Thinking of getting your California real estate license? What might you want to know before taking the leap?
Obtaining a California real estate license is attractive to investors for more than one reason. It can serve as a path to get into real estate investing, a way to make more money on a better schedule, and even a way to get a better deal on a new home. But what might you want to know about becoming a CA Realtor before you dive in?
It’s Not Cheap
While becoming a Realtor is often seen as the path to more money, it also costs money. For some, it may be the best investment they make. For others, it could be an expensive detour. There are the costs of real estate education and training, then the exam and license, insurance, and looking the part. Most will find they also want to invest in better gadgets and other items like business cards, and more to get started. Usually these are all expenditures made well before there is any scent of a paycheck on the horizon.
There’s No Guaranteed Paycheck
Unfortunately, there is still no guarantee of a ‘paycheck.’ Even if you land a deal and sign a deal on the first day, it can take months to close and get paid, and the experienced know that the chances of any single deal falling through can be very high. It takes hustle, hard work, and time to build up a good income from real estate sales. Many never make more than minimum wage. Most will find they need to be able to fill in the cash flow dips that can last a couple months between paydays from other sources until they can fill and keep their pipeline filled. You may make more in a day than most others make in a year, but it probably won’t happen every day. You need to account for this.
There’s Plenty of Competition
There is plenty of competition on the real estate landscape. Besides a sizable army of other California Realtors, and even a small army of competing real estate agents in your own brokerage office, there are real estate investors, investment firms, and new tech startups to compete with. Of course, most aren’t real competition. Maybe 10% are serious competitors, the rest do very little business at all. Those which choose and commit themselves to a niche can seriously slice down the potential competition even further, and will find it easier to fend off new competitors. This can help your remaining budget go further as well.
You Can’t Buy Everything They Want to Sell You
Few are prepared for the vast amount of things you’ll be sold. It’s mind boggling. And if you’re not careful, you’ll do a lot more buying than selling. Beyond the basics mentioned above, there is advertising, new cars, new memberships, additional learning opportunities and conferences. Then there are all of the marketing, branding, and technology tools you’ll be pitched. These can run into thousands of dollars. Each one is presented with a well thought through pitch on how it is better, how much you need it, and what great returns it can offer. If you aren’t shrewd, you’ll end up with 3 or 4 CRMs, and multiple variations of other tools that all do the same thing, and you might never use any of them. Anticipate this spree of being pitched, and recognize in advance that you’ll need to be very picky about what you do invest in. Talk to other, more experienced California real estate experts and get their input on what they are using.
You Have a Lot of Choices
One of the easiest parts of becoming a California Realtor is finding a real estate brokerage company to work for. You make them money and pay them for the privilege, not the other way around. So if there is any hope that you might pull off a deal or two then you’ll probably be hired on the spot. You’ll probably even receive numerous offers and recruiting letters by mail and email. However, it is wise to put a little thought into it before choosing as you’ll be investing in branded materials, and don’t want to lose leads and clients if you switch ships later on. There is a wide scale of CA real estate brokerages to choose from. Some are franchises of national chains, others are local, and then there are small independents. Factors to consider in the process are where you’ll receive training, support services offered, any local market positioning, office location, or other advantages may provide more leads and credibility, or less between companies. Of course this is also often balanced by commission splits. The bigger the name the more you’ll be expected to give up, and vice versa. This often ranges from a 50/50 to 90/10 split.
There are Limitations Once You Have Your License
Many individuals and aspiring real estate investors choose to get their licenses to help them in their other endeavors. However, it is critical to point out that there are more limitations on what licensees can do verses regular citizens. There may be additional disclosures to be made, and you’ll be held to certain ethical standards, and potentially barred from some transactions that others wouldn’t be.
Use Your Goals as Your Compass
It’s important to remember why you are getting a California real estate license, and use this as your guide to decision making. Otherwise, it’s easy to get caught up in the whirlwind and blown off track. Remember why you are doing it, and let that guide your choices.