Many aspiring real estate investors choose to “get in” by becoming real estate investors first, but is this an unnecessary and pricey step on the path to real estate investing? Hundreds of people a year decide to become a real estate investor and instead of going into being one, people spend valuable time becoming an agent. They choose this path because they lack confidence in their abilities and want to “learn the ropes” before jumping into investing. Being an agent could be a way, in their minds, to earn that steady paycheck while not going "all-in." Ultimately, many who choose real estate agent as their path to to real estate investor simply discover that it is only a long and costly detour to get to what they want.
Do you know how expensive it is to become a real estate agent? This is often why many agents quit prior to renewing their license. The fees are hefty and many. Agents can expect pre-licensing course fees, association dues, lockbox costs, continuing education fees, and more. All of the previously mentioned costs do not include the setup expenses that agents incur when starting out. The cost of the website, purchasing technology, business cards, new devices, signs, and so on. All of that can EASILY add up to thousands of dollars.
You can take all of the training, pay for your startup costs as an agent, and still, this will not guarantee you a paycheck. Real estate agents need to be prepared that it could take six to twelve months before they see any profits. Did you also know that the average real estate agent only makes the equivalent of minimum wage? To make any money as an agent, you will need to hustle and throw more time and money into various marketing efforts.
Agents Vs. Investors
Now let’s compare the average earnings of real estate agents and investors. RealtyTrac calculated that the average total profit from flipping a property in 2016 rose to over $60,000. That number includes just one deal. You will find that flipping houses aren't the only way to get involved in real estate investing. When you become an agent, you can expect to put up $5,000 into just earning the CHANCE to work as a salesperson for another investor. Or, you have the option, as an investor, to put your money directly into the market and begin investing immediately. What sounds like the better deal?
There are multiple options for someone like you to begin earning money right away. Invest in mortgage notes, private lending, real estate crowdfunding, and wholesale properties. I started investing with negative money in my bank account. That is another story in itself! My point is: There is always a way!
Real estate agents are necessary, and although there is a possibility that new technology could wipe out their jobs, that hasn’t occurred yet. For some, becoming an agent will fit their personality and lifestyle best. For those who want to go straight to investing, you can still get the benefits of an agent if you want. Hire one if you need to. The bottom line: Every person— agent or investor— needs to calculate the math for themselves and decide which path will lead them to their goals and yield the best returns.