Should I become a real estate agent to invest in real estate?
Many real estate investors ask whether it’s worth the time and money to become a real estate agent. There are several advantages to becoming a real estate agent. Using your real estate license to find good deals, networking with licensed agents, and making more money with commissions are all incentives for taking the extra time and expense to get your real estate license.
The most important advantage which you have as an agent over other investors is your detailed understanding of all the forces and trends in the real estate market where you work. Although real estate investing does not require previous knowledge and can be learned through online educational resources, no informal education and online research can ever beat the depth of knowledge and expertise which you have after years of buying and selling properties in your neighborhood.
A regular person takes about a regular person about 3 months to research a real estate market, search for properties, and find a good deal within his/her budget. As you can imagine, before an individual part-time investor is ready to move forward with buying a property, the good deals will have already been long snatched up by professional investors. Agents can easily qualify as professional real estate investors as they spend their days buying and selling real estate. You need to know the current status of the market, the fair price of the type of property you are interested in, and the kind of profitability you can expect from a rental property.
As a real estate agent, you have access to the Multiple Listing Service database which ordinary investors don’t. That’s the precise reason why so many of them decide to hire an agent rather than invest on their own. Furthermore, you travel around your market every day and will see right away any “For Sale” signs on properties that are not listed on the MLS. Meanwhile, you are also familiar with the foreclosure activities in your neighborhood and know where to find the best-foreclosed properties, bank-owned homes, and short sales in the local market. Through your network—to be discussed in detail in a bit—you also have access to off-market properties, one of the best sources of cheap real estate.
One of the most challenging problems that first-time real estate investors run into is financing. Most of them don’t have enough cash to pay for an investment property in full, and they suffer from limited knowledge of other financing options such as conventional mortgages, FHA loans, private money lenders, hard money loans, and many others. Your networking as a real estate agent comes as an advantage in this regard. After helping your clients figure out their loan so many times, you are perfectly familiar with the mortgage requirements and interest rates in your area.
Real estate is a people’s business, and you as a real estate agent know that better than anyone else. Knowing the right person is important not only when buying and selling properties for your clients, but also when you buy your rental properties. You have spent years building your network of different professionals to advance your career as an agent, and now you can use this same network to invest in real estate.
As you can see, the benefits of investing as a real estate agent are numerous. To make this your most productive year in real estate yet, consider buying your investment property.