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Marco Romero has been in real estate ever since reading Rich Dad Poor Dad at an early age. He was actually on Episode 23 of the Podcast (When to set up a company for a real estate investing) and you can find out more about him and his start by checking out that episode.
Marco Romero is a real estate investor and a licensed real estate agent. In this episode, we talk about the pros and cons of getting your real estate license. There is no cut and dry answer to this question as it’s more about your specific situation and goals. We take an in-depth look at all possible scenarios so that you can make an informed decision on which way you want to go.
In this episode we talk about the pros of becoming a real estate agent. Namely, we discussed the fact that you get access to the MLS to find deals and rum comps yourself. We also mentioned how you educate yourself to know the ins and outs of real estate better than many investors do. We also talked about how you can save money by being able to list your properties yourself. You can also land more deals off the MLS by being able to sweeten the deal for REO agents and other listing agents.
We also talked about the cons for getting your real estate license. To me, there were more cons than pros…but I’ll let you be the judge of whether you feel it’s necessary for you. After all, that’s all that matters.
The cons were than you have to pay fees to be an agent. You have to also hang your license with a broker (at least in Texas). You also have to do all the paper work for transactions or hire someone to do it for you. You also have to provide full disclosure that you are an agent to all prospective customers and clients.
As for me, I’m going to continue to operate as a real estate investor without a license. It’s just not necessary. We would rather save time and pay a little more to have our properties listed and not have to deal with showings and paperwork. It’s just worth it to us.
We also generate most of our deals “off-market”. We mainly use our real estate investor website to generate most of the motivated seller leads we get.
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Welcome to The Flipping Junkie Podcast. My name Danny Johnson former software developer turned house flipper flipping hundreds of houses. Each week we bring you interview, strategy stories and motivation to help you get started flipping houses and on your way to becoming your own boss and achieving financial freedom. Thanks for spending time with me today. Now let’s get to it.
Hey everybody. Welcome back to The Flipping Junkie Podcast. Thank you for listening. I know there are a lot of options out there, other real estate investing podcast. A lot of them are my friends so I wouldn’t say don’t listen to them but thank you for listening to us as well and making a lot of these great episodes in order. What we’re doing right now is we’ve provided the last, I think it was seven or eight podcast episodes, we’re covering the foundation with mindset, motivation, all that kind of thing. Now we’re moving more into building teams and getting your business set up correctly. And then we’re going to get into marketing, analyzing deals, making offers all that stuff, so it’s sort of like a course through podcasts. So every week you’re going to get a next step in the process of starting in real estate investing. So I don’t know that anybody else has done that. I wanted to set something up so that the podcast wasn’t sort of all over the place where one week you hear about investing in commercial properties, the next week you’re talking about asset protection or something like that. It’s just all over the place and it’s kind of hard to progress that way. But anyway, what we are doing now today is we’re going to be talking about whether or not you should get a real estate license. Now this question comes up a lot. People wondered whether it would be best to get a real estate license to become an agent as a real estate investor. And so today, I’ve got my friend on again Marco Romero. He was actually in Episode 23, so just a couple weeks ago you may have heard the episode with him. Great guy and he himself is a licensed agent. So we’re going to bring a mine and he’s going to – well actually, we have him on today right now and we’re going to discuss the pros and cons of becoming a real estate agent.
So a little background about Marco. He got started after getting interested after reading “Rich Dad Poor Dad” at an early age laying out a success strategy. He began to acquire skills he would need in order to build a career as an investor. He gained valuable people skills by working in sales in the restaurant field. So the experience he gained by working with the wide spectrum of individuals was critical in success and investment properties. So since obtaining his real estate license over seven years ago, he’s worked for several investment companies in San Antonio and now successfully run his business independently. He spent time in all realms of residential real estate from standard single family homes to small multifamily properties. Taking what he’s learned in other fields, Marco has brought a philosophy that a transaction is never about the property, but rather always about the people and that’s a very important point Marco makes and I like that philosophy. There’s really not a right answer to the question of whether someone should get a real estate license or not. It’s more about weighing the pros and cons of determining which is best for you and your situation. An example of that might be if you strictly target marketing to motivated sellers and rent out the houses that you buy so you’re not really selling them or reselling them, you’re not buying listed properties, you probably won’t be as interested in getting your license. But if on the other hand you buy most of your houses from the MLS and sell the house as retail after you fix them up, you’re likely going to find that having a license has a lot more advantages and disadvantages. So we’re going to talk about those pro and cons and then based on what you typically do or looking to do in your use the investing business help you decide whether it would be beneficial to go that direction or not. So let’s go ahead and get Mark online here and talk to him about all these pros and cons and thanks again for listening to The Flipping Junkie Podcast and you’ll find all the show notes for this episode at flippingjunkie.com/26.
Danny Johnson: Hey Marco thanks for being on the show again. I know we just had you a couple weeks ago. Thanks for taking the time to talk with me again.
Marco Romero: Hey, Danny I’m glad to be back. I could tell that you miss me, so I’m glad to be here.
Danny Johnson: How could you tell because I was texting and calling you like an incessantly for the past two weeks?
Marco Romero: I was like, “Hey he’s talking to me a lot more normal. He’s trying to make a superstar over here on the podcast.”
Danny Johnson: Well, we did such a great episode last time and I know you had given a presentation before about pros and cons and everything involved with getting your real estate license as an investor or when you’re getting started as an investor and typically on the show we’ll talk about how people got their start in everything. But since you were just a couple of weeks ago, if people are really interested to go back and listen to episode 23, which is the one where we went into some of that. So rather than starting about how you get started everything, let’s talk about when you got started I’m pretty sure you said that you got your license when you get started. So could you talk about your thought process now for why you did that?
Marco Romero: Definitely. At the time it kind of went in line with the direction that I was wanting to go and if you remember from last time on the podcast I mentioned that I had joined Lifestyles which is that education and mentor group here in San Antonio and I was a member there first. And the reason I was a member there was because I was really wanting to get involved in real estate start investing and I hadn’t done investing at that point. But I had done a lot of reading, a lot of researching, a lot of seminars and I was really involved in their group and they actually pursued me and presented the opportunity of becoming an agent. Basically as an agent with them, I would find investment deals on MLS, work with their investors, their investors are looking for properties as my clients and represent them from the beginning to end until they became the owners of the property. For me at the time, I was just so new I thought it was an excellent opportunity for me. It kind of hit a couple key factors for me. Number one, it was going to allow me to be more involved with the group. Number two, I wasn’t doing deals. I didn’t have lots of money to do deals. So even if I did one deal at that time, I would only learn from that one deal. Whereas if I was an agent working with their investors, I could be leveraging the experiences of each of those transactions. Learn, practice at negotiating, learning how to write the contracts, learning how to deal with pitfalls, how to review an inspection report and how to pick an inspector to themselves. And so by helping all these investors get their deals, I was actually treating their bills as my own deals and it made me become more proficient, helped me learn and ultimately help me become a better investor down the road, but it kind of just at the time really fit with the direction I was going and then I saw it as an opportunity to further myself and to become better for the ultimate goal I was trying to achieve and that’s why I decided to become an agent at that time.
Danny Johnson: That’s great. It fits in to when people talk about working with another investor to get experience in because you can read all you want and listen to podcast – everything and learn a lot. But really until you get into the real world experience take action like the real learning begins.
Marco Romero: That’s definitely true. There’s nothing like the real deal. I mean there are a lot of books, seminars and people and you can have theoretical concepts and you can have the general idea of how items are supposed to go from step A to step B to step C all the way to a completed deal, but what you find is that real life isn’t as organized as that, and sometimes you have to adjust on the fly or deal with a particular problem that you didn’t first see or plan for or even knew could exist. By being involved in real transactions, it’s really going to help you grow and get your creative juices going and just understand how to deal with a an investment deal from the beginning to end in a more higher level contextual view. Being involved with other investors, whether you’re getting paid on it or not is going to be a valuable experience for you especially starting out because really that’s where learning happens in leaps and bounds rather than in steps and that’s something that I always recommend to people.
Danny Johnson: Yeah, it’s great. You had mentioned that that helped with getting started but why was it that you had to be an agent to be able to help out with doing that with that company.
Marco Romero: Well I just it was just the way that their particular company was set up. They are an education group so they have a bunch of members and there’s different levels of membership and the higher levels of membership those members had access to real estate agents that would look for particular investment deals for them and basically send them an e-mail say, “Hey, there’s an investment deal available. Do you want to pursue it?” So for those members that makes their life a little bit easier, it’s more for the people that have more money but don’t necessarily have the time or in some cases don’t have the full education and know how to deal do the deal completely. And so by using the agents with that particular company, they’re leveraging the agent’s time, that agent’s experience and help them go through it that way. I didn’t go into it with that mindset or a plan that’s how they operated and then they presented it to me and I was like, “Wow, that makes sense.” I want to get involved in that manner and that’s kind of how it came to be.
Danny Johnson: Okay. So you were actually doing the hunting for the deals for the other members.
Marco Romero: Right. I would hunt for the deals and then as the agent I would represent them from negotiation to contract to closing.
Danny Johnson: Great, great. So if we look at this from the perspective of somebody that’s either new or already doing some real estate investing, I’m not sure that it would be too much different between the two situations, but would you be able to discuss the pros of getting your real estate agent.
Marco Romero: Well, I am a real estate agent obviously since we’ve been discussing it and I am a real estate investor and there are a lot of pros involved in becoming a real estate agent. Number one which was a big component for me especially starting out was access at MLS. I felt like that was like the Holy Grail at the time. Obviously I was new, I don’t really know all the different ways you can get property, but I did know that MLS that’s the database where people are all trying to sell their houses, having access to that is very powerful. You always have leads to go after. Now there might be a lot of competition in certain areas. But if you are proficient and going through the deals and building a relationship with other agents, you can find deals on MLS. But the other component to MLS is you can run your own comps which that’s valuable in itself, you don’t have to rely on other people to give you the information on what is this property worth. What is this property? What could it rent for? What’s gone on in the area? How quickly are properties moving? How many other properties are for sale in this particular neighborhood? All those are critical pieces of information which helps you decide and make intelligent decisions on how to pursue a property that if you don’t have access to MLS you’re relying on others to get it to you. So the fact that you as an agent have access to MLS really can help you quickly determine different items and help you pursue different properties in one way or another based on that information. So access to information is huge. And the other component as a pro in my mind, is as a real estate agent, you have to go through a rigorous amount of schooling. They make you take all these different classes to prove that you have the level of education that the state is mandating. And by taking all those classes in some cases, yes they might be boring, let’s say you’re going over law, but there’s a lot of critical information that a lot of people wouldn’t get any other way. The fact that as a real estate agent you’re almost forced to learn these things really ultimately can help you become a more rounded and knowledgeable real estate professional, number one, but also a more rounded and knowledgeable real estate investor. I have a very intricate knowledge of how to write contracts, the different components in the different sections within the contract, how to use them to my advantage whether I’m on the buyer’s side or seller side that either I wouldn’t have gotten by just going the path of solely being a real estate investor or would have taken me a lot longer and it’s just because real estate agents are writing contracts all the time. Those classes are there for you to learn all the different components whether it’s investment real estate or not by learning the components of just normal buyer representation and how buyers purchase properties from a retail standpoint that is excellent knowledge to have for you as an investor when you’re trying to sell the property at retail price. Flip is an example.
Danny Johnson: Yeah. That’s a good point because that’s one that I didn’t even think of really when I was thinking of the pros myself of getting a license. It is as a education because really as a real estate investor sellers – especially actually if you are buying houses directly from motivated sellers, they’re sort of relying on you to have the ability to know what you’re doing and you really should know what you’re doing for their sake and for your sake. I think there are a lot of investors out there with a minimal knowledge of how things actually work and it’s not to say that that can’t be gained in another way, but that it really is a big pro that you brought up that I didn’t really think of at first. So yeah I like that.
Marco Romero: Definitely. It’s very common as a real estate investor that you can get in one area and you focus on that you get proficient in that area. And by becoming a real estate agent, it really gives you a broader view of the whole world of real estate and how real estate as a whole as the industry functions in different components and having that knowledge is really impactful for you and your business especially as you’re growing as a real investor and as you learn different components and how you branch out into other investment strategies. All that is really important.
Danny Johnson: Great. Okay. So we have access to MLS to find deals in run comps and then the education aspect of it so that you will learn more of the ins and outs of real estate. Any other pros to getting your real estate license?
Marco Romero: Something I noticed is when I am doing deals particularly on MLS if I mention that I’m a real estate agent and I’m dealing with other real estate agents or real estate brokers, I usually give in sometimes a little bit more information. There’s something about it when I’m talking to a real stranger and they know they’re also doing dealing with their real estate agent. They’re not as stand off-ish or combative, I’ve tried their approach both ways and I found that people are more open so they like, oh, this other person is also a real estate agent or another real estate professional. They understand the game in the situation and so they’re a little bit more open they’re more willing to help. They’re more willing to give information or to guide a transaction in a certain way or they kind of view it as, “Hey we’re both real estate agents and we’re trying to make this transaction works,” so it’s a little bit more helpful. That’s just kind of a side bonus that I’ve noticed when I was doing business especially with the real estate brokers. I don’t know what it is about real estate brokers but most them, not all of them, most of them see themselves like a pedestal so they think they’re like better than real estate investors or something. But if you say your real estate agent, they’re like, “Oh, okay. This guy’s gone though some schooling. He knows how the deal works and they’re a little bit more helpful.”
Danny Johnson: And I think that’s probably where that comes from. It’s not that they’re maybe they do it on purpose but there’s so many real estate investors out there and there’s a big handful that I really don’t know what they’re doing. And so they end up calling in finding out wasting people’s time wasting broker’s time. So I think maybe that just to look at it from their perspective, it’s probably because of that. Would you would you agree to that?
Marco Romero: Oh, definitely. And you actually touch on another component. When I was first starting out, pretty much all I was doing was transactions for other real estate investors, so working as a real estate agent. And by doing that, I was constantly in contact with other real estate agents and working on transactions with other real estate agents. And by doing that, I was dealing with numerous different real estate professionals and it helped me learn how to be better as a professional myself, meaning how can I make sure that this contract is filled out completely? Not just all the different components of the price and closing thing, but making sure the other agent’s information is completely filled out, how to quickly respond or how to make sure that I know that this information is going to be requested. Let’s say inspection date is the next step of the process, knowing that I need to go schedule it through CSS, I need to make sure I have a showing time frame, and make sure I block up the appropriate time, letting that other agent know that we’re going to have one to two days to review it and that we’ll have a response at this time. And just basically being a better professional regardless of the real state component, being better communication, time management, follow up, communication in general, by dealing with all these other real estate agents as an agent myself, I learn to become more proficient in that realm, which translated into my investment business, to becoming more proficient, more professional and more on top of my business in general.
Danny Johnson: Yeah and that’s very important. What about with regards to working with other agents as well, I mean, what about sweetening deals for listing agents if you’re looking for a deal, so if you’re looking at maybe contacting an REO agent about a bank owned property as an investor but also as an agent, aren’t there ways to kind of sweeten the deals for that listing agent if you were to make an offer?
Marco Romero: I’ve done plenty of times where I don’t collect my buyer’s agent commission. That’s always been really big.
Danny Johnson: And so they end up getting that, right? You just sort of you tell them that they can have your commission.
Marco Romero: Basically.
Danny Johnson: So I guess it’s the net, right?
Marco Romero: Right. So the listing agent typically writes an agreement with the seller whether it’s a banker or not and they usually make about 6%. And then when another agent is brought into the transaction, that listing agent is the one that decides what the split is in combination what they’ve agreed upon and with the seller. Typically that split is 3% for the listing agent and 3% for the buyer’s agent, so it’s a 50/50 split. So I, in a lot of cases, will go to an agent and say, “Hey, I won’t act as a real agent in this transaction. I’m going to work as a real estate investor. I’m going to forfeit my buyer’s agent commission and that way the listing agent can get paid the full 6%.” But they know that they’re dealing with a real estate agent, so they know that this is a serious transaction. The person they’re dealing with is a professional and knows what they’re doing, those type of things. And you can do that as a standard real estate investor too. But that’s a technique that you can use when dealing with a listing agent to incentivize them to help you in this transaction because they’re basically being paid double.
Danny Johnson: Right. And there’s probably other ways to help incentivize it as well that’s not related to money and more in time right because agents are busy and there’s things that have to be done with those properties with scheduling and lockboxes and things like that and probably a lot of times they’ve got people that are doing that for them, but you feel like you would be a benefit to tell them that you would handle some of those things for them, so that they don’t have to.
Marco Romero: Oh of course definitely. I mean you don’t have to have your license to do that if you communicate with the agent in that regard, but there is an understanding there of course if you can be that professional and be able to help them in that regard of course. That in itself is a big motivating factor for them to want to work with you.
Danny Johnson: Great. So we talked about listed properties. Are there any pros to having your license if you were an investor that mostly buys off market deals, so they’re doing the “we buy houses” type of marketing. You’re getting calls from sellers directly in buying and without agents. Are there any pros to having your license at that point?
Marco Romero: When you’re dealing with motivated sellers?
Danny Johnson: Right.
Marco Romero: I think a big pro for me is a referral. There will be plenty of motivated sellers that you’re in communication with that you just can’t see eye to eye on price. Maybe you need that at 40 and they’re just stuck on the 55 number. Well you can say, hey, either number one you can list the property for them and make a commission there. But I like even better than that is to just refer that seller to another real estate agent and say, “Hey, you’re a real estate agent. Here’s a seller ready to sell their house and they want to sell at this price. Can you list the house for them and whatever you make, give me 25%.” And I don’t have to do any of the work, I’ll give them the lead and then I’ll just get a check two months down the road for no work. I have plenty of referral basis with other real estate agents because I’m a real estate agent and they’ll pay me a percentage or their commission.
Danny Johnson: Yeah, that’s great. And I was waiting for that because it was like “Well, couldn’t you do that if you weren’t an agent?” But that’s the thing, right? It’s the referral being paid for.
Marco Romero: Technically, a real estate agent is not supposed to pay anyone from a commission derived from a real estate sale. But if it’s paid to another real estate agent as a commission that’s a way to still compensate, not break any rules.
Danny Johnson: Alright. Okay cool. Did you have any other pros?
Marco Romero: I guess the other pro is it depends on who you broker under which is really critical for a lot of real estate agents and some just don’t give it as much thought as they should. Picking the brokerage that you want to be with is really powerful and important.
Danny Johnson: Can you explain how that works for us because I think there’s probably a lot of people who don’t understand the whole brokering and hanging your license.
Marco Romero: Sure. So in the state of Texas, only real estate brokers which are like a step above real estate agents people that have been in the business for a little while, have done a little bit of extra education and have taken a test to get the brokerage license only real estate brokers can practice real estate in Texas. However they can sponsor real estate agents to practice real estate on behalf of themselves. So real estate agents cannot practice real estate unless they are sponsored by a real estate broker. And so, there are very big name brokerages out there and brokerages are just the culmination of people that brokers have put together. Big ones are like Century 21 and Keller Williams and things of that degree. Then there might be more of a mom and pop person that’s like, “Hey, I got my brokerage license and it’s just me and two guys in the office kind of thing.” You want to put yourself in a position depending on your experience level and knowledge level where you can leverage all the benefits of your brokerage which is usually number one access to education and training. A lot of brokerages will have their own classes and their own updates because real estate is always changing, the forms are always changing, the rules are always changing especially for agents, and then also access to the people in the office. Some brokers are never around. You don’t want to be with those. You want to be with brokers that are always involved, always helping, always giving you ideas because the truth is most brokers have been around for quite a number of years. That’s why they’re a broker and in some cases 20-30 plus years and they might have a unique perspective on your particular problem or a solution that you might not have ever thought of because you haven’t encountered that situation before and they can really help you in your process whether it’s an investment deal or just the normal real estate transaction. So taking the time to really identify what are the items that are important to you as far as knowledge, education, access to the broker and the other agents in the office, and then there’s also fees of course and deciding what are those items and most importantly and how can they further your investment goals is very important because there are some brokerages that have no clue about real estate investing so they don’t know how to write the contracts in your favor. They might not understand creativity like creative financing and because of that lack of knowledge they’ll shun it or you want to be with people that understand it completely, will further it, will give you ideas and hey maybe they service a lot of investor clients some themselves and can give you leads, those type things. You want to put yourself in a spot to succeed when you’re making this big choice because the broker and the brokerage will affect your success in ways that you may or may not know.
Danny Johnson: Great. And I wanted to ask a little bit more about that. You mentioned finding one that that is more aware of how real estate investors work and so that they don’t shun it for lack of knowledge of how it works andow would you find those people is the first thing and then the other thing was about the fees because you briefly mentioned that there’s fees and I was wondering how the fee structure usually works and how agents pay the brokers and how all of that works, so if you could cover maybe those two topics.
Marco Romero: Okay. I’ll cover the fess first. As far as the fees, every broker is different and it’s basically an agreement between as a real estate agent your agreement is between you and the broker. So in all reality, you can negotiate what the costs and fees are to you. Now most brokers don’t operate in that manner. Most brokers have a standard in which all their agents perform and you either accept it or you don’t, but some common fees are desk fee. Some common fees might be a yearly fee just for being a part of the brokerage just for being there. There might be like a supply type fee. There might be fees for, hey, this broker generates leads for the office and if you want access to those leads you need to pay a certain amount whether it’s like a one time or a month kind of thing. But the biggest one that usually takes the most away from you as an agent is what is their percentage or amount that they get from each transaction. Really common one is like if the buyer’s agent which I referenced earlier would get paid 3%, so you’re doing a deal and you get on $100,000 house you get paid $3,000. In a lot of cases a broker might take $1,000 from that and you keep the two $2,000 and they get 1%. There are some brokers out there who will take a flat fee, maybe $500 or $250 on any transaction whether you get paid $12,000 or you get paid $2,000. So those are some things to look at. There are also at the level higher than the broker there are fees with the – here in San Antonio we have SABOR, the board of realtors. There are fees with the board realtors and having fees to be able to access MLS. Usually those are quarterly and those are usually a couple hundred dollars or so, and then there is usually a big yearly fee with the Texas Board of Realtors and the National Board of Realtors ad those fee are I think right around $200 or so every year. There’s a lot of fees but if you’re doing consistent business it’s really a small percentage of what you can make. And then what was the first part question? I forget.
Danny Johnson: The first one was finding the brokers that you would want to work with as an investor.
Marco Romero: Number one, ask investors that you know. That’s a great starting point. Most investors or anyone any of the good ones they all have agent contacts. They all have either specific real estate agents that they work with or specific real estate brokers that they work with and I would just use track and find them. If you have a really good investor that only works with an agent and not a broker, well contact the agent say “who’s your broker” and then find out that information that way. Another common way is property management brokers that focus on property management are brokers that for the majority of their business they’re dealing with real estate investors and their investment properties. Now that’s another way to get with brokers that understand the investment business. Now that kind of depends on the broker in that scenario. If they primarily focus on property management, they might not be as knowledgeable as far as the acquisition of investment properties, but at least they’re still in the realm of real estate investing and that’s another good starting point. And then I’ve mentioned this in your last forecast, you said it was podcast 23, everyone needs to listen to that.
Danny Johnson: Yeah, flippingjunkie.com/23.
Marco Romero: Just going to the local real seat clubs, I mean, people always ask a lot of questions like, “How do you get this?” “How do you find a good contractor?” “Where do you go to get an agent” or where can I find this or that and the other answer is almost always use the power of the network. So go to a place where there is a network. So go to your investment real estate investor associations. There’s usually one every single month in all the major markets and here in San Antonio I think we have like four or five major ones every single month. Go to those. Talk to people and just use the power of people that know people that know people and you’ll be able to find good starting point for all the team members that you need in place.
Danny Johnson: Yeah and a great way to do that sometimes because it’s seem overwhelming because you can get some names and then you’re sort of left wondering well which of these people should I contact and I would say keep doing it so you start to get repeat names and those are the ones to focus on.
Marco Romero: Or focusing on the investors that are knowledgeable and experienced that might have other properties in their portfolio. Whoever they recommend are usually going to be quality peropl.
Danny Johnson: Alright. I think we’ve covered pretty much all that I could think of unless you have some more about the pros of getting the license.
Marco Romero: As far as the pros, we’ve covered it.
Danny Johnson: Alright. So let’s get into the problems with having it or cons. You wouldn’t necessarily say problems but more negative than positive.
Marco Romero: Okay. Well, first off, it does make it that I am a real estate agent and I am a real estate investor So as a real estate agent, I am in the state of Texas I am considered a real estate professional. I have gone through schooling. I have taken tests. I am knowledgeable when it comes to real estate, so I am held to a different standard than just any old person that might be buying or selling a house. In the state of Texas, that puts more liability on me to operate in the right manner. So for instance, one of the problems that you can face if a person – and by the way in Texas particularly the real estate commissioner actually came down to one of those local events I mentioned. We have here is Almeria and he came out actually in January and he talked about a lot of different components in it. An example would be it can kind of hurt your investment negotiation in some regards because you have to disclose a lot of different components. Every person I come in contact with I need to let them know I’m a real estate agent and have them sign on a form stating that. If I’m trying to pursue a seller to buy their house, as a real estate agent I need to disclose to them the value of their property, which can hurt in negotiation at times. Another thing and they’re starting to crack down on this a little bit more and more as far as agents that are operating ethically. But if a person comes to me like I didn’t pursue them independently of my pursuing them they came to me individually and they say I want to sell my house, I have to first think of them as a real estate agent and try and get them the most that they can get for that house before I can pursue it personally. So meaning, if they want to sell their house for – well, maybe they don’t know, but it’s my fiduciary responsibility to try and get them the most money that they can for that particular house. Whether that’s through listing the property myself or referring them to another real estate agent. Now it’s okay if they go with another real estate agent to list their house and then I go and pursue the house, but if they came to me first, my other obligation is to service them first before serving myself. So I can’t try and buy their property right off the bat. I have to get representation with an agent and then pursue that property.
Danny Johnson: So if you do marketing for buying houses and they contact you or is this outside of that?
Marco Romero: No, outside of marketing, if they come out to you independently. If they pursued you first, that makes sense.
Danny Johnson: Okay. Let’s say you send out postcards and then somebody calls you, at that point you could try to buy it.
Marco Romero: Not in postcards because you pursued that first.
Danny Johnson: Okay. I was going that sounded pretty terrible.
Marco Romero: The commissioner came down on January r and there was a lot of discussion on different components of it and one of the areas that he was focusing on and trying to – he’s trying to get rid of all white bad dealing in Texas and so he was really focusing on property management and trying to get everyone that does property management to have a license so they can operate. Well obviously he came to an investment group so there was a lot of talk about like wholesaling and investing and things like that. And he said, as an agent, the concern is always for your client’s interests before yours and so if this person came to you independently and say, “Hey, I want to sell your house you have to think of the best interest for that person before you think of your own.”
Danny Johnson: I’m just wondering how somebody could come to you outside of marketing unless it’s like a referral or something.
Marco Romero: You can just be talking to the neighbors of the house. And you’re like, hey, investor or whatever and they say, “Oh, I want to sell my house.” You weren’t trying to buy their house initially in the county. That might be an example of it.
Danny Johnson: I guess you could wear a t-shirt that says, “I buy houses.” And so no matter what, it’s always because of your marketing, right?
Marco Romero: Right. And he’s just now kind of being more specific and I’m sure there’s a lot of grey areas and things like that. But that’s just an example of it. Basically as an agent you had to be more mindful and there’s a lot more steps that you to adhere to, a lot more disclosure and things like that which can slow things down for you, can make it a little bit harder for you. If a person knows their house is worth 70 and I’m trying to buy a 35, it’s not as easy to negotiate.
Danny Johnson: Right. One thing that we – we used to sell a lot of our houses, the retail houses that we would sell after fixing them up we would do FSBO, we’d sell them by For Sale By Owner, stick a sign out in the front yard and then put an ad on in the newspaper. It’s so very time consuming to take calls and have showings and deal with all of that and all the paperwork and get smart and decided just to start listing those with an agent in letting them take care of the houses. If you are your own agent though, then you’re sort of doing all those things all over again. Is that how you look at that or is there another way to look at that?
Marco Romero: Do you mean on doing the listings yourself?
Danny Johnson: Right. So when you’re selling your own properties.
Marco Romero: Yeah. Up ‘till recently I listed all my own properties whether I was renting them or selling them and that was in an effort to save on cost because 3% I would earn from my commission, hey, that goes to my bottom line and makes the deal that much better. But honestly as of recently, I even though I am a real estate agent I basically don’t act as an agent like almost ever. I refer everything out. If it’s a listing scenario or like if I am trying to buy as an investor and they’re just too high, I refer it out like I mentioned earlier or let’s say I have a flip, I’ll just have another agent and do it for me or if it’s a rental I have another agent do it for me because right now I’m trying to focus on the time component. Time is becoming more and more valuable. So instead of putting my time to save money, I rather pay some money to do these items for me just like I would pay a contractor to rehab it rather than do it myself in an effort to be more proficient with my time and I can direct my time to the more profitable items which is getting the property.
Danny Johnson: Right. So that’s sort of the con to the pro. The pro is listing your own deals and saving the commission over having an agent do it, but then you’re sort of the one having to deal with the calls and the showings and all that kind of stuff the back and forth that’s so time consuming right.
Marco Romero: Another big con is the fees I was mentioning earlier. You have to pay out to your broker every single transaction and sometimes it’s a big chunk sometimes a small chunk and when you count it all up at the end of the year, you’re like, “Man, all this money going out” just the fees adds up over the course of years and things like that. So the fees are there and they’re just another cost to do business. But that’s something to juxtapose when you’re deciding to become an agent. If you’re already a real smart investor is it worth it to become an agent and do all these other things that pay these other cost or what’s that cost compared to just having an agent on your team. That’s something to consider.
Danny Johnson: Which could get into the whole – that sort of boils back down to the whole argument of whether you have more money than time or more time than money and which way to go with it.
Marco Romero: Right.
Danny Johnson: Alright. So we I think we’ve covered a lot of the pros and cons pretty much all that I could really think of and you threw a lot out there that I hadn’t even thought of which was awesome. But then there’s other ways, so it’s not always just that cut and dry too. If you want a pro of having an agent or being an agent sometimes you can get that benefit without becoming one. And what I’m getting at is sort of isn’t there a way to get access to the MLS if you’re not an agent through working with an agent maybe as an associate or something.
Marco Romero: Yeah. If you’d just talk to an agent most of them are pretty ___ and cool. Here’s the log in and just use mine. Now they’re not supposed to do that, but lots of agents do that and if you’re a real estate investor, I totally would take advantage of that. If it doesn’t it cost you any money, have an agent that’s more willing to do it, utilize it. Another way that an agent can do is they can give you your own log in as a kind of an assistant to the agent. There is a cost to that it’s pretty minimal I think here and here in San Antonio it’s like $24 every quarter. So it’s like basically nothing to set up a separate log in and you can have your own searches and stuff. You do have to have the broker’s approval on that and the broker has to set it up, but that’s another way you can get access to MLS. And then last item is an agent can actually set up on MLS to where particular searches – the results from those searches are emailed to you and you can have your own. It’s like a separate log and that’s not MLS itself, but it pulls data from MLS and it gives you the ability to look at the photos just like an agent can and then go through them. You can get the printed information like bed, bath, square foot those types of things. That’s just like a feature of MLS for real estate agents to service their clients. It’s primarily for searches. So if you identify particular searches hat you want to have in place, sit down with an agent, have them that set up and they’ll email you every time a new property comes up that meets the parameters of your search. So that’s another way. Yes.
Danny Johnson: And that’s great to know because if you ask an agent, “Hey, can you pull up all these for me” all the time and it’s like, “No. I don’t have time for that.” But knowing that a lot of times in most systems they have the ability to set up those automations where they put the criteria and then every time something like that matches the criteria, that’ll be automatically emailed to you. It’s not a whole lot of work for them.
Marco Romero: Right. Definitely.
Danny Johnson: So great. I think this was an awesome episode and I can’t think of any other questions I have about whether to get to a real estate license or not back to the whole thing about it’s really up to what you want to do what you plan on doing and whether weighing those pros and cons that we discussed which ones mean more to you than the others. I think sometimes maybe even people will look at that as getting a license as just a prolonging or a delaying of getting out of your comfort zone and starting to do things. I wouldn’t use it if you’re honest with yourself and you’re not kidding yourself that that’s what you’re doing. Just be careful for that.
Marco Romero: Yeah. I have people that come up to me and ask me all the time about it because a lot of people know that I’m an agent and a real estate investor and a lot of people ask me “Should I?” or “Shouldn’t I?” The truth is there really isn’t a “yes” or “no.” The way that you should determine whether or not you should get you real estate license is by truly doing a reflection on your current position and what your goals are and where you’re trying to go. So for instance if you’re new or starting now and you’re trying to get into it, it might be beneficial for you to get your license because you can learn and be a part of it and you can actually get paid on other people’s transactions and hey if you need an extra boost of income maybe you can help your neighbor buy their next house and that has nothing to do with real estate investing, you can make a little extra pocket change right there. And if you’re an investor that’s all that more experienced down the road, I would really reflect on what you want to do because you do have to consider your time is becoming more and more valuable as you’re getting better and better at investing and as you’re bringing more and more money in, so is it worth the time and effort to go through the school and take the test and then to keep your life since you do have to continuously take more classes, which is additional time and money or could you build your business around leveraging other people’s time other agents’ time. That’s something to consider. and where do you fall on that spectrum really really will help you determine how to make that decision and to decide whether or not to get your license.
Danny Johnson: Great. Marco we’re going to go ahead and end it here. Is there any is there a way for people listening out there if they want to get a hold of you? What’s the best way for them to find you and talk to you?
Marco Romero: Well last time reaction. Follow me on Facebook. I say go ahead and do that to me Marco A. Romero and low picture is like a piece of art that’s orange and white. I had a lot of people contact me last night.
Danny Johnson: Oh good. They’re finding it then.
Marco Romero: Don’t be afraid to contact me. I’m always glad to help and answer questions or just intellectual conversation or just joke around that’s always fun too.
Danny Johnson: I’ll try to do that search and provide a link if possible on the show notes page which would be at flippingjunkie.com/26, so if you’re having trouble finding him be sure to check out flippingjunkie.com/26 for the show notes page and I’ll have a link there to Marco’s Facebook.
Marco Romero: I think this is my new favorite podcast of yours, 23 was good but this one is good.
Danny Johnson: Yes, it’s good. And for people listening, this is coming out – we’re releasing them now on Monday. But Marco was gracious enough being that I had a pretty crazy schedule to do this on a Sunday afternoon, so extra thanks to him for taking the time on especially on Sunday to knock this out. Thanks. Thanks Marco.
Marco Romero: My thoughts were clear on Sunday. So we planned it appropriately.
Danny Johnson: Yeah it did actually worked out really well. Well, have a great day and I’ll talk to you soon.
Marco Romero: Thank you Danny and take care everyone.
Alright another great episode. Thanks for listening. I’m not sure about you guys but I don’t think I’m going to be working at getting my license. It seems like way too many cons for me. I don’t have a license. I haven’t had one and me for anything it’s more of time these days. So having an agent do those things with listing properties, taking calls, handling showings, and all the back and forth getting properties closed when we sell them I’d rather do that. We have an awesome agent that does that for us, but so I hope you got some great info out of it and if you’re looking at it for a ways to find deals using MLS good for you. If you decide that well I don’t really think I want to get my license, I’m just going just market to motivated sellers, buy directly from sellers, that’s what we mainly do and most of our leads come from our website. We provide websites for other real estate investors as well. So if you didn’t know, you can get a real estate investor website from us with all the knowledge I’ve learned over the last 10 years of using a website to get leads online for motivated sellers. You can check out Lead Propeller dot com, leadpropeller. com is where we have our website. You can check them out. Hope you have a great week and see you again next week for the next episode. Have a good one.