Episode Transcript
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Stacie (00:00):
Here's what you need to
consider when thinking about
(00:02):
whether having a real estatelicense is best for you.
Do you have the time to investinto the education, because
that's a biggie right up front.
Is the initial cost of thateducation and licensing fees
worth it?
What exactly do you plan to usethat license for?
Like just personal use?
(00:22):
So like buying and selling yourown properties and understanding
the law behind propertymanagement to make your rental
property investments moreprofessional?
Would you want to manage otherpeople's properties for them?
You know, would you want to helpfamily and friends with their
sales and purchases of property?
You know, holding your realestate license is fantastic and
(00:43):
has a lot of benefits if youhave a plan on how you want to
use it.
Welcome to your landlordresource podcast many moons ago.
When I started as a landlord, Iwas as green as it gets.
I may have had my real estatelicense, but I lack confidence
in the hands on experienceneeded when it came to dealing
(01:04):
with tenants, leases,maintenance, and bookkeeping.
After many failed attempts, fastforward to today.
Kevin and I have doubled ourdoors and created an organized,
professionally operated rentalproperty business.
Want to go from overwhelmed toconfident?
If you're an ambitious landlordor maybe one in the making, join
us as we provide strategies andteach actionable steps to help
(01:27):
you reach your goals and thelifestyle you desire.
All while building a streamlinedand profitable rental property
business.
This is your landlord resourcepodcast.
Welcome back to Your
Landlord Resource, the go to
podcast for self managinglandlords looking to confidently
(01:49):
and professionally operate theirrental property businesses.
I am your host, Stacie Casella.
Kevin (01:55):
And I'm your co host,
Kevin Kilroy.
And as you know, both Stacie andI have our real estate license.
Stacie is an official quoteunquote Realtor because she
holds her license with a realestate broker, and she keeps up
on all the annual and biannualcourses that are required and
(02:16):
she pays all her annual fees.
Now, I, on the other hand, havemy real estate license and would
be considered a salespersonbecause I do not hold my license
under a broker or pay any annualfees to the state or national
governing bodies that regulateactual Realtors, like Stacie
does.
(02:36):
And because of that, I cannotlegally do any real estate
transactions or receivecommissions on sales or
purchases.
But every four years I take mytests, I keep my license active
just not in the sense that I cando anything with it.
The thing is anytime I want to Ican select a broker and do what
is called hang my license withthem, pay all the annual fees
(03:00):
and be able to complete realestate transactions.
So that is why sometimes youwill hear me refer to Stacie as
a Realtor and myself as asalesperson.
The bottom line difference isshe can use her license freely
now and I would have to do somework and pay some fees before I
could use mine.
Stacie (03:20):
So let me clarify that a
little bit more.
As a member of NAR which is theNational Association of
Realtors, I get a special littlepin with that R symbol on it and
I get to call myself a Realtor.
And it's funny because basicallythe industry needed a shorthand
way of saying a real estateagent license held by someone
(03:43):
who is also a member of NAR.
So that's what the Realtordesignation has come to
represent.
In addition to licensed realestate agents, licensed brokers,
associate brokers, propertymanagers, real estate
counselors, and appraisers, theycan also be Realtor So therefore
(04:05):
all Realtors are licensed realestate professionals, but not
all licensed agents areRealtors.
I know it's kind of confusing.
But bottom line, you have tohang your license under a
broker, which is the person whobasically takes on all the
responsibilities, making surethat you do your job correctly.
Plus you have to pay to be amember of NAR through your state
(04:28):
or local Realtor association andtake a code of ethics course
every other year to remain ingood standing as a Realtor.
And I believe this is the casenationally.
And why are we talking aboutthese differences?
Because today we're diving intoa question that we've been asked
about a lot lately.
And that is, is it worth it forrental property owners to get
(04:51):
their real estate license?
It's a big question with a lotof information, and we're going
to cover the ins and outs ofgetting your license.
From the time and the costsinvolved to the potential
benefits like commissions andmarket knowledge, tax
advantages, and even managingproperties for others.
Kevin (05:12):
Yeah, so we first started
off with our real estate
licenses and then we beganinvesting in real estate.
So if you're already a landlordand you're curious about the
advantages of holding a realestate license or maybe
wondering what the pros and consare, you're in the right place.
So let me kick this off withwhat it takes to actually get a
(05:34):
license.
First up, the time andpreparation.
So getting a real estate licenseisn't a quick process.
On average, you're looking at 60to 90 hours of coursework
depending on the state.
And that doesn't include thetime to study for the exam
itself, which is challenging.
Stacie (05:54):
Yeah, right.
So back in my day, we tookcourses in person.
I think they're still around butwe used a company called First
Tuesday.
And I still remember driving upto San Francisco and attending
my classes in person.
And to be honest, for me, itworked best because I'm actually
kind of shy, and I'm not one tospeak up and ask questions.
(06:18):
So being in that in personsituation allowed me to ride on
the coattails of other studentsand learn even more about the
content when they ask questions.
Plus, learning from a person,and this does not necessarily
have to be in person, butlearning from someone with
experience and listening to howmy instructor put the lessons in
(06:42):
perspective by using real lifeexamples made my learning
experience night and day overjust reading a book.
And I believe First Tuesday isonly online now though.
some community colleges stilloffer courses for you to go in
person and take a course.
And for students in college,many universities offer courses
(07:03):
as well.
Kid number one took most of hisreal estate courses in college
as part of his major, which wasfinance with a minor in real
estate development.
And then when he moved back toCalifornia, he was able to
submit his transcripts forcredit.
Now, he did have to completesome state specific courses.
Like one or two but once thosewere completed he could start
(07:26):
his exam prep.
For the most part the coursesare available online
Kevin (07:32):
Right and those are the
basics behind the initial
education to get your realestate license.
Now here in California you haveto take a real estate practice
course, real estate principlescourse, and then one elective
and those can range from realestate finance, legal aspects of
real estate, accounting,economics, appraisal, and of
(07:56):
course property management.
Now those other courses have alot of content.
Real Estate Practice will coverReal Estate Law, Real Estate
Practice, Advertising, HandlingMoney, Disclosure, Personal
Bias, and Fair Housing.
Real Estate Principles willdiscuss topics like Property
(08:17):
Ownership, Legal Descriptions,Contracts, Agency Relationships,
Property Valuation, Financing,Closing Procedures, and Relevant
Laws.
This course essentially preparesstudents to understand the
basics needed to pursue a realestate license or manage
personal real estateinvestments.
Stacie (08:39):
So I did look it up and
there are some companies out
there where you can learn bylive streaming a course that's
going on.
Maybe that's like at auniversity or something.
And there are others that offermentorships with their online
learning.
So if you're someone like me wholearns best and can retain the
most by listening to someonespeak and teach over reading,
(09:02):
there are some options for youout there.
Kevin (09:05):
Yeah, and you know,
online learning doesn't really
bother me.
I kind of like how I can go atmy own pace and re read
something if I don't understandit the first time.
You know, people learn atdifferent paces, so sometimes in
a classroom situation it mightbe too accelerated.
Especially if they're likeStacie and fearful of asking
questions in a public settinglike that.
(09:26):
The last thing about education Iwant to touch on is continuing
education.
Now, most states require youtake additional courses every
one to two years to keep yourlicense active.
Here in California, ourrequirement is 40 hours of
continuing ed within the fouryear period we hold our license.
However, most coursecertificates expire within 18
(09:50):
months, so completing them earlyreally doesn't make much sense.
One thing Stacie and I have doneis to go to our local Realtor
association and take an eighthour refresher course when it
was offered.
I mean, they covered all thethings we would learn online or
by reading those, you know, twoinch thick books, all in eight
(10:10):
hours.
And at the end of the day, wetake one test there.
Then leave and complete oneelective course and test
whenever you're done.
Stacie (10:20):
Yeah, well, let's be
real.
That eight hours is the personpretty much going over every
single question that could be onthat test.
In order, mind you.
So when you refer to your notes,you can pretty much figure out
the answer pretty quickly.
Kevin (10:37):
Yeah, and of course
there's always those few
questions that weren't discussedto give you a short little panic
attack because you can't findthe answer right away.
Stacie (10:46):
Yeah, well of course.
They can't have everyone getting100 percent or else it's going
to throw off the authenticity ofthe course and what was learned.
But hey you guys that is theCalifornia version of the real
estate education system to getyour license.
You guys need to do research onyour own state to find out what
the requirements are.
Kevin (11:05):
And because I can
imagine, some of you are
wondering do I get the licensein the state I live or the state
where my properties are located?
The answer is the state whereyou live.
This is so if you decide to moveforward with a career in real
estate at some point, you can doso easily.
The other reason is because somestates, not many, but some, will
(11:27):
allow what is calledreciprocity.
Each state has its own rulesregarding reciprocity.
So, you need to research if thestate you want to practice in
has an agreement with yourcurrent state.
Now, some states offer fullreciprocity, allowing you to
transfer your license withminimal additional requirements.
(11:48):
While others might only havepartial reciprocity with
specific states.
And even if there isreciprocity, you might still
stop it.
Let me get through this.
You might still need to completeadditional state specific
education, or pass a smallportion of the real estate exam
(12:09):
related to the new state's law.
Go ahead
Stacie (12:13):
I could do a drinking
game on that word.
I mean I'd be hammered by now ifI had to take a shot every time
you said it in the last threeminutes.
Kevin (12:21):
All right, I was thinking
the same thing.
It's the official word used byall states to show a mutual
agreement.
And I couldn't really think ofanother word to use.
Reciprocity.
And lastly, if you processtransactions out of state, you
can always do what is called areferral sale or purchase.
(12:42):
And that is where you have alicensed real estate agent in
the state where you or someoneyou know were buying or selling
giving you a referral fee fromtheir commission.
Essentially they are doing abulk of the hard work with
regards to the contracts and atthe property, and you can kind
of help out when you can.
(13:03):
And not sure if this is the caseeverywhere, but we pretty much
have experienced referral ratesof 25%.
So that's 25 percent of theircommission earned.
Stacie (13:15):
And that might seem
high, but there's a couple of
factors to consider.
So often you're the one who'sbringing the property to them.
They're not the ones that aresearching for, evaluating, and
then finding you the rental toconsider.
So all that work of finding theproperty that works within your
buy box, like checking theneighborhood and understanding
(13:38):
the rental rates and knowingwhat your parameters are and
presenting the options to youare not performed.
They do, however, depending onwhether you're buying or
selling, have to handle theoffer, the contracts, um,
meeting the inspectors and theappraisers, et cetera.
And I want to touch briefly onthe new NAR regulations after
(13:59):
that historical lawsuit allabout buyer's commissions.
We have not seen a change incommissions.
So most sellers are still givingthe two and a half to 3 percent
commission to the buyer'sagents.
It's just one thing that is morenegotiable now.
And honestly, it always hasbeen.
It just had become standardpractice to assume that you're
(14:22):
going to split the sellingagent's commission and now it
needs to be discussed.
And when I say discussed, it's abox that's checked or a percent
that's listed.
Kevin (14:32):
Uh, should we talk
quickly about the referrals you
have been able to secure thisyear by having your real estate
license?
Stacie (14:39):
Sure.
All right, you guys so this yearalone, I have completed three
transactions and likely willhave one more before the end of
the year.
And one of those was an eightunit apartment building where I
represented the seller.
And for that one, I pulled mybroker in and we co listed the
property.
And the reason for that wastwofold.
(15:01):
One, when our brokerage takes onthe sale of a rental property,
especially a multifamily one, wehandle the property management
at a reduced price for theseller.
This is so that we can make surethat we get to know the tenants,
can access the property easily,and make sure that all the I's
are dotted and T's are crossedwhen it comes to the leases.
(15:24):
We are looking at the propertyfrom the perspective of the
buyer and what they will want tosee and then making adjustments
to give them the best propertypossible.
So I handled the propertymanagement for that and ran all
the legal stuff, like theleases, the turnovers, security
deposits, et cetera, through thebrokerage.
(15:44):
And my broker handled the sale.
And I'll be honest, my expertiseis in property management, not
sales.
I can read a lease forward andbackward.
But a purchase agreement is awhole different animal.
So my broker handled workingwith the owner on what updates
needed to be completed.
Like they needed a new roof anda new paint job.
(16:07):
And then they spruced up thelandscaping and improved the
curb appeal.
Now I did handle the showings,because I could sell the units
and the area.
I was able to discuss theinvestment side of the purchase
and where a new owner could addvalue to the property.
Bottom line, my broker and Imade a really good team and we
(16:28):
split the duties.
Again, I brought the seller in,and I knew her and her family
personally, so I was able todiscuss with her, in layman
terms, what everything meant.
And she trusted me, which is ahuge responsibility, and it's
one that I do not take lightly.
But in the end, she got thesale.
(16:49):
Now it was for slightly lessthan she hoped, but the tenants
were somewhat challenging, soshe was relieved to get them off
her plate.
The other two transactions wereone of mine, the Chico property
that we held for way longer thanwe should have, and a piece of
land that a family member wantedto sell.
(17:10):
Again, I contacted a couple ofgreat Realtors in the area of
the properties being sold,explained I was referring the
sales to them and let them dotheir thing.
Kevin (17:19):
So, when the transactions
were completed, you were sent 25
percent of their commission,right?
Stacie (17:26):
Yeah, kind of.
So, in the close of the sale,through the title company
handling the transaction, myportion of the commission gets
sent to the broker, and he takesa small portion of it to cover
the errors and omissionsinsurance that he carries.
Just in case a lawsuit comesabout after the fact.
And I'm sent the remainder,which for me is 80 percent of
(17:48):
the referred amount.
Kevin (17:49):
So your broker keeps 20%?
Stacie (17:53):
And, you know, I think
that's fair.
It didn't start off that way.
When I first started he kept 40percent because I was learning
and he had to spend timeteaching me.
Then the more transactions thatI completed, the more I learned
and his portion taken was lessand less until his maximum
allowed of 20% was reached.
You know, some brokers are gonnado 10%, someone go less than
(18:15):
25%.
So that is something to considerwhen finding somewhere to hang
your real estate license.
And I will say that I leaned onthis broker hard when I first
started I was as green as theygot and I really had a lot to
learn.
Kevin (18:31):
Which is kind of funny
because I know a couple times
he's contacted you for help,right?
Stacie (18:36):
Yes, he has.
Not too often, but since Istarted way back in 2008, I have
pretty much done propertymanagement full time.
And I will say he runs thingspretty old school.
And, and that's fine because theproperties that he manages have
owners that operate things oldschool too.
So, I mean, it works for himmost of the time.
(18:58):
Here's what you need to considerwhen thinking about whether
having a real estate license isbest for you.
Do you have the time to investinto the education, because
that's a biggie right up front.
Is the initial cost of thateducation and licensing fees
worth it?
What exactly do you plan to usethat license for?
(19:19):
Like just personal use?
So like buying and selling yourown properties and understanding
the law behind propertymanagement to make your rental
property investments moreprofessional?
Would you want to manage otherpeople's properties for them?
You know, would you want to helpfamily and friends with their
sales and purchases of property?
You know, holding your realestate license is fantastic and
(19:41):
has a lot of benefits if youhave a plan on how you want to
use it.
Kevin (19:47):
Speaking of costs,
licensing is not free,
unfortunately.
You'll need to budget for coursefees, exam fees, and your
license registration.
And on average, it can runanywhere from$500 to$1500
depending on your state and theprograms you use.
So, I think annually, Stacie,you pay what?
(20:09):
Like$1500 for the localassociation, including the MLS
fees?
Stacie (20:15):
Yeah, I think it's
closer to like$1700 a year for
both those now.
Kevin (20:18):
Wow.
So that's a lot of money to haveto pay per year if you're not
doing regular transactions then.
And additionally, there arecosts associated with
maintaining the license, likethe State Department of Real
Estate renewal fees andadditional coursework every year
or two.
Now on the flip side, we knowother landlords who see it as a
(20:41):
small price to pay because theysave money on commissions when
they buy or sell theirproperties.
If you're regularly buying orupgrading properties, those
commission savings can make asignificant difference.
I know Stacie has alreadytouched on commissions, but one
of the biggest advantages ofhaving a real estate license is
that you is the ability to earncommissions when you buy and
(21:03):
sell property.
If you're someone who activelybuys properties as investments,
that commission could be a solidadvantage.
I mean, especially if you're ina market with high property
values, much like here inNorthern California.
With your license, you can saveabout two to 3 percent in
commissions on each transaction.
(21:23):
And that's if you handle thetransactions yourself.
If not, like Stacie mentioned,you can refer the transaction to
another Realtor and earn somemoney back that way.
Stacie (21:35):
Yeah.
And the only downside to that isthat you have to pay taxes on
those earnings.
So I know, tough problem to haveto deal with, but those taxes
can add up.
So you have to considerreserving some of the
commissions to pay those taxes.
Now, you would receive a 1099from your broker for those
commissions, and if you're notaware of the taxation with a
(21:58):
1099, there are no taxes removedfrom your broker, because you're
considered a contract worker,not an employee.
You are responsible for payingall the taxes.
So the state, federal,unemployment, et cetera.
So as a safeguard, I generallywill hold aside 25 percent of my
commissions just to be safe.
(22:19):
Now, after my taxes arecompleted, if I have to pay, I
can pull from those tax reservesthat I have held to pay my tax
liability.
If I don't have to pay, which isoften the case, those tax
reserves are now mine to do whatI please with, which is usually
to reinvest into a property,either by way of adding it to
(22:42):
reserves to an existingproperty, so I can do
improvements, or buying a newone.
You know, sometimes we'll holdon to it so we can take a
vacation or save for somethingbig like kid number one's
wedding coming up next year.
Kevin (22:57):
Better get going on that
one.
I mean that's gonna be herebefore we know it, right?
Stacie (23:02):
Yeah
Kevin (23:03):
But seriously on the flip
side, if you're just managing a
couple of properties and aren'tplanning to buy or sell off and
the benefits of having your realestate license might be less
impactful.
So consider the cost of gettingthat license as well as the
potential benefits.
Now, speaking of benefits, let'stalk a little bit more about
(23:24):
those.
Another big benefit to holding areal estate license is the
access to market data.
With a license, you gain accessto the Multiple Listing Service,
or MLS, which gives you a hugeadvantage in market analysis.
Can you get this from having agood relationship with your
Realtor?
Yeah, absolutely.
But not if you're looking to buyor evaluate properties that are
(23:48):
out of your area or state.
You would have to have a Realtorto do that work for you, and
honestly, if it's just forevaluation, that can be a pretty
big ask.
I mean Realtors will help youinitially, but they will not
continue unless they knowthere's something coming out of
it for them.
Stacie (24:06):
Yeah, you guys, the MLS
is gold for rental property
owners because it provides areal time snapshot of comparable
rentals and sales listings inthe area.
Can you get that from publicsites like Zillow or Realtor.
com?
Yeah, but you have to dig forit.
On the MLS, you can set yourparameters and do a
(24:28):
comprehensive search.
You also have access to old orexpired listings where you can
pull information as well.
You know, on those public sites,you only have access to what is
currently on the market, unlessyou type in a specific address
and search property by property,which is ridiculous.
Several times I have used MLSdata to help a landlord price a
(24:50):
unit correctly or make a morecompetitive offer on a property,
but for smaller landlordsmanaging just a property or two,
it might be overkill.
So it all depends on your endgoal.
Kevin (25:01):
You know, holding a real
estate license can also open up
networking opportunities andlike Stacie mentioned earlier,
allows you to earn referralfees.
So for landlords with ambitionsbeyond self management, this can
be a great way to expand yourreach.
So, consider if you get yourlicense and you begin to do
property management for otherlandlords in your area.
(25:24):
If and when those landlords wantto buy another property or sell
the one you manage, you canrepresent them for that sale.
And side note here, if you havea property management company
that you use already, check yourcontract.
It has become common practicefor licensed property managers
to have a clause in theircontract that states that they
(25:46):
get to represent the ownershould they decide to sell the
rental property.
And if you love them and they doa fantastic job, hey great.
But if they do a mediocre job atmanaging your rental, likely are
not going to be a greatsalesperson for you.
So, just food for thought.
But yes, having your licensemeans you network and pick up
(26:08):
referrals or sales and earnextra income and potentially
expand your business.
Stacie (26:14):
Yeah, but of course that
networking does take time.
So if you're in a nine to fivejob, this aspect might take some
time to cultivate and achieve.
All right, now let's talk aboutone of the biggest, often
overlook benefits of gettinglicensed as a real estate
professional, and that's theincome tax advantages.
(26:34):
This applies particularly ifyou're a full time landlord who
manages their own properties orplans to someday, because these
tax benefits can be prettysubstantial.
If you're classified as a realestate professional for tax
purposes, you might be able todeduct passive losses against
your active income.
Which is a huge benefit,especially for those with
(26:56):
substantial rental portfolios.
So let's say you're a landlordwith a high tax liability from
other active income sources.
Like maybe you operate anotherbusiness or you're pulling
dividends from investments, oryou have a large capital gain on
a property that you decide tosell and not 1031 exchange.
If you meet the IRS requirementsas a real estate professional,
(27:20):
you can often use rentalproperty losses to offset that
income, which can reduce youroverall tax burden.
Kevin (27:28):
But keep in mind, it's
not an easy qualification to
meet.
The IRS requires that you spendmore than 750 hours a year in
real estate activities.
And that these hours constitutemore than half of your total
working hours.
So this means it's usually onlyan option for full time
(27:49):
landlords or those who are veryinvolved in their properties.
Stacie (27:53):
Yeah, I think we figured
it out the other day, right?
I mean, because that more thanhalf of total working hours or
the 50 percent part is kind ofconfusing.
So whatever hours you log in foranother job or business, you
must be able to prove you workthe same amount of hours or more
(28:14):
in real estate business.
50 percent or more of youroverall hours need to be in real
estate.
So if you're multitasking, stopand listen to what I'm about to
say.
If you work a nine to five forsomeone else, logging in 40
hours a week, for 52 weeks peryear, that's around 2080 hours a
(28:38):
year.
Essentially, you, as anindividual, have to be able to
prove you worked 80 plus hours aweek in a year to qualify.
And it's nearly impossible toprove that you did that unless
you have logged hours and can100 percent prove that you did
that work, as the IRS does lookat if you work for someone else
(29:00):
and will audit you asking forproof of the time completed.
There are many court cases onthis where landlords have lost
because they cannot provide theproof of those hours and what
work they performed during thosehours.
Which means you have to provethat for that year while you
worked full time for someoneelse, that you also worked 40 or
(29:23):
more hours a week every week ofthe year over and above those 40
hours worked on your nine tofive.
I believe you have to exceedthose hours by your other
employment by one hour.
So, for the most part, that'spretty tough to do, especially
if you have a family to care foror other responsibilities beyond
(29:43):
your job in being a landlord.
Can it be done?
Absolutely.
Other people have proved thatthey've done it.
You just have to be very mindfulabout tracking hours and what
you did to be able to prove it.
Now, another workaround to thisis if you're married and you
file a joint tax return withyour spouse, who does not work
(30:05):
full time for someone else.
That spouse can get their realestate license and do the 750
hours of work for your rentalproperties.
And if they have another job,they just have to be able to
prove that their hours in realestate were at least one hour
longer than their otheremployment.
So, if you file a joint taxreturn, you can then use your
(30:28):
spouse's real estateprofessional status to get those
tax advantages.
And it can pay off significantlywhen tax season comes around.
Kevin (30:37):
And it's also important
to mention that this isn't just
about deductions.
If you're doing substantialrenovations, having the real
estate professional status canalso help you offset high repair
and upgrade costs.
And those expenses can bededucted in real time rather
than being depreciated overyears.
(30:57):
I would say it is definitelyworth discussing with your tax
professional as they can helpyou understand whether the tax
benefits justify the commitmentto of becoming a licensed full
time real estate professional.
Stacie (31:10):
And let me jump back in
here and tell you that those
annual fees that I have to paythe$1700 plus the courses are
all expenses that can be writtenoff as well.
So even if you don't process anytransactions, you can still
deduct the costs associated withholding your license along with
those expenses or losses thatoccur.
(31:30):
Which for us is much larger thanthe$1700 that I have to pay
every year.
Kevin (31:36):
Yeah, very good point.
You having that real estateprofessional status has been a
real game changer for us in ourtaxes, especially the last
couple years.
Stacie (31:45):
Yeah
Kevin (31:47):
Now here's another
important legal aspect about
having your real estate license.
In many states, if you want tomanage properties for others, a
real estate license is required.
California, Florida, Oregon, andVirginia, to name a few.
And in most cases, if you'relicensed, as explained earlier,
(32:07):
you have to operate under a realestate broker supervision.
This can add complexity ifyou're thinking about expanding
your business to manageproperties beyond your own.
When you hold your license witha broker and manage other
people's properties, you willhave to run your fees and
earnings through that broker whowill take their share.
They are legally responsible forevery transaction you conduct,
(32:30):
so they have to hold an errorsand omissions insurance in case
any legal action comes fromtransactions you bring through
their brokerage.
That means if you have a tenantsue for a fair housing complaint
or a botched security depositrefund, the owner who is
responsible for paying for thatlawsuit, will eventually come
(32:50):
back to you and your broker forcompensation.
That's where the errors andomissions insurance comes in.
I will say that in California,at least, you are allowed to
self manage your own rentalproperties without a license.
And you are also allowed tomanage rental properties for
immediate family members withouta license as well.
(33:12):
That's limited to your spouse,child, or a parent.
You cannot legally handlemarketing, leases, tenant
placement, or ongoing managementfor someone else, even a
sibling, without a license heldby a broker, and especially not
if you're being compensated forit.
The only workaround is if you'rean employee of that person, not
(33:34):
a 1099 contractor receiving acommission via a 1099.
Most all states are like this,except a few.
And of course, Idaho is one ofthe exceptions.
Any Joe Schmo can wake up anddecide to be a property manager
and not have to be certified orhold a license.
I mean, nothing.
Stacie (33:55):
Yeah, and that's
absolutely nuts, you guys.
The property manager that wehave to use in Idaho was not
licensed until just recently.
And we don't know this for sure,but our guess is that the
license that he got in 2023 wasso that he could add that clause
about representing landlords ina sale.
Now just a guess though, no hardfacts to support it.
(34:17):
It's just a hunch off an emailthat we received saying that he
could now represent us in thesale of our property if we were
ready to sell.
Kevin (34:25):
Yeah, regardless smart
move on his part though.
So Idaho along with Maine,Kansas, and Vermont are the only
states that currently do notrequire any license or
certification to manage rentalsfor other people.
Now, let's go over the biggestbenefits of having your real
estate license, specifically forlandlords who want to self
(34:47):
manage.
One of the clearest benefits ishaving a better understanding of
the real estate market.
So, even if you're not buyingproperties every month, knowing
how to evaluate properties andset competitive rents is very
valuable.
By far the greatest benefit ishaving control over your own
transactions without relying onan agent.
(35:09):
For example, if you'renegotiating the lease or buying
a new investment property,having that extra market
knowledge and confidence canhelp you get a better deal.
As a licensed real estate agent,you have access to all your
state specific leases andaddendums as well.
Plus, because of licensingrequirements, you are kept up to
(35:31):
date on the laws, regulations,and ordinances between landlords
and tenants on a regular basis.
Stacie (35:38):
Alright, so here's the
bottom line.
If you're a landlord who seesyourself expanding into property
management, or if you plan tobuy and sell properties
regularly, the benefits of areal estate license could easily
outweigh the costs and the timethat it takes to manage your
license.
But if you're managing just acouple properties and don't plan
(36:00):
on expanding, the cost and thetime required may not pay off.
So think about your long termgoals.
Are you open to managingproperties for others?
And are you looking to grow yourportfolio?
Or are you simply focused onjust maintaining the properties
that you have?
And most importantly, do youhave the time and desire to
(36:24):
learn all you need to get andhold that license?
And whatever your answers are,we hope that this episode has
helped you make a more informeddecision on whether getting a
real estate license is right foryou.
And hey, if you got at least onegood tidbit of information out
of it, would you do us a favor?
Would you please leave a kindreview of the podcast so that
(36:47):
other landlords can find us too.
If you want to hear more, followor subscribe to the podcast so
that each week the episodes aredownloaded right to your
favorite podcast platform.
And we'd love to stay in contactwith you.
If you have a question or youwant to suggest a subject for a
podcast, you can text us at 650489 4447.
(37:13):
That's 650 489 4447.
Or you can email us at Stacieyourlandlordresource com.
That's Stacie with an I E orKevin yourlandlordresource com.
We will link those all in theshow notes as well.
(37:34):
Also in the show notes, you canfind links to all the downloads
that we offer, ways to sign upfor our free newsletter, and the
waiting list for upcoming 2025course on placing your ideal
tenant.
There's also links to ourprivate Facebook group that's
just for self managinglandlords, and our social media
accounts on Instagram, Facebook,and YouTube, where we share very
(37:57):
informative and detailed tipsand tricks for landlords.
So check those out.
I think I covered it all.
Thanks again.
And until next time you've gotthis landlords.