When you first start investing in real estate using a non-recourse IRA loan, you might be looking for ways to streamline the process. Since you’re dealing with property and houses, you might start wondering if a real estate license would be advantageous to have. You’re not alone in these thoughts. Many who invest in real estate have the same thought process. But is getting your real estate license really worth it? Here at First Western Federal Savings Bank, we’ve partnered with people who want to successfully invest in real estate. We get this question from our clients all the time, and there are advantages and disadvantages to having your license. Here are some insights you should keep in mind while deciding.
Getting Your Real Estate License Takes Time
The idea of a real estate license is attractive for some until they realize the amount of work that goes into it. Depending on where in the United States you live, you’ll have to take one or more courses in order to prepare for at least two exams. The first exam is over federal laws, and the second covers your state’s housing laws. All of these courses and exams incur their own costs.
Once you’ve passed these exams and have been granted your license, you’ll be expected to take continuing education courses to keep up-to-date on the latest changes in laws and regulations in your state. On average, you can expect to pay about $1,500 annually to maintain your real estate license.
But You Get Access to More Resources
While the costs of getting your real estate license might deter some, others recognize that the tools and resources they get in return are more than worth it. Once you’re licensed, you can partner with a local real estate agency and your local Board of Realtors. Between these two groups, you’ll likely be able to access things like discounts, continuing education classes, and other tools.
While these resources may not be directly related to your investment opportunities, they can help you get a greater understanding of the real estate industry as a whole. Having more skills and tools at your disposal can help you make smarter investments using your IRA non-recourse loan.
With these resources come more chances to network as well. Having a real estate license means you’ll meet individuals who are selling a high volume of properties every year. You can work with them to improve your skills, sharpen your investment strategies, and more. Networking can also lead to more opportunities to invest that you would not have had previously. Some of this networking will come from the brokerage you’re working with, but the rest might come from industry professionals you meet while taking your courses or closing deals.
You’ll Need to Disclose Your Agent Status
Once you’ve acquired a real estate license, you have to share this information with anyone that you’re working on a deal with. This prevents you from knowingly taking advantage of a potential seller. In some cases, investors feel that this disclosure hurts their chances at making a sale or purchase and could keep them from making as much money on their investments. They fear that sellers will recognize that an investor’s offer is probably below their asking price or what the market says it’s worth.
However, others view their license as an advantage. Having the status of being a real estate agent could actually help to establish trust in potential clients. Sellers might feel more comfortable agreeing to a price knowing that you have a firm background in the real estate market.
You Get a Connection to the MLS
The Multiple Listing Service is an incredibly valuable tool for real estate agents and investors alike. This system is the fastest way to see available properties on the market and can introduce you to deals and opportunities that you might not otherwise have access to. This system gathers all of the listings posted by brokerage firms in your area and across the country.
Not only do you have more real estate listings to page through, but you also have historical data about the value of a property that can offer you insights into how you might invest in that property. You’ll be able to see how much the house was sold for in the past and how quickly it sold. You can use this information to compare between similar properties in similar areas.
While the MLS is undoubtedly a powerful tool, it’s not as much of an advantage as it used to be. With resources like Redfin, Zillow, Trulia, and even Craigslist, sellers are getting their listing out in front of more buyers than ever before. Not only that, but services like these even offer insights into the sales history of a property as well.
You Could Make More Or Pay More
Having a real estate license means regular fees to maintain the license, as well as annual fees to use some of the industry-related resources like the MLS. Additionally, you might have to pay a fee to your broker in the form of a percentage of your commission. For those looking to use real estate as an investment into their IRA, these fees might deter them from getting their license.
For others, these fees are minimal when compared to the chance for increased profits on sales. Some real estate investors use their real estate license to continue to make an income while they wait for an investment property to be remodeled or for a deal to close.
Partner With Our Non-Recourse Lenders Today
For more than 40 years, First Western Federal Savings Bank has been connecting people with the resources they need to make smart investment decisions. Our lenders offer IRA non-recourse loans that can help you reach your financial and retirement goals. Using these funds, you can invest in properties that you can use as rentals, vacation homes, and more.
By using an IRA non-recourse loan, you’ll enjoy tax-deffered, or even tax-free appreciation and income from your managed assets. Contact our lenders today to find out more about our lending options and how we can help you start investing in real estate today!