Real estate investors are increasingly being pressured to get their real estate licenses. However, is that the best idea? What are the alternatives?
We recently covered the increased pressure many real estate investors are facing to get licensed. Most of it is peer pressure, especially from those that don’t understand the system. In other cases, it comes from authorities. However, that is usually when individuals haven’t invested in their real estate education, or are deliberately disregarding the rules.
It is still debatable whether or not it is worth it for investors to get licensed. There are many advantages to being a Realtor and a real estate investor, but there are obvious cons too. Many might seek out alternative, hybrid solutions that keep them safe. Let’s take a closer look.
The Pros of Becoming a Realtor:
- Legal protection and compliance
- Networking opportunities
- Access to the MLS
- Discounts on real estate transactions and services
The Cons of Becoming a Realtor:
- Additional costs and overhead
- Regulatory burden
- Restrictions and limitations on deals
- Exposure to malicious and frivolous complaints
- Disclosure and negative branding
- Disadvantages in real estate negotiations
Note: If you know you need a real estate license to cover the activities you are doing, then absolutely get one. No question. But if you don’t, and you don’t like the cons, then perhaps one of the following solutions is right for you:
The Alternatives to Becoming a Realtor
Have Your Partner Become a Realtor: Why not have your life or business partner get their real estate license? In many cases, this can provide the best of all worlds. It can help real estate investors retain freedom when they need it, but also ensure legal protection, access, and discounts when desired. There are obvious quirks and a need to be transparent in all dealings, but this can be a great solution. It can also help create additional income streams.
Negotiate Better Terms with a Local Realtor: Many of the benefits of having a license can be obtained simply by working with local Realtors. Many real estate investors are scared off from working with Realtors without really doing their homework, or trying. Despite the decades long, love-hate relationship Realtors and investors have often shared, it can often be a good match. If you are good at what you do, are a serious investor, and have volume, you might be surprised at just how much of a discount you can get.
Invest in a Real Estate Brokerage: If investors don’t want to be on the front lines, they could always invest in a real estate brokerage. This could be a small partnership, or investing to gain majority control in a larger brokerage. Either direct profits can be gained from a whole office or chain of agents and brokers, or from the business itself – all while getting perks on personal real estate deals. This can not only yield discounts, but additional revenues, and wealth building in a new business.
Become a Home Builder: Representatives of home builders and some other organizations can be exempt from licensing requirements. Be very careful here, and know your local and state laws. This might be a more appealing option for some, or which can be combined with the other solutions above.
While some real estate investors still find the decision to get licensed or not confusing, there are plenty of solutions. In fact, for those that are already well into the swing of the game, these hybrid solutions could help build income and wealth beyond their goals and expectations. Just find the right fit for you, know your real estate law, and ensure you are always transparent. Perhaps we can tear down the old barriers between agents and investors for the benefit of consumers once and for all.