Its when a seller takes back a mortgage for the buyer. In other words, its when the buyer goes to the seller for financing instead of the bank. Sometimes the buyer has too bad of credit and has no choice but to ask the seller to borrow the money to buy the house. In this case, the seller can benefit by charging higher interest rates than a bank would. So its basically a Win/Win situation.
If you're looking for an unbiased opinion, you'll not get it through experienced real estate agents. They are agents because they are biased towards that. Consequently, Non-agent investors are biased the other way.
Read through the old posts on this subject, this basic question in one form or another is already well chronicled here on TCI. As you read through the old posts, you'll be more than able to make up your own mind on this one.
Good luck,
Jeff
I think it pretty well is as Jeff said. You make up your own mind based on your own likes and dislikes.
If you did well in the military where the mildly incompetent are mostly led by the totaly incompetent then become an Agent as did I and follow the path up and up. You will associate with a lot of strange folks motivated by some really strange stimulae. But in the area of a Brokerage you will learn alot and of course be very entertained.
It is an easy climb to head of the group but it does take some time and you must remember that most are persons of the rank and file. They learn an Standard Operating Procedure and apply it to all occasions.
If you will avoid this and think out of the box, you will do well and move on up from the Representation of Buyers and Sellers into the lofty area of "The Deal Shop." This is where you sit down and declare. "My main purpose in Real Estate is not to do a really great job of representing clients. It is to make money for myself, my family, pets and other hanger ons. Then at that moment of truth you awake and on to true glory. That is if True Glory can be measured in Money.
I know no other path. All others appear to be denying themselves income while they learn the aspects of dealing in the dirt.
I hope this is helpful. I had a wonderful break in period in the Military. I flew with some of the nuttiest persons in the world. I worked for Generals who had never read Clauswitz. "Die Krieg" I was loaned out to the French Army in Indo China and nobody had even read about the Spanish Partisans and what they did to dear Napoleon. They wondered what was motivating the Viet Cong er Minh and had never read Sun Yat Sen, "Three Principals of the People." I watched them at night gather in their little Towers and get wiped. I spent the nigh tied to a tree talking to snakes. Came morning I lived. They did not.
What I am saying. Go learn from those that do. Licensed or Not. Then go do it.
Thanks guys for your replies. With all the research I've been doing on the Real Estate field, I've come up with alot of negativity in this field with the exception of Real Estate investing. But if most Real Estate career professionals (again with the exception of investors) make such a lowsy paycheck, then why do so many people still enter into this field? If one makes such little money as an agent/appraiser/property manager, then why even choose to go into this field? I was thinking that going into Real Estate by starting off as an agent would be a good start... but now I'm not so sure. Please enlighten me.... biased or unbiased, I know ultimately I'll have to make my own decision. But opinions and comments along the way would be helpful, thanks.
Hello:
I am a licensed real estate agent in Greensboro, NC. I think that going into real estate full time requires some prior planning. You need to make sure that you have at least 3 months salary in the bank to live off of. You also need to make sure that you have enough money to advertise and get people to start buying from you. I would suggest that you read, Rich Dad, Poor Dad by Robert Kiyosaki to get an understanding of what mindset that you are going to need to become successful in the self-employed quadrant.
I like to associate with realtors and take away knowledge from some that have good info. As an investor I use a realtor when it suites my needs and he understands my position and respects that. As my own boss in RE I make my own hours and control my cash flow. Good luck down either path you choose.
Hello Kit,
The last three posts are good advise and thruth of being an agent. I myself found in the 80's getting my liscense with intent of being a "double agent" as far as my goal was create a real estate empire, but the re company/companies I contacted and trained with had alterior motives. I was to compete with the 20% making the money and by no means step out of their boundaries to discredit the brokerage
( remember this was in the 80's) well the tie didn't fit, training retained(somewhat) not useful to me now, I made more money working the trenches at a power co/construction co. than my peers in re at my 5 yr. reunion.(80's again).
My point being is don't think you have to be an agent to invest. by all means having a broker liscense is a major plus and when the money is right I will retain one, but $$ and experience will go a long way.
Marv
ps that's my 2 cents
Whoa - I'll add to the responses here. First thing you need to do is redefine your thinking.( "I'm aware that agents work almost 100% of the time off commission. But what is an average salary one may expect to make annually in this career field?" 100% commission means no salary. Also no benefits (insurance etc.) or expense account. Also higher taxes (due to self employment). You will be financially on your own. If you are looking at the commission percentages on realtor sales realize that for most realtors a healthy chunk goes to the broker who doesn't pay you a salary or expenses. Last time I checked, here in Texas nearly 90% of the people who go throught the courses to get a real estate license are out of the business in a year or so. Get a handle on what's involved. You could end up broke very quickly!!
What has workedd well for me is to have taken the realtor agent course to understand more of what goes on in the field of real estate and be licensed then the brokers in our area have a program where you are afffiliated with them from the stand point you get a percentage of their fee when you give them a lead or listing. But you are not involved as a regular agent and you wind up saving money when they sell one of your properties,
I started investing in 1993. I picked up my real estate license 1999 because I was tired of watching people take money away from the closing table that could have been mine. If you become an agent first and end up working for a brokerage firm that deals in traditional marketing and sales you will very likely not learn much about investing. 95% of the licensed agents I know spend all of their time marketing themselves to get that next listing. I, however, having been an investor from the start have a totally different outlook on the business. I spend virtually zero time marketing myself and instead use that time looking for investment deals that I can capitalize on personally. Yes, I do broker deals for others but mostly for investors who are just starting out and need some mentoring or for more seasoned investors who like my commission structure better than a typical firm. I'll never be a top producer in the eyes of the Realtor community and I never want to be. If you get caught up in that mindset your investing will likely suffer. Remember, being a licensed agent is not condusive to learning how to be a good investor. Quite the opposite in my opinion.
Hello Rek769,
That is what I was talking about to be a double agent.
for your own investment needs.
Glad to see you working with the "normal" system to benefit your investments.
Marv
I have a question about the double agent route to tack onto this post. I too think it is a good idea to have a license as an investor for several reasons. The course will give you good insight in the way the real estate market works and you can take the commissions on your own deals. I'm taking the course right now, but at the same time want to get started in finding investment deals.
My question is, how easy is it to get brokers to agree to have you on their books if you don't expect to be a day-to-day agent. I get the feeling that none of the big names will help you out and would have to get help from smaller local brokers? Does this happen a lot? Are there any cons to an investor holding a license?
I recently found out that an aquaintance of mine worked in Real Estate. I asked her if she was an agent or not. And to my surprise, she said she wasn't. So who are the people that you usually see in all those open houses that just sit there in the office/study room of the house? I was surprised by her answer because she used to be my next door neighbor, but now she moved into a 400,000+ condominium down the street. So I know she makes really good money because of her beautiful new car and condo, plus she is single. And how would one go about finding an occupation as such? I've always thought that the people sitting in those houses were either brokers or agents? Please enlighten me....
This is my second post, so I state up front,.. I'm laerning from all of you, not trying to teach.
Mt experience tells me the following:
As to whether you should become a RE agent or not is up to you. I see good points for both side of the coin. By no means am I not a REI or a pro on the matter, but I am building my knowledge base to understand all the factors in RE transactions... (there is always room to learn). I started out as an appriaser and I see how the banks, lenders and brokers see properties and loans, etc.
I moved on the become a REALTOR, and work on a commision base with buyers and sellers. Most people who become agents quit within the first year or so. ( 80/20 rule of maybe evven 90/10 rule). This is the people side of the business and you skills must be up to par, or you must be willing to learn, study and evolve to become successfull (and by 'succesfull' I mean sell more than the average agent does). Don't expect to make a ton of money your first year.
REI, in my humble opinion, offers the ability to deal in real estate without having to sell yourself to others. Once you have the techniques down your on your way. You find the deals, do the math regarding values, equity, financing, etc, and apply your creative financing or whatever the case may be and get paid on the long term, rental income, flip, etc.
This is eventually my goal as well as your seems to be. As far as the comment about income being taxed higher, I think it depends on what we're talking about. I pay a lower tax rate because as a REALTOR, I deduct all my expenses from my commisions before paying taxes. This includes everthing I would pay for anyway; cell phone, internet, car, gas, office, supplies, cameras, postage, etc. Now if we are talking about reinvesting and delaying tax payoffs as a REI, and then purchasing your own home after selling all your investment property and moving into the last property for over 2 years and then selling and pocketing all that tax deferred gain (as I understand you can do in my state, FL) then your a king and yes, the tax benefits of your gains are better as an investor. But you are not 'pulling' the money (gain) out, just deferring it.
So in conclusion, getting your RE license will help you understand contracts better, becomding a REALTOR will give you access to MLS (which will allow you to study markets, comps, trends, etc).
AND AS AN EARLIER POST MENTIONED, you can get one side of the commision on deals and walk away from the closing table withmore money just because you are licensed. (and even refer people to other REALTORS or agents to get referral commisions. Its not a bad gig to have in your pocket.
I would take the course, and the appraiser course on as well if you can.
So that you are armed with more tools.. I think that something that was mentioned is fundamental, find an investor that is DOING IT, and learn from them. THAT is the fastest way to sucess, is to follow one who is succesful.
i just read my post..
to clarify, I am not an REI, I am not an investor.
I am on the path to be, but NOT YET.
i worded it funny and made a mistake in the post above.
Its Contract-For-Deed....CFD.
Its when a seller takes back a mortgage for the buyer. In other words, its when the buyer goes to the seller for financing instead of the bank. Sometimes the buyer has too bad of credit and has no choice but to ask the seller to borrow the money to buy the house. In this case, the seller can benefit by charging higher interest rates than a bank would. So its basically a Win/Win situation.
Oh yea, title doesn't pass to the buyer until the agreed-upon amount is repaid to the seller. Hence the name, Contract-for-deed.
If you're looking for an unbiased opinion, you'll not get it through experienced real estate agents. They are agents because they are biased towards that. Consequently, Non-agent investors are biased the other way.
Read through the old posts on this subject, this basic question in one form or another is already well chronicled here on TCI. As you read through the old posts, you'll be more than able to make up your own mind on this one.
Good luck,
Jeff
I think it pretty well is as Jeff said. You make up your own mind based on your own likes and dislikes.
If you did well in the military where the mildly incompetent are mostly led by the totaly incompetent then become an Agent as did I and follow the path up and up. You will associate with a lot of strange folks motivated by some really strange stimulae. But in the area of a Brokerage you will learn alot and of course be very entertained.
It is an easy climb to head of the group but it does take some time and you must remember that most are persons of the rank and file. They learn an Standard Operating Procedure and apply it to all occasions.
If you will avoid this and think out of the box, you will do well and move on up from the Representation of Buyers and Sellers into the lofty area of "The Deal Shop." This is where you sit down and declare. "My main purpose in Real Estate is not to do a really great job of representing clients. It is to make money for myself, my family, pets and other hanger ons. Then at that moment of truth you awake and on to true glory. That is if True Glory can be measured in Money.
I know no other path. All others appear to be denying themselves income while they learn the aspects of dealing in the dirt.
I hope this is helpful. I had a wonderful break in period in the Military. I flew with some of the nuttiest persons in the world. I worked for Generals who had never read Clauswitz. "Die Krieg" I was loaned out to the French Army in Indo China and nobody had even read about the Spanish Partisans and what they did to dear Napoleon. They wondered what was motivating the Viet Cong er Minh and had never read Sun Yat Sen, "Three Principals of the People." I watched them at night gather in their little Towers and get wiped. I spent the nigh tied to a tree talking to snakes. Came morning I lived. They did not.
What I am saying. Go learn from those that do. Licensed or Not. Then go do it.
Cheers Lucius
Thanks guys for your replies. With all the research I've been doing on the Real Estate field, I've come up with alot of negativity in this field with the exception of Real Estate investing. But if most Real Estate career professionals (again with the exception of investors) make such a lowsy paycheck, then why do so many people still enter into this field? If one makes such little money as an agent/appraiser/property manager, then why even choose to go into this field? I was thinking that going into Real Estate by starting off as an agent would be a good start... but now I'm not so sure. Please enlighten me.... biased or unbiased, I know ultimately I'll have to make my own decision. But opinions and comments along the way would be helpful, thanks.
Hello:
I am a licensed real estate agent in Greensboro, NC. I think that going into real estate full time requires some prior planning. You need to make sure that you have at least 3 months salary in the bank to live off of. You also need to make sure that you have enough money to advertise and get people to start buying from you. I would suggest that you read, Rich Dad, Poor Dad by Robert Kiyosaki to get an understanding of what mindset that you are going to need to become successful in the self-employed quadrant.
I like to associate with realtors and take away knowledge from some that have good info. As an investor I use a realtor when it suites my needs and he understands my position and respects that. As my own boss in RE I make my own hours and control my cash flow. Good luck down either path you choose.
Hello Kit,
The last three posts are good advise and thruth of being an agent. I myself found in the 80's getting my liscense with intent of being a "double agent" as far as my goal was create a real estate empire, but the re company/companies I contacted and trained with had alterior motives. I was to compete with the 20% making the money and by no means step out of their boundaries to discredit the brokerage
( remember this was in the 80's) well the tie didn't fit, training retained(somewhat) not useful to me now, I made more money working the trenches at a power co/construction co. than my peers in re at my 5 yr. reunion.(80's again).
My point being is don't think you have to be an agent to invest. by all means having a broker liscense is a major plus and when the money is right I will retain one, but $$ and experience will go a long way.
Marv
ps that's my 2 cents
Whoa - I'll add to the responses here. First thing you need to do is redefine your thinking.( "I'm aware that agents work almost 100% of the time off commission. But what is an average salary one may expect to make annually in this career field?"
100% commission means no salary. Also no benefits (insurance etc.) or expense account. Also higher taxes (due to self employment). You will be financially on your own. If you are looking at the commission percentages on realtor sales realize that for most realtors a healthy chunk goes to the broker who doesn't pay you a salary or expenses. Last time I checked, here in Texas nearly 90% of the people who go throught the courses to get a real estate license are out of the business in a year or so. Get a handle on what's involved. You could end up broke very quickly!!
What has workedd well for me is to have taken the realtor agent course to understand more of what goes on in the field of real estate and be licensed then the brokers in our area have a program where you are afffiliated with them from the stand point you get a percentage of their fee when you give them a lead or listing. But you are not involved as a regular agent and you wind up saving money when they sell one of your properties,
I started investing in 1993. I picked up my real estate license 1999 because I was tired of watching people take money away from the closing table that could have been mine. If you become an agent first and end up working for a brokerage firm that deals in traditional marketing and sales you will very likely not learn much about investing. 95% of the licensed agents I know spend all of their time marketing themselves to get that next listing. I, however, having been an investor from the start have a totally different outlook on the business. I spend virtually zero time marketing myself and instead use that time looking for investment deals that I can capitalize on personally. Yes, I do broker deals for others but mostly for investors who are just starting out and need some mentoring or for more seasoned investors who like my commission structure better than a typical firm. I'll never be a top producer in the eyes of the Realtor community and I never want to be. If you get caught up in that mindset your investing will likely suffer. Remember, being a licensed agent is not condusive to learning how to be a good investor. Quite the opposite in my opinion.
Hello Rek769,
That is what I was talking about to be a double agent.
for your own investment needs.
Glad to see you working with the "normal" system to benefit your investments.
Marv
I have a question about the double agent route to tack onto this post. I too think it is a good idea to have a license as an investor for several reasons. The course will give you good insight in the way the real estate market works and you can take the commissions on your own deals. I'm taking the course right now, but at the same time want to get started in finding investment deals.
My question is, how easy is it to get brokers to agree to have you on their books if you don't expect to be a day-to-day agent. I get the feeling that none of the big names will help you out and would have to get help from smaller local brokers? Does this happen a lot? Are there any cons to an investor holding a license?
Thanks,
harmmg
I recently found out that an aquaintance of mine worked in Real Estate. I asked her if she was an agent or not. And to my surprise, she said she wasn't. So who are the people that you usually see in all those open houses that just sit there in the office/study room of the house? I was surprised by her answer because she used to be my next door neighbor, but now she moved into a 400,000+ condominium down the street. So I know she makes really good money because of her beautiful new car and condo, plus she is single. And how would one go about finding an occupation as such? I've always thought that the people sitting in those houses were either brokers or agents? Please enlighten me....
This is my second post, so I state up front,.. I'm laerning from all of you, not trying to teach.
Mt experience tells me the following:
As to whether you should become a RE agent or not is up to you. I see good points for both side of the coin. By no means am I not a REI or a pro on the matter, but I am building my knowledge base to understand all the factors in RE transactions... (there is always room to learn). I started out as an appriaser and I see how the banks, lenders and brokers see properties and loans, etc.
I moved on the become a REALTOR, and work on a commision base with buyers and sellers. Most people who become agents quit within the first year or so. ( 80/20 rule of maybe evven 90/10 rule). This is the people side of the business and you skills must be up to par, or you must be willing to learn, study and evolve to become successfull (and by 'succesfull' I mean sell more than the average agent does). Don't expect to make a ton of money your first year.
REI, in my humble opinion, offers the ability to deal in real estate without having to sell yourself to others. Once you have the techniques down your on your way. You find the deals, do the math regarding values, equity, financing, etc, and apply your creative financing or whatever the case may be and get paid on the long term, rental income, flip, etc.
This is eventually my goal as well as your seems to be. As far as the comment about income being taxed higher, I think it depends on what we're talking about. I pay a lower tax rate because as a REALTOR, I deduct all my expenses from my commisions before paying taxes. This includes everthing I would pay for anyway; cell phone, internet, car, gas, office, supplies, cameras, postage, etc. Now if we are talking about reinvesting and delaying tax payoffs as a REI, and then purchasing your own home after selling all your investment property and moving into the last property for over 2 years and then selling and pocketing all that tax deferred gain (as I understand you can do in my state, FL) then your a king and yes, the tax benefits of your gains are better as an investor. But you are not 'pulling' the money (gain) out, just deferring it.
So in conclusion, getting your RE license will help you understand contracts better, becomding a REALTOR will give you access to MLS (which will allow you to study markets, comps, trends, etc).
AND AS AN EARLIER POST MENTIONED, you can get one side of the commision on deals and walk away from the closing table withmore money just because you are licensed. (and even refer people to other REALTORS or agents to get referral commisions. Its not a bad gig to have in your pocket.
I would take the course, and the appraiser course on as well if you can.
So that you are armed with more tools.. I think that something that was mentioned is fundamental, find an investor that is DOING IT, and learn from them. THAT is the fastest way to sucess, is to follow one who is succesful.
my .02 cents..
'the rookie'
quick 8-)
i just read my post..
to clarify, I am not an REI, I am not an investor.
I am on the path to be, but NOT YET.
i worded it funny and made a mistake in the post above.
"the rookie"
quick