I was speaking to a friend that is in a similar business and he mentioned that I should get licensed. I told him that I have my LLC…but he insisted that I needed to be licensed.
I have read a ton of books and literature on this business and I have yet to see a single thing that mentions getting a wholesaling license.
So my specific question is…does the state of Georgia have a license requirement for wholesalers? For that matter, does any state have a licensing requirement for wholesalers? ???
He may have been referring to an agents/brokers licence. This would benefit you legally and financially. Generally you have to be an agent for a year or two before you get your brokers license (depening on the state) Some states though they dont require you to be a broker to sell or buy homes. Some do have a limit on the number of transactions you are allowed in a 12 month period and then they consider it selling without a license.
Financially here’s an example of the benefit of being a RE Broker. I am selling 2 and buying 1 house in the next 12 months the 2 i am selling are about 225k each and the one we are buying is about 500k. If i sell the 2 with no cobroke - I save about 22k or 11k. If I cobroke on the purchase my brokerage will walk away with 12.5k in commission money (for a total realized income/savings of 34k) Of course i could just do FSBO on the sell which is basically what Im doing but with MLS and a license you get more cred.
The brokers license was a no brainer - i got my agents license and did the minimum required for the broker i was working for for the 1 year. It doesnt cost much and the potential for extra income could outweigh the investment side completely. Now I can make my own deals on listing/buying/selling and other investors know this and come to me. I list some for a nominal ($100) fee. I dont make any money but i get the advertising.
I don’t think having a license is a huge benefit to being an investor. It depends on what you’re doing, what your goals are, etc. If you like to research using MLS and want to market your own properties or get a piece of the commission, having a license could be great. I love the research and marketing part of the job, so enjoy it. I also like networking with real estate pros that are more in the agent circle.
Most of my investors hate handling details and would rather have someone do that for them while they find off-market deals and network. I don’t think it hurts to have a license except the added liability (the law here in Texas can seem weighted towards the consumer), so you may choose to go for it.
A good rule of thumb is to talk to investors who are agents, agents who work with investors, etc. and see what they think.
In my opinion most state license rules relate to transactions whereas you are selling multiple homes to consumers. When you wholesale homes to investors, by nature you are often selling to other businesses.
It’s a wolf to wolf concept.
Please dont take this as legal advice, but it seems a logical idea to avoid the scrutiny and costs of licensing.
I understand that youre aiming at but real estate doesn’t generally fall under wholesale/retail theory.
What youre doing is getting a deal that is available to anyone and then finding someone to make a profit off of that deal with, thats not wholesale/retail. Wholesale/retail involves some kind of exclusivity at the source of production. Buyers purchase wholesale(under license agreement or distribution agreement) then sale to consumers with a mark up. In general as a retailer a business license is required to purchase wholesale goods. Not so in real estate. If it were a true wholesale/retail market the law would be that only brokers can buy a house and then that broker can sell it and as a private individual you can sell a few with out a broker (kinda like car dealers) But after a point youre in business to sell cars.
When dealing in a transaction - anyone who buys or sells regardless of whether youre a broker or investor or company or individual is responsible to the same laws. What a brokers license does is allow you to represent other people in a purchase or sales transaction. That line is blurry depending on where you are at. But it boils down to that If youre bringing buyers(doesnt matter who, the law doesnt care) to your properties then at a certain number of transactions youre by the definition holding your self out as representing sellers or buyers.
The brokers license just allows you to more and not worry about that line. Its a business decision that you make. Just putting it out there for you.
usual disclaimers apply
Not a dumb question at all. I am getting my license to have MLS available for comps. I also like the idea of being able to list other investor’s properties at a discount. But, there is one other reason I struggled with for a while. Sub2s. When doing a Sub2, I get the deed but it isn’t recorded until I sign it over to the new buyer. At that in between point when I am showing the house or soliciting buyers for the house, I need to feel confident that I am not outside the ‘law’ if there are multiple beneficiaries on a property. Also, I like to attract buyers first…so that is even more of a fine line as to whether I am acting as a salesperson, at least the intent is there.
Also, I can participate in the commissions when I buy listed property as well as have the commission I make on the home if I need to put it back on the market through MLS.
Melissa