Should You Be a Realtor or Real Estate Investor?

Real Estate Investor or REALTOR?

Deciding between becoming a realtor or a real estate investor can be a daunting choice, especially since they represent two distinct career paths. Both have their unique advantages and challenges, and understanding these differences can help you make an informed decision. Drawing from my experience as a realtor for four years and a real estate investor for three, I’ll break down the essential aspects of each path to guide you toward the right choice for you.

Education Requirements

First and foremost, let’s talk about the educational requirements for each role. It’s crucial to note that neither path requires a traditional college degree, but they do have specific educational paths.

Becoming a Realtor

To become a realtor, you must complete a pre-licensing course. The number of required hours varies by state; for example, Pennsylvania requires 72 hours of coursework. After completing the course, you need to pass both state and national exams. That’s pretty much it as far as formal education goes. It’s a straightforward path, but it does require commitment and discipline.

Becoming a Real Estate Investor

On the flip side, becoming a real estate investor doesn’t require any formal education or licensing. You can start investing today without taking any courses or passing any exams. However, I highly recommend finding a mentor to help accelerate your learning and avoid common pitfalls. Having someone to guide you can significantly improve your chances of success.

Access to MLS

Another significant difference lies in access to the Multiple Listing Service (MLS).

The MLS is a powerful tool that realtors use to list properties and find comparables, which are crucial for determining the market value of a property. As a realtor, you have direct access to this platform, enabling you to run comps effectively. This can be a game-changer when it comes to pricing properties accurately.

Investors, on the other hand, typically do not have access to the MLS. However, there are alternative platforms like Zillow and Realtor.com that can be used to find comparable properties. While these platforms can be useful, they often lack the real-time updates you’ll find on the MLS. So, if you’re serious about investing, consider leveraging the MLS through a realtor.

Financial Aspects of Each Role

Now, let’s dive into the financial side of being a realtor versus a real estate investor.

Realtor Earnings

As a realtor, you typically earn a commission of about 3% on each deal. However, this commission doesn’t go straight into your pocket. You have to factor in your broker's split. For instance, if you sell a property listed at $200,000, a 3% commission would amount to $6,000. But if your broker has an 80/20 split, you’d only receive $4,800 after the broker takes their 20%. You also need to set aside a portion for taxes—30% is a good rule of thumb for self-employed individuals. After taxes, you’d be left with approximately $3,360.

Investor Earnings

In contrast, real estate investing offers multiple avenues for earning money. Let’s break down one of the most popular strategies: wholesaling.

Suppose you enter into a contract with a seller for $200,000. You then find an end buyer willing to purchase the property for $210,000. As the middleman, you’d pocket a $10,000 profit. However, just like with realtor commissions, you need to set aside money for taxes. After setting aside 30% for taxes, you’d net approximately $7,000.

The key takeaway here is that investors generally face fewer fees and have more flexibility in how they earn money compared to realtors.

Autonomy and Work Environment

Another aspect that sets these two paths apart is the level of autonomy you have in your work.

Being Your Own Boss as a Realtor

Many believe that becoming a realtor means you’re your own boss, but that’s not entirely accurate. Once you sign buyer agency agreements and listing agreements, your clients effectively become your bosses. You have to cater to their schedules, preferences, and demands, which can sometimes feel limiting.

Freedom as a Real Estate Investor

In contrast, real estate investors enjoy much greater freedom. You set your own hours, make your own decisions, and determine how you want to run your business. Whether you want to make follow-up calls or set appointments is entirely up to you. This level of control can be incredibly appealing for those who value independence in their careers.

Risk Levels in Each Role

Let’s talk about the risks involved in each profession.

Realtor Risks

Being a realtor is generally less risky. If a client decides to sue you, your brokerage has your back and provides legal counsel. This safety net can be reassuring, especially for those new to the industry.

Investor Risks

On the other hand, real estate investors face a higher level of risk. If you own a property and things go awry—like a renovation going over budget or a tenant causing issues—you’re solely responsible for the fallout. Investors must be prepared to handle all aspects of property ownership and management, which can be daunting.

Similarities Between Realtors and Investors

While there are significant differences, there are also some noteworthy similarities between the two professions.

• No Pay Without a Deal:

  In both roles, you won't earn any money unless you close a deal. This means you must be proactive in finding opportunities.

• Negotiation Skills:

  Both realtors and investors need strong negotiation skills. Whether you’re negotiating offers or terms with sellers, being able to negotiate effectively is critical.

• Networking:

  Building relationships is vital in both fields. Whether you’re a realtor looking for clients or an investor seeking deals, networking can help you succeed.

Can You Do Both?

If you find yourself intrigued by both paths, you’re not alone! Many people successfully navigate both careers. I’ve been both a realtor and a real estate investor, and it’s certainly possible to excel in both areas.

If you’re interested in becoming a realtor, I’ve included a link below to get started on your pre-licensing course. Whether you choose one path or both, the key is to find what aligns best with your goals and lifestyle.

Ultimately, the choice between being a realtor or a real estate investor comes down to your personal preferences, risk tolerance, and career goals. Take the time to evaluate what you want out of your real estate career, and don’t hesitate to seek out mentors and resources to help you along the way.

Whichever path you choose, be sure to invest in your education and network with others in the industry. The real estate world is vast and full of opportunities, so make the most of your journey!

For those interested in becoming a realtor, check out the link for the C Shop to start your pre-licensing course and get a discount. Good luck on your real estate journey!

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