Do You Need A Real Estate License To Flip Houses?
Kaitlin Davis6-minute read
June 14, 2023
We understand that learning how to make money in real estate can be just as exciting as it is overwhelming, but there’s no need to fret. One of the ways to make money in real estate is by flipping properties, which is the act of purchasing distressed properties, fixing them up, and reselling them for a profit.
There are a lot of questions around flipping houses, and a common ask if you need a real estate license to get started. While you might not need a real estate license to flip houses, having one comes with a host of pros and cons.
Do You Need A License To Flip Houses?
The answer is – no, you don’t need a real estate license to flip houses, but having one can work to your benefit as a house-flipper. Not only can a license make you more knowledgeable in real estate processes, it also grants you access to tools and resources that can make real estate investing easier and more profitable.
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Pros Of Flipping Houses With A Real Estate License
While having a real estate license is not necessary to start flipping houses, doing so comes with an array of pros including:
Real Estate Knowledge And Experience
The real estate market is a vast, complex system with many terms, laws and processes. Becoming a real estate agent can help a house flipper become more knowledgeable about the real estate market, its processes, and important permits and regulations that pertain to flipping homes. Instead of being blind sided by hidden factors after you purchase your fixer-upper, having your real estate license ensures that you’re educated on the steps to be successful when you’re buying and selling.
Access To The MLS
The multiple listing service (MLS), is a tool that real estate professionals use to share information with each other about all homes for sale in a given area. While you will be given a wider reach of potential buyers as a seller, this service also gives you useful information about investment properties as a buyer. The MLS is not publicly available, you can only access it if you become a licensed real estate agent.
Added Source Of Income
Flipping houses, even as a full-time business, can be an inconsistent source of income. To supplement the money made from an investment property, it’s recommended that you have multiple streams of income. By becoming a licensed real estate agent, you open the door to unlimited profit potential because unlike other careers, the real estate profession doesn't have an income cap. If you’re looking to get into flipping homes, it’s likely that you already have a strong passion for business and a dedicated mindset – traits that will take you far as a real estate agent. As long as you are able to sell properties, you are able to make a commission to supplement the profits you make from flipping homes.
No Agent Commissions
One of the most obvious pros of receiving your license is the money you will save. When you buy or sell a home trough a real estate agent, you (or the seller) have to pay them some sort of fee. Most agents do not ask for a flat rate, but instead, a percentage of the home’s selling value – also known as a commission fee. By becoming your own real estate agent, you will bypass agent commission fees and retain more of the profit.
By becoming a real estate agent, you can expand on your network and build relationships with other real estate professionals. House flippers need to have connections with contractors, inspectors, other investors and, of course, real estate agents to be successful. Being a real estate agent as well as a house flipper helps you connect and build connections with crucial contacts.
When it comes time to sell a flipped house, credibility is a crucial element in the closing process. Thanks to the time you’ve spent learning about the legal and financial side of buying and selling properties, it is likely that a buyer will perceive you as knowledgeable and trustworthy. Furthermore, having connections with other real estate agents will make it likely that if they have a client who is looking for a home in the parameters of your fixer-upper, they will connect you to the buyer.
Cons Of Flipping Houses With A Real Estate License
Like anything good, there are cons that come along with acquiring your real estate license while flipping homes. While there aren’t many cons that come with obtaining your license, they are still factors that you should consider before you start the process.
Costs Of Education And Certification
The largest obstacle you might face when trying to become a certified real estate agent is the cost of education and certification. Laws and costs vary by state, but you can generally expect to pay the following fees:
- Pre-licensing courses and education: $300+
- License application fee: $25 – $30
- Fingerprints and background check: $100 – $125
- State exam: $50 – $100 per attempt
- Real estate license: $150
In total, you should set aside about $800 - $1,000 to cover the cost of classes and application fees. To get the most accurate number, you should check your state’s requirements for becoming a licensed real estate agent.
Acquiring a real estate license can be a timely process. Depending on the route you take, the entire process can take about 2 – 6 months. Online courses might be able to be completed earlier than in person courses, for instance. Each state has different education requirements, with most requiring a minimum number of hours of pre-licensing instruction time. The required time can range from 40 – 300 hours. Whether you spend 2 or 6 months acquiring your real estate license, it will take some time and commitment to achieve.
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And get to purchasing another property to flip sooner.
Tips For Flipping Houses Without A Real Estate License
Obtaining your real estate license may not sound appealing to you, which is completely understandable. You can still be a successful house flipper without your license. If you decide to move forward without getting a real estate certification, you should consider doing the following.
- Use a real estate agent. Using a real estate agent to help buy and sell your flipper uppers can come in handy for a few reasons. If you choose to go with a real estate agent, get connected with a Rocket HomesSM verified agent or REALTOR®. Rocket Homes’ top-of-the-line agents will handle the heavy load to take some of the weight of home investments off your shoulders.
- Consider a contractor’s license. If you decide to obtain your contractor’s license, you will be required to learn about any laws and permits you will need to work on your investment property.
- Try micro-flipping. Micro-flipping is a perfect start for someone who is just getting into flipping homes. Despite the way the name sounds, micro-flipping actually requires little “flipping” at all and can be a much faster way to make money with real estate than the house-flipping you’re likely thinking of. Instead, of buying a property and renovating it before making the sell, micro-flippers use software to analyze data and find properties that they can buy below market price and sell quickly to another buyer. No renovating, no manual labor.
How To Get A Real Estate License To Flip Houses
If you feel as if the pros outweigh the cons, we encourage you to take the steps to become a real estate agent before you buy your first investment property.
- Take courses through an accredited program: Prior to applying for a real estate license, you would have to take state mandated pre-licensing courses through an accredited school or program. These courses can take anywhere from two to six months, depending on your state.
- Apply for your license: Next, you’ll have to apply for your license. At this point, background checks and fingerprints may be run.
- Take the exam: If your application is accepted, you’ll have to take your state’s mandated real estate exam. This can be a difficult, time-consuming test, so actually retaining the formation from your courses is a crucial step.
- Obtain your license: Now that you’ve completed the prior steps, you will be able to acquire your real estate license.
However, receiving your license isn’t the end of the process. Depending on your state, you might have to obtain a certain number of credits hours of continuing education through licensing cycles. Most of the credit hours will usually be law specific courses.
The Bottom Line
Flipping homes is an exciting task to take on. If you’re hoping to buy your first investment property, Rocket Mortgage® might be able to help. As you’re preparing to buy a house to flip, you should consider starting the approval process with Rocket Mortgage. You should also consider connecting with one of our top-of -the line REALTORS® to make your buying process easier. Best of luck on your house-flipping journey!
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