Become an Agent...to learn about Investing? - Posted by Nick

import · January 16, 2003, 6:35pm

Posted by Corey ND on January 17, 2003 at 08:50:06:

Sounds like what I did

I learned more in real estate school and doing my own deals that working in an office.

As for that broker giving him a job. Why not give anyone with a heartbeat a desk and see what they can do the agency doesn’t have much to loose.

import · January 16, 2003, 6:35pm

Become an Agent…to learn about Investing? - Posted by Nick

Posted by Nick on January 16, 2003 at 19:35:17:

I’m 22y.o. and I’ve had the experience of running a small contracting co. I’ve gone to school for business and although I think I could make some good money in contracting I don’t think it’s my dream. I have always been interested in Real Estate Investing and I want to concentrate more on this dream. My question is if you were me what would be the profession you would choose to learn the most about Real Estate Investing. I’m leaning towards becoming a Real Estate Sales Agent. I figure I will learn on the job and network both my investing with my sales. I’ve already completed the course and have a job offer with a firm all I have to do is take the test and go through there training program. What would you do???

import · January 17, 2003, 3:47pm

Re: Become an Agent…to learn about Investing? - Posted by Dean-TX

Posted by Dean-TX on January 17, 2003 at 16:47:47:

Question. I made the decision that I wanted to get into real estate investing. I figured that in addition to reading the REI books and reading the posts on this site, which are great by the way, I would take some real estate courses just for the knowledge, which I did. When I finished my courses I thought since I went through the time and $$ to take the courses, I might as well take the state test, which I did. I passed the test. In Texas you have to have a Sponsoring Broker to activate your RE license. I have no intention on doing this. So therefore my question is this. Since I have not, nor do I ever plan on, seeking a broker and becoming an “Active” RE salesman, am I now governed by the discolosure rules? Do I have to tell future buyers / sellers that I am I licensed RE saleperson even though my license has always been “inactive”?

import · January 17, 2003, 9:49am

Re: Become an Agent…to learn about Investing? - Posted by JW

Posted by JW on January 17, 2003 at 10:49:24:

You mentioned that you are a contractor. Any specialty or general? If general, why not consider real estate development. I know many successful contractors who have parlayed that experience into development. After all, there is no better way to make money than to create value.

import · January 17, 2003, 9:36am

Some Advantages and Disadvantages - Posted by JB

Posted by JB on January 17, 2003 at 10:36:41:

You definitely will not learn anything that you couldn’t learn by just getting yourself out there making offers, researching this site, and maybe investing in a course or two.

There are, however, some advantages:

Access to properties listed on the MLS. If you are lucky, you may be able to get a hold of pre-foreclosures or handyman specials.
Access to comps (recent sales) and public records on the MLS.
If you purchase a property that’s listed with a broker, you can get the 3% commission at settlement.
If you wholesale a property to an investor, you can negotiate to list the property once he has rehabbed it, and receive a 3% commission at settlement. If you happen to find the purchaser (thru ads, open houses, etc.) you can get a 6% commission at settlement.

Here are the disadvantages, as I see them:

Becoming an agent is an expensive propostition. You pay for classes, the exam, the license, post-licensing courses, MLS membership, board of realtor membership, an electronic key for access to properties, continuing education classes, membership dues. Also, most brokers will charge you for everything from telephone usage to xerox copies. And then you must pay your broker a monthly fee and/or pay him a percentage of your commission.
The seller who may call you from an I Buy Houses sign, is probably calling you because they want to avoid paying a commission. Once you tell them that you are an agent, they may be less interested in talking to you.
If sellers know that you are an agent (which you technically must disclose), and they do agree to do business with you, then they (not to mention the Board) will hold you to higher level of standards than they would the average Joe investor. It can be argued that it is your responsibility to inform the sellers of the FMV of their property, and if you were to purchase a property from an unwitting seller at 50% of FMV, the seller could later file a complaint and/or sue you for unscrupulous business practices.

I would suggest that if you do get your license, and you do plan to invest, partner with a non-agent investor and let him/her be the primary person that the sellers deal with.

import · January 16, 2003, 10:28pm

Re: Become an Agent…to learn about Investing? - Posted by JustaJoe

Posted by JustaJoe on January 16, 2003 at 23:28:39:

I was an agent and had many of the same experiences as the others who have posted here. I can tell you that if I only knew then( 8 years ago) and what I know now I’d hang my licensed and concentrate on investing and if someone came along and wanted a listing I’d go with it. Looking back the agents in the office that were making money were the ones buying and selling for themselves, using the information and the contacts. I gave up my license because I was afraid of “disclosure” and that people would not want to deal with me because they would think I’d have insider information but as I have learned from this site and others you can be an agent and an investor at the same time. Get your license and hang it. Learn the law and hone your skills. Then get your brokers lic. and tear it up!

Joe

import · January 16, 2003, 10:16pm

HAHAHA - oops! Couldn’t help it! - Posted by Carmen_FL

Posted by Carmen_FL on January 16, 2003 at 23:16:32:

I can laugh, because I am a real estate broker. The reason I laugh is that most real estate agents I meet are woefully inexperienced, even in real estate sales issues, let alone real estate investing.

I got my RE license specifically to invest in real estate, but i had to eat, so i tried selling houses. I joined a large company which promised to teach me about foreclosures. This is what they taught me: how to sit in on open houses on foreclosed properties the owner/broker had bought for his own portfolio and wanted to flip; or that he didn’t buy and didn’t want to waste his own time with. A desk and a phone is about all they offered, since they had one computer for about 15 agents in the office. When I tried to talk about real estate investing, they told me that I was prohibited from dealing with investors, and I should steer them all to the one realtor in the office who dealt with them because they would “just waste your time”.

After that glorious experience, and selling one $30K condo (I think i made $250 after fees, splits, etc.), I decided I hated real estate sales. I now use my license almost exclusively for RE investing unless a real estate sale/listing falls in my lap.

Now that I’m a broker, because I’m too busy to do otherwise, I tend to give any agents that approach me the same kind of deal I got … here’s a desk, a phone, an old computer. If you don’t know what you’re doing yet, don’t bother me, go find someone who can teach you (in a much nicer way, of course). I’m not here to train my future competitors, and probably neither are any other broker/investors.

So, getting your license in the hopes that a real esatte firm will teach you about investing is, in my opinion, fruitless. Getting your license in the expectation of using it to get information is better. Getting it to become a broker in a year or so, so you can run your own “investment” brokerage which will concentrate on distressed properties after you learn all about REI … that I can see.

Sorry for the giggle at the expense of your question. No offense to the good ones out there, but every time I talk to a fellow Realtor, I am more and more embarrassed by the profession.

import · January 16, 2003, 8:53pm

Re: Become an Agent…to learn about Investing? - Posted by mike

Posted by mike on January 16, 2003 at 21:53:53:

I agree with Doug. I had a license in CA and was in the biz. There can be advantages (depending on what kind of REI you get into) but IMO none compelling enough to put time and considerable energy into making it as an agent until the day you call yourself an investor. If you want to be an investor, learn to be an investor. If you want to be in RE sales it sounds like you’ve got a good start. Even though both deal with real estate, they are two different fields requiring different skills/knowledge. Talk to agents if you need more opinions.

And don’t be too swayed by having an offer for employment. In many ways the setup is not terribly different from most unskilled sales jobs. The broker is not paying you a dime as an agent. All you’ll get from him is a desk and phone. So the easiest thing for him to do is cast the net wide for agents and hope that out of those a couple can cut it and produce income for him.

Congratulations on your ambition.

Mike

import · January 16, 2003, 7:27pm

Re: Become an Agent…to learn about Investing? - Posted by LJ

Posted by LJ on January 16, 2003 at 20:27:28:

I totally agree with Doug. I have been in RE Investing for 6 years now, all no-money-down, and I am just now becoming a RE broker, like he says, for the inside info and the contacts you can make. I got started in investing mainly from #1 the carleton sheets course, #2 from locating, talking to and buying from other older wiser investors, and #3 reading everything I could find on the subject , including everything on thei website. Also join a local landlord association. Hope this helps!

import · January 16, 2003, 7:12pm

Re: Become an Agent…to learn about Investing? - Posted by Doug ON

Posted by Doug ON on January 16, 2003 at 20:12:28:

If you want to get into a profession to learn about real estate investing how about … real estate investing?

You won’t learn how to invest by being an agent, agents don’t know anything about the subject, unless they become investors. The two really are separate. However, being an agent can help your investing career thanks to the contacts and information accessability; or so I’ve heard; I’m not an agent myself.

import · January 18, 2003, 7:52am

Other advantages… - Posted by Hal Roark

Posted by Hal Roark on January 18, 2003 at 08:52:22:

Education in re law and practice. While boring, the classes do explain what a contract for deed is, what a contract is, etc. AND, most importantly, it teaches what the laws are IN YOUR STATE! That is invaluable.
Legal updates. All realtors are kept abreast of changing rules and guidelines. Good info to have.

For my money, there is no debate: become a realtor for the education and access to the mls.

In your case, though, you should MAKE AN ABSOLUTE FORTUNE!!! I mean this. You have some business theory? You’ve run a construction company? And you are 22? Play your cards right and you just might be retired by 30.

What do you want to do? Rehab, l/o, etc? What approach best fits your knowledge and skills?
What approach best works in your market? Rehabs? Sub2? Figure that out. Combine 1 with 2 or move if you have to in order to do so.

Good luck,

Hal

PS. Strongly consider going to the convention. It will jumpstart your journey. Good luck.

import · January 17, 2003, 11:45am

Re: Some Advantages and Disadvantages - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on January 17, 2003 at 12:45:58:

JB----

I like this post. I’ve read a lot of posts on the subject adn this seems balanced, gives lots of information in a few words.

I wonder if one should add as a disadvantage not only the costs, but also the time. Taking classes and doing paperwork should take away from doing deals, I would think.

Good Investing and Good Posting***Ron Starr

import · January 17, 2003, 10:57am

Re: HAHAHA - oops! Couldn’t help it! - Posted by Mark-IL

Posted by Mark-IL on January 17, 2003 at 11:57:47:

I agree, but to a point. While I deal with Realtors every day who give the industry a bad name, there can be benefits to being one. Maybe I was lucky (or just chose the right office). The broker I work with has several apartment buildings and is quite helpful in the investment end…like a mentor. I have his 30 years of experience and contacts to draw off of. He doesn’t believe he’s training future competitors. In my case, he’s training a future (now present) investment partner. So, while I agree that many of those in the brokerage industry are not very good, there are good directions to go if you look for them.

import · January 17, 2003, 7:10am

Re: HAHAHA - oops! Couldn’t help it! - Posted by eric-fl

Posted by eric-fl on January 17, 2003 at 08:10:03:

Yet another of your posts I wholeheartedly agree with, Carmen. Though not a true blue broker, I do have a salespersons license, and can vouch for your comments regarding other Realtors (except for you and me, of course:)

import · January 17, 2003, 12:37pm

Thanks! - Posted by JB

Posted by JB on January 17, 2003 at 13:37:33:

What an honor to receive a compliment from Ron Starr himself!

I am a newbie at REI but I became an agent (or, more accurately, a licensee) a few years ago and these were just a couple of points I thought might be worth mentioning.

As for the time investment…that defintiely could be a disadvantage. But, then again, at least in the DC/MD/VA area, it takes relatively little time at all to be sales-ready from the time you step foot into the pre-licensing course until the time that you are ready to take the exam (40 or 80 clock hours, or something like that). If you have the money to take the exam right away, and then the money to pay the RE Commission to issue your license, then you are pretty much ready to go. Some brokers want you to take some post-licensing classes to give you a feel for the more practical information, but most (if not all) brokers will allow you to write contracts immediately. When you make money, so do they.

So, yes, the time-investment is a disadvantage but I would say that it’s not as huge of an issue as the potential investment of money. The $2000 or so that you spend getting yourself up-and-ready as an agent, could possibly be better spent on marketing yourself as an investor…

…Unless of course, on your very first deal you can flip a 150k property to an investor, who will then rehab it and list it with you for 375k. Then you can make 12k commission, or 24k if you can find a buyer. This is what I am hoping to do with my very first deal - on which I am working right now. If I could make that happen, then I would say that all the disadvantages are well worth it.