A common question I get regarding real estate investing is whether the investor needs his or her real estate license to successfully be an investor? The short answer — no. We have been investing for about 10 years now and I have only had my real estate license for the past two or three years. Since then, having my license has been handy but far from necessary.

The main reason to get your license is it’s worthwhile financially. Let’s go through the costs first.

  • $500 — the cost an online or livestream real estate course. I got my license through a private education company called Real Estate Express and did my coursework online. If you were to do nothing but the course, it would just take about a month to get the license and take all the necessary tests (which have to be taken either at the library or some other facility that has a live proctor to make sure you don’t cheat). I think it took me six or eight months just because I would work on the course for a while and then get busy with something else and have to refocus my efforts. There are dozens of other programs authorized by the Texas Real Estate Commission (TREC) where you can take the classes, including some in person at local community colleges. The coursework in Texas is divided into six mandatory 30-hour courses.
  • $200 — Once you take all your coursework completed, you have to apply with TREC to become an inactive agent.
  • $50 — After TREC approves your application, it’s time to sit for the real estate exam. This usually costs about $40 to $50 and has to be taken at an official testing facility. Texas currently contracts with Pearson VUE for this activity. The test is online and multiple choice. The test isn’t hard necessarily, but the questions can be stilted and hard to answer under pressure. I went in cold the first time I took it and failed. The second time, I actually studied a little and passed. Pearson has a 29-page detailed guide that should answer most of your questions about the process of taking the exam, including where to go and what to bring.
  • $50 — Cost to get fingerprinted so that a background check can be ordered. This is important as you will have access to people’s homes and their possessions.
  • Varies widely — Find a sponsor. Real estate agents cannot work independently in Texas. They have to work for a qualified broker. The broker then ensures that you’re doing the job ethically and correctly and in exchange you agree to share part of your commissions with them. The split varies widely so you’ll need to negotiate this going in to any agreement. This is an independent contractor arrangement so every brokerage will be different. For some, if they take you on as an agent, they expect a certain level of production from you in exchange for sales support and an office. Other brokerages may only charge you a small fee to align with them. I was fortunate enough to meet Scott Killian during a real estate deal years earlier and he agreed to allow me to become an agent in his firm. He allows me to be a very, very, very part-time agent with Scott Real Estate. In exchange, when I buy or sell something — either for myself or another client — I share some of the commission with him.
  • $1,000 — Although this varies based on where you live, budget about $1,000 to join National Association of Realtors (NAR) and your local real estate board. For me, that means joining MetroTex for my local real estate organization which includes membership to the NAR. Your dues are tax-deductible and the organizations will provide some nice discounts, including discounted membership to AAA, discounts on cell phone products, continuing education benefits, and access to their own healthcare exchanges (this is important as you will be an independent contractor and will not have employer benefits). Membership also very important as it gives you access to the Multiple Listing Service which shows you everything that is on the market as well has comes with a host of other tools for reviewing listings.
  • $500 — Other fees, tools and marketing materials, like business cards and lock box access tools.

Being a realtor does have its perks. As a buyer, you can show yourself a home on the market the minute it becomes available, without having to call a realtor and get on his or her schedule. Buyer’s agents are also entitled to a percentage of the sale of a home so if you’re buying a property for yourself, you get the average of 3% commission on the price (although after splitting your commission with your broker, it’s closer to 1.5%.). On a home valued a $100,000, that amounts to a discount of about 3% to be split between you and your broker. Similarly, if you sell a home for $100,000, you still have to pay the buyer’s agent 3%, buy you (and your broker) can split the other 3% which will save you $3,000.

I do like having my license as while we don’t buy or sell property very often, I do like listing my rental properties on the MLS. Advertising my rental on the MLS spreads my listing to a much wider audience than I can reach myself as the MLS has relationships with companies like Trulia, Zillow and HotPads to share my listing with their audiences as well. That said, there is a cost to me should another realtor bring me my tenant. It usually costs about half of one month’s rent to be paid to the other broker for their efforts to bring you a new tenant.

Another feature I like about being a realtor is access to continuing education. As time permits, I like attending seminars both online and in person. This is important as I need the continuing education credits to renew my license. I also like learning new things as the real estate market is constantly changing.

All that said, the bottom line of this exercise, do you think you’ll be doing enough buying, selling and leasing to make your investment in becoming a realtor and maintain your real estate agent license worthwhile? That’s a math problem you’ll have to solve for yourself.