Do You Need a Real Estate License to Invest?

Investing in Ohio real estate offers lucrative opportunities for wealth building. If you’re interested in rental properties, wholesaling, or house flipping, you may wonder, “Do you need a real estate license to invest?”

While a license is optional for real estate investors in Ohio, obtaining one can offer substantial advantages. In this guide, we’ll discuss investment opportunities in Ohio and outline the benefits of having a real estate license.

Key Takeaways

• Ohio’s real estate market offers diverse options for investors, including rental properties, house flipping, wholesaling, and commercial real estate, each catering to different investment strategies and risk preferences.
• While Ohio does not require a real estate license for investors, having one offers significant advantages, such as cost savings on commissions, direct MLS access, and enhanced market insight, ultimately supporting more profitable investments.
• Real estate wholesalers in Ohio don’t need a license if they act as the principal buyer, but a license allows greater flexibility for marketing properties and supporting other investors and reduces potential compliance risks.

Types of Real Estate Investment Opportunities in Ohio

Ohio’s real estate market offers a variety of investment avenues that cater to different financial goals, risk levels, and interests.

1. Rental properties

Ohio’s affordable property prices make it a popular location for cash flowing rental properties, particularly in Cleveland and Dayton. Both cities have a healthy price-to-rent ratio (7.6 and 9.3, respectively) and low home prices, which are music to investors’ ears. By investing in Ohio rental properties, you can generate passive income and build equity over time.

2. House flipping

For those with an eye for renovations, house flipping—buying properties to renovate and resell quickly—can be profitable in Ohio’s competitive yet affordable markets.

Do You Need a Real Estate License to Flip Houses?

In Ohio, investors don’t need a real estate license to flip houses. However, having one can be advantageous by offering direct access to MLS listings, giving more control over buying and selling activities, and potentially lowering transaction costs.

3. Real estate wholesaling

Wholesaling is an investment strategy that involves securing a property under contract and selling it to another investor for a profit. This often requires less upfront capital and can provide quicker returns.

Do Real Estate Wholesalers Need a License in Ohio?

In Ohio, real estate wholesaling doesn’t require a license if the wholesaler is acting as the principal buyer—meaning they put the property under contract with the intention to resell it.

However, licensing may be required if the wholesaler’s activities resemble those of a real estate agent, such as the following.

• Assisting other buyers: If you, as a wholesaler, actively seek properties on behalf of other buyers or promote yourself as one who can help others find investment properties, you’ll need a real estate license.
• Marketing properties to the general public: If you, as a wholesaler, advertise or market properties in a way that suggests you’re offering real estate services or acting as an agent—especially if you don’t have an ownership interest in the property—it may be viewed as practicing real estate without a license.

To stay compliant with the law, Ohio wholesalers must clearly state they are selling their contractual rights to purchase the property, not the property itself, and should always identify themselves as the principal in the transaction.

Do you need a real estate license to do wholesaling in Ohio? You don’t, but having a license allows wholesalers more flexibility to market properties and assist other investors without risking compliance issues.

4. Commercial Real Estate

Ohio’s commercial real estate sector is experiencing growth, particularly in retail, industrial, and office spaces.

For instance, Columbus has seen a decrease in office vacancy rates. Additionally, the city’s industrial market recorded a positive absorption of 1.7 million square feet year-to-date (Q3 2024), indicating a robust demand for industrial spaces.

Similarly, Cleveland’s industrial market has shown strength, with longer leases and higher rental rates.

These trends reflect a positive outlook for Ohio’s commercial real estate market.

Should I Get a Real Estate License as an Investor?

While not required, having a real estate license as an investor is undoubtedly advantageous. Licensing provides access to critical tools, insights, and relationships that can improve the investment process and increase profitability. In addition, even though you need to consider the potential cost of getting your license, you can save on real estate commissions by being licensed.

Benefits of Having a Real Estate License as an Investor

Do real estate investors need a license? No, a license isn’t required, but having one is beneficial. Here are some reasons to consider earning your OH real estate license.

1. Save money on commissions.

You may be able to save thousands on each deal by earning your real estate license.

Real estate professionals typically earn between 5 and 6 percent on each transaction. These commissions are usually divided among the buyer’s agent, the seller’s agent, and their respective brokerages.

As a licensed real estate agent, you’ll be able to oversee your own transactions, enabling you to save on a portion of the real estate commissions. However, you’ll likely be required to pay a commission to your broker, as they are legally responsible for overseeing your transactions.

As you interview Ohio brokerages, ask if they offer flexible commission arrangements for agents’ personal investments. Some may offer reduced fees or special terms.

2. Gain insights into the Ohio real estate market.

Licensed investors gain deeper knowledge of Ohio real estate market trends, equipping them to make more informed investment decisions. They have direct access to comprehensive data on property values, neighborhood growth patterns, and market forecasts, enabling them to spot emerging opportunities early. This insight allows them to strategically navigate the market, minimize risks, and optimize investment returns.

3. Obtain direct access to properties for sale.

With a license, investors can access the area’s Multiple Listing Service (MLS). The MLS provides detailed information on properties that might not be available on public sites, allowing investors to identify deals quickly.

4. Understand Ohio real estate laws.

Your pre-license courses will cover Ohio’s real estate laws and regulations, the knowledge of which is vital for legal and financial compliance when investing.

For example, licensed real estate agents in Ohio can invest in properties for personal gain. However, state law mandates that licensed agents disclose their status as real estate professionals to all parties involved in a transaction. This is essential to ensure transparency and prevent conflicts of interest, as agents may have access to insider information or resources unavailable to the general public.

5. Network with Ohio real estate insiders.

Licensed investors have more access to industry events, professional networks, and real estate groups, which allows them to make more connections with agents, brokers, and other investors.

While not required for all investment activities, a real estate license can open up opportunities for greater access, professional insights, and financial rewards. You may even enjoy the industry so much that you’ll decide to work in real estate sales full-time.

Hondros College is here to help. Learn the average Ohio real estate agent’s income and commission starting out and how to get a license to understand what you can expect as a licensed investor/agent.

Sources:

“Columbus Real Estate Market Reports.” Newmark. Accessed October 30, 2024. https://www.nmrk.com/insights/market-report/columbus.

Hughes, Eric. “The 12 Best Markets for Cash Flow Rental Properties (Updated for 2024).” Rental Income Advisors, October 24, 2024. https://www.rentalincomeadvisors.com/blog/best-rental-property-markets-2021.

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