When you think of real estate investing, what comes to mind? A house flipping show on TV or a financial guru coaching you from the sidelines. Maybe it’s your parents who are experienced, having bought and sold properties for decades. You might even think you need a real estate license to flip houses.
But I want to make something very clear: anyone can flip houses! You don’t need a real estate license, just ambition, patience, and the willingness to learn what it takes.
It may not be easy money, but it can be rewarding if you put out the effort.
Let’s start with the basics.
What is flipping houses?
Flipping a house means buying a distressed house at a discounted rate, improving the home, and selling it at a premium rate.
Buying Price + Renovation Costs < Selling Price
The concept is not complicated; perhaps that’s why many people think they can jump into it head-first.
However, once you dive into each step of the process, you will see that it can be tricky to navigate. Having a real estate license might help in some instances, but you might be better suited to put your efforts elsewhere. We’ll talk more about real estate licenses in a minute.
Flipping a house takes lots of time, patience, energy, and money. If you’re missing any of those attributes, you might not fare well in this industry.
Let’s discuss the process a bit more, so you have a solid understanding of what it takes to flip a house.
What is the process of flipping a house?
As we discussed, the concept is simple. Each element of the idea is more complex. So we’ll break down the details and provide you with some insight into what it takes.
Buying a distressed property.
The first part of flipping a house is simply acquiring the property. Sure, having a real estate license might be helpful during this phase, but not necessary. You’ll have access to the MLS, but trust me, if a property has made it to the MLS, then every other property investor is looking at it too. That’s when you’ll see the price hike up with multiple offers. In addition, a real estate professional has unique insight as to the market and neighborhood values. Just having a license doesn’t help with that.
Anyways, this phase will take time and patience because you have to analyze each property in excruciating detail, or you’re going to lose money on the backside of the deal.
You’re looking all over the place at properties. Zillow, Trulia, Facebook buy/sell/trade groups, and even driving around looking for abandoned properties. At this point, you’re trying to find the property that will give you the biggest bang for your buck. After all, the better the deal you get on the home, the more profit you stand to make.
Fixing up the property and adding value.
Now that you’ve acquired the ideal fixer-upper, it’s time to get to work.
Hopefully, when you were searching for an investment, you were running some rough calculations on how much the renovations will cost you. If you get this wrong, you could end up losing money in the end.
At this point in the process, a real estate license won’t help at all. Of course, a seasoned agent will know what’s trending, what upgrades are sought after, and what styles will sell. However, having a license itself does not do you any favors.
If you’re handy, you can elect to do all the renovation work yourself. Sure, you can call in experts where necessary, such as an HVAC technician or electrician, but you’ll carry the load independently. Or you can hire out the work. It’ll tap into your profits, but you’ll be able to move on to find the next flip. After all, the longer you sit on investment properties, the more you’re eating the carrying costs.
Selling your investment.
Everything is perfect. The dismal property you purchased a few months ago is now a gorgeous estate just waiting for a family to settle in. Now is the time to list it!
This might be a valuable time to have a real estate license. You will have access to the MLS for comparative market analysis to accurately price the home, and you’ll be able to list the property on the MLS. You’ll even get to keep the listing agent commission.
However, it’s quite a bit of work, considering you’re losing money when you’re not quickly selling the home and moving on to the next one. When you pay an agent’s commission, you’re paying them for their vast experience, and the time they’re dedicating to getting you the top dollar for your investment.
It’s not easy money.
I’ve heard it countless times; “I want to make it big in real estate. I’ll just get a real estate license and start flipping houses as they do on TV.”
Unfortunately, that’s not how things work if you don’t have experience or up-front capital for investments — like any other business — then your chances of success are very slim.
Your first property will probably be a failure. While I hate being a drab, statistically speaking, that first one, you might end up losing money. That’s okay, though, as you’re gaining experience and learning along the way. What works, what doesn’t work, and learning the tools of the trade.
Real estate investing isn’t easy money, but it can be great money with enough effort.
A real estate license may help, but it’s not needed.
To answer the question, do you need a real estate license to flip houses? No, you don’t. It might help in some areas, though.
As a licensed agent, you’ll have access to the MLS to see what properties are on the market and analyze market prices. You’ll also be able to list properties on the MLS and not need to pay a commission on buying/selling homes. These are significant benefits of having the license, but it’s not required.
Anyone with some ambition, patience and the willingness to learn what it takes to flip houses can do it. Of course, you’ll need a real estate agent at some point to help out, but that help is invaluable.
Having a seasoned realtor on your team is the best option.
With an agent, you can quickly see trending properties, when they will sell, and how much they’ll be offered. You’re not just tapping into listings on the MLS, but instead the wealth of knowledge that the agent brings to the table.
The agent will also help you negotiate the best price for your investment. Whether getting the price down or working with the seller to include essential repairs, you’re using their experience and wisdom for a better result.
You don’t need a real estate license to flip houses. It would be best if you had a seasoned agent with a license. Make them part of your team and go forward and start making money.