think it’s really an effective way, uh, to get rolling. It’s definitely not necessary. Um, if you need to generate cash and you’re in the sales industry, like maybe there’s an argument to be made that, you know, you could build up a little bit of a investment, uh, uh, pile of capital.

Um, and you’re really good at sales maybe. But otherwise, you know, if your goal is to invest, like don’t, don’t waste your time on, on, on going into the sales field because honestly you might do really well and get stuck. I’d have to see that happen. It’s golden handcuffs. Yeah, yeah, yeah. Because you could make a decent amount of money, uh, or a lot of money, uh, doing it.

So it, it could, it could be kind of sticky if you’re not careful. Yeah. That,

[00:02:47] Anthony: and that’s where my mind goes to is if you’re starting out when you’re young and you’re like fresh outta school or something and you, you don’t have any means to go make a lot of money, I think sales jobs are the best way to get started.

Cuz in a lot of cases, your [00:03:00] commission is tied to how good you are and in the beginning you’re gonna suck. So you’re not gonna make much, but you get better at it. And then the sky’s. Yeah, and so I would, I do think that being a broker could be very interesting. If you want to get capital and you, you’re smart and you realize like, Okay, as this capital comes in, I’m not just gonna spend it.

I’m gonna invest it. I’m gonna take this money and be putting it over into this other thing. Generally though, I see a lot of brokers not do that. They get the money and then they start getting the nice car and the next thing to know the house, and then everything kind of creeps in their lifestyle and they couldn’t afford to invest.

Now they have to sell just to keep the engine going.

[00:03:32] Dan: Yeah. And there’s another aspect of this too, because like you kind of mentioned before, um, some people, uh, look at it as potentially a way, uh, to get access to, you know, to off market deals, right? Yeah. If you’re gonna be transacting in the space that you’re gonna be investing in, a seller comes to you to sell a property for them.

You know, I used to ask this question myself a lot of the time, like, why aren’t brokers picking these up themselves and selling ’em? But I mean, that’s a huge conflict of interest for, for the, the agent, right? It’s their job to take that and, and show it to the market. That’s what [00:04:00] they’re getting paid for.

So from the sellers perspective, you know that that’s not gonna fly. If you offer to buy it, they’re probably gonna be like, Wait a minute. Um, that implies that I could probably get a heck of a lot more if we actually market it. So, no sir, I’m not gonna transact with you

[00:04:12] Anthony: anymore. Yeah, I, I know a lot of people get in think this way, like, I’ll get my brokers license cause I’ll have access to more off market deals and.

I know brokers who have done this, you can do it, but you have to be upfront and transparent with the seller and explain like, here’s the situation. I’ll give you this much, I’ll buy it from you right now, or I can take it to market. But you, you’re gonna create this friction between you and your, your perspective investors, like the people that you would bring the deal to.

Cuz if you bring me a deal and you’re just picked off the last couple things, I’m like, Okay, this deal isn’t as good as what you’re getting. Like there’s a conflict here. And so you gotta be able to navigate that. And maybe more importantly is when you’re a broker. You have a lot more disclosures and a lot more legal loopholes that you have to jump through.

Then if you were just doing something off market, like if I reach out to you off market, I can say, Hey, I wanna buy your building, [00:05:00] whatever. But if you’re a broker and you reach out off market, you gotta tell ’em, it’s like a cop. If I ask you, Are you a cop? You gotta tell me.

[00:05:05] Dan: You know, that’s true. I forgot about this.

But on those first couple of deals, um, where I was, you know, contacting sellers directly, trying to find something on, on the second deal in particular, uh, the eight unit I picked up, uh, and even, even, uh, brokers who are listing properties will. If you call somebody and ask them about a property they’re listing, uh, they’re gonna ask you, Are you a broker is number one.

Uh, if there’s a listing agent on the deal and you call inquiring about it, their first question is, Okay, I wanna make sure you’re not gonna take half my paycheck. I wanna make sure I don’t have to split the commission with anybody. Like, are you a broker? If you are, that’s gonna cause issues because you’re gonna be a much more expensive buyer.

So even if you’re not coming in, uh, you know, trying to take a piece of that, Uh, you know, once you say you’re a broker, the perception to that listing agent is that this guy’s probably gonna try to take a piece of my, my paycheck. So it’s actually hell a lot easier to just be like, No, I’m not a broker.

People are gonna respond much better. Sellers are gonna respond a lot better to that. [00:06:00] Yep.

[00:06:00] Anthony: The, the last aspect of this is, maybe not the last one, but another one that comes up. And this last one I got, so I’m dry after this one, is, um, Oh, I kind of, I just brain farted. Where did it go? Um, Maybe you just keep talking for a second cuz when you were talking it came to me.

Wait, .

[00:06:16] Dan: Yeah, I, um, I mean I’m pretty much out of ’em too. I think we hit on most of ’em to be honest. I just, I think the biggest Oh, I got it. Good. Because I had nothing . Thank you.

[00:06:25] Anthony: Um, okay, so the last question is, okay. If I get, if I become a broker, then surely I’ll learn more about how this industry works.

I’ll have better connections. I will become a better underwriter. I’ll be able to identify better deals that might be true. If you get into large multifamily of the type that you’re going to be transacting in in, but probably when you’re starting, you’re gonna go and be a residential broker, like a single family duplex, that is not gonna transfer at all.

And I do not know if being a broker, like a multifamily broker really makes you that much more. I don’t know if the time and energy that goes into [00:07:00] becoming a successful multi-family broker would make you that much better than if you had just gone off and become an investor right away and just been underwriting.

Like a lot of these guys and gals, like no offense to any of them if they’re listening, they’re not that sophisticated. It’s not like they have a PhD in this.

[00:07:16] Dan: So, yeah, I, I’d have to agree. I don’t think, um, I mean, you obviously get to witness a lot more transactions because you know, a lot of the larger multi-family and commercial transactions, um, you, this is a little bit tougher to get data on those things.

So you would get to. More insight into transactions, but I don’t really know how much value that would provide. I mean, just go out there and actively invest in your own for a year and you’d probably get, you know, a good amount of, uh, experience. So I agree.

[00:07:43] Anthony: So, I mean, that’s, that’s how I, I look at it honestly.

Like, I’m not gonna say being a broker is not the right move for some people, but again, it’s like, if you’re trying to generate good income, like you’re at that point you’re trying to pick a career path and you investing doesn’t even make sense yet cuz you just don’t have any capital to work with. Sure.

Being a broker is actually [00:08:00] a pretty bomb way to make really good money. But the problem with any job where you have the opportunity to make really good money is it becomes golden handcuffs really easily. So just be aware of that. But don’t go get your brokers license if you think that’s going to be what helps you become a better investor or even get involved in investing it.

It probably will not. If anything, it’ll probably hurt you. Yeah, I agree. All right. So that’s it. That’s all we got. See, we did pretty good without your read. You know, I was concerned for a little bit. I think we just stayed on one

[00:08:28] Dan: camera angle, right? ?

[00:08:30] Anthony: Yeah. So for the listeners at home watching on YouTube, or if you go to multifamily investing made simple.

I’m not playing with the cameras today. I can switch ’em like this. Um, yeah, but this is what you get. Reed usually does that, and um, what ends up happening is if I run the cameras, I just, I, I sit on. I just, I put it on me and I just sit there and then, you know, you’re not even on the show anymore.

[00:08:49] Dan: So, Yeah, and that’s weird when you’re not talking, then you just kind of space out and look at the floor and people are wondering

[00:08:54] Anthony: what the hell’s going on?

What am I looking at? If you guys don’t know what our setup looks like, then you know, make sure to follow us on [00:09:00] Instagram cuz we give a lot of behind the scenes clips where we show, like the setup in here, it’s actually really rad. But one of the things that’s funny about it is our, our monitor. With all the cameras is on the floor.

So if you ever watch us on YouTube, um, and you see us looking at the floor, we’re looking at ourselves. Yeah. We’re not, the

cameras

[00:09:15] Dan: not sad and depressed. We’re just, um, fixated on ourselves. Yeah. We love us. Which is fine. Yeah.

[00:09:20] Anthony: All right. That’s gonna do it for us guys. And guys, we appreciate you being here as always.

Uh, if you do get a second, just go drop a review. That’s cool. Um, that’s my ask. It’s not gonna be a big one unless, Nope. It’s not. We’re just gonna leave it there. Um, I’ve done, You almost got desperate there. Almost got desperate. I almost got. Yeah. Um, if you don’t go leave a review, then be prepared. I’m gonna show up outside your house at 2:00 AM in the rain with a boombox.

It is. It’s happening. It’s

[00:09:42] Dan: happening. So this is where he, Reid usually cuts it off and ends

[00:09:45] Anthony: it. Okay. I’ll, I’ll do it for us. Uh, uh, We love you guys. We’ll see you in the next.[00:10:00]

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