As a Real Estate Investor, You Don’t Need a License – Here's Why
Among the many questions and apprehensions that investors have, one question is about needing a real estate license. Who needs one? Do you need one if you're an investor looking to create a rental income for yourself? There is some amount of confusion surrounding this, so I thought I would just clarify – no, you do not need a real estate license to invest in real estate.
Who needs a real estate license?
There is some data to show that it is beneficial to have a real estate license if one is working in real estate. In other words, if you're a real estate agent, then it makes sense to have a license. This is then a mandatory requirement as well. As an agent yourself, you can save on commissions, have access to some of the better deals, have better networking opportunities and earn commissions etc. The question here is, are you an investor or an agent? While agents ought properly to be licensed, investors are not required to have a license.
As an investor, you want to invest in one or two or a few more properties – as an investment for your future and to create a passive rent income. The law does not require you to have a license for this, nor do you need a license for buying and selling property, and collecting rent.
Why do some investors have licenses?
All this said, it is true that some investors do have licenses. This is mainly because they know how lucrative it is to invest in real estate. They help others invest and earn off of real estate; obviously they are going to reap some of the benefits themselves as well. Many of these investors have licenses probably because they are agents /brokers and not just investors.
If you buy and sell property for others, you would typically need a license. This is to regulate the real estate space and to put a check on shifty operators. While it can differ based on the regulations of each state, getting a license is a bit of a process: you have to work for some years, take courses, and pass an exam and so on. Once you get a license you have to keep it current by having it periodically renewed as well.
So if that sounds like a lot of work, it is! It makes sense to get a license only if you plan to make real estate your job. And why bother when you can buy, sell and rent out property without the hassle of a license? If you want to get a license simply because you want to get to know the ropes a bit, ICGRE is here to help. Any question you have about investing in real estate, we are happy to answer them for you. Drop us a line at info@icgre.com or call us at (800) 324-3983 (toll free) or (415) 927-7504
