Aside from the potential fall-out from COVID-19, house flipping today is not a guaranteed path to success in the real estate market. Attom Data Solutions reported a rise in house flipping activity and gross profit in the first quarter of 2020, but a lower return on investment. As iBuyers enter the market, house flippers need to be creative in locating the next flip in the off-market arena and ways to increase profit margins. To that point, getting a real estate license will not only help you when finding and negotiating your next flip, it will save you money on fees and commissions.
1. Bypass commissions which could easily eat 5-6% of the the sales price
2. Get an understanding of real estate rules and regulations especially regarding issues such as permitting, disclosures and discrimination
3. Gain access to the MLS, a multi-listing service to find listings as soon as they hit the market
4. Make connections with high-quality contractors
5. Having a real estate licenses will help boost trust from potential buyers
That said, you could go the sell-by-owner route to help save fees, use Zillow and other apps to get a idea of the market, learn about the legal issues and good contractor through research and/or hard knocks, and develop an irresistible charm all on your own. But if you are considering real estate investment as a serious endeavor, the money saved on commissions alone is a good reason to get your license.
Meg Prater of Hubspot, outlines 7 steps in getting and maintaining your license.
1. Understand state licensing and education requirements – Requirements will vary state to state.
2. Take a pre-licensing course – There are a number of ways to take classes. Choose one that fits your needs.
3. Pass a state licensing exam – The exam can take 1.5 to 3.5 hours and can cost up to $60. Again, it depends on your state.
4. File a real estate license application – Fees vary and can cost up to $250. You may have to pay for a background check.
5. Find a real estate brokerage – Most states require a broker to sponsor you for the first 2-3 years.
6. Join the National Association of Realtors (NAR) – You must join NAR to call yourself a broker.
7. Renew your license regularly – Usually every 2-3 years.