Posted by Taiyo on March 30, 2004 at 18:26:11:
When I decided to become a full time investor in 1988 (been investing since 1974), I felt that a Broker’s license would help me me find potentially better deals ahead of the general public. However, my Attorney advised me to get rid of my license ( I did not tell him I was getting my license). I did not understand why. But I did as he advised and had my license revoked within a month of receiving it.
My investing was primarily SFR - hold for cash flow or sell after a period of time for profit. I did 1031 exchanges and did it again & again. In 1988, I became a land investor. I primarily did double escrows. My buy escrow would close then 5 minutes later my sale escrow would close. Using 1031 exchanges, did it again and again. I learned why my Attorney wanted me to get rid of my Broker’s license. Here in California, if I had a license I would be required to tell the Seller of the property I was purchasing, I was selling his property for substantial profit in a very short period of time.
Since then I have gone into Commercial Real Estate now back to houses. Without a license it has made it possible to go to other Areas (locally and out of state) to invest.
I use Agents, Brokers, word of mouth and Services (who provide me with NODs and TD sales information). I have learned the better deals are in the Agent’s and Broker’s pockets not the MLS or what they talk about.
After you have established a repoire and trust (not that you have done a deal with them, but that you can). They might provide information of the better deals. If they do, and you are able to complete a deal, you will be on their inside track. They will not tell you of deals they are trying to complete themselves, but they can’t buy all the deals they know about. Sometimes they can not complete their deal and you maybe able to step in and complete it after they have expended their own time and effort (compensation to them, what you feel is fair). They will give information regarding a Seller who does not want to list but wants to sell. I will pay them a Buyer’s commission (no set amount, but what is fair) if I am able to complete a deal with the information they provided. I may use 25+ Agents and Brokers in the same Area. Few listen, most don’t.
If you need cash flow, a License may be a good option. If you don’t, I believe it is far more efficient to use the Agents and Brokers. They are like your employees who you do not have to pay,
The key to me is to be fair to everyone involved in the deal. The Seller, Information Provider and to yourself. I have paid 10% commissions on the Sale end and still made substantial profits. Maybe not on that one deal, but on the deals to follow (they will come).