Difference Between Licenses and Business Portfolios in Real Estate

You may often hear the terms license and business portfolio mentioned in real estate. It's essential to know the difference. 

A real estate license is something that you will need to operate as a real estate professional in the state of Florida. You will need a license to act as a real estate agent or broker. 

A real estate business portfolio is similar to a resume in that it records all your past and present real estate assets. You'll likely have a business portfolio if you are involved in real estate investing. 

More on Real Estate Licensing

To practice real estate in Florida, you must get a license. If you want to become a real estate salesperson in Florida, you must be at least 18 years old, take a 63-hour course, and pass the exam successfully with a grade of 75 or higher. 

To become a broker, you must be at least 18 years old. Additionally, you must already have an active real estate sales agent license, 24 months of real estate experience within a five-year period, take a 72-hour course, and successfully pass the exam with a 75 or higher. 

Upon becoming a real estate agent, you will have to place your license with a sponsoring broker. Although you will operate as an independent contractor, you cannot open your own firm as a real estate agent. 

When you become a real estate broker, you can choose a business structure, such as a sole proprietorship, a limited liability company, or a C or S corporation, and operate as an independent business owner. Once you choose an appropriate business structure, you can get a business license through the state of Florida

It is best to consult an attorney and an accountant to ensure the best results in setting up the proper business structure for your real estate firm. Once you set up your business and acquire all the necessary business documents, you can work individually or hire other real estate agents to work within your firm.

More on Real Estate Investing Portfolios

If you want to operate as a real estate investor in Florida, you aren't required to get a real estate license to operate. However, it is ideal to obtain a real estate license and gain experience in the industry to improve the chances of success. While you may not need a real estate license, you will need a business license if you plan to operate actively instead of passively. Having a business license will add a layer of protection for your assets acquired by real estate investing. 

Again, working with an attorney and an accountant to set up the firm is a good idea since some forms of business licensing can result in double taxation on properties or may even be exempt from certain tax benefits. 

Real estate investment portfolios consist of building a portfolio and receiving passive income in the following ways:

  • House flipping
  • Buying rental property
  • Raw land Investing
  • Commercial real estate
  • Crowdfunding
  • Vacation rentals
  • REITs (real estate investment trusts)
  • Wholesaling

These are some of the most common items that may be included in a real estate portfolio. Some investors may focus specifically on one niche, such as house flipping or vacation rentals. Others may consist of a diverse portfolio. 

Although most of these investment tools may not require licensing, laws are changing, especially regarding wholesaling. Before establishing an investment firm, check to see if your form of investing needs further licensing in your local government. 

Frequently Asked Questions

Can I be a real estate salesperson and a real estate broker simultaneously?

Yes. But it depends. A real estate broker can be a real estate salesperson. However, an agent must become a real estate broker before operating as both. 

Am I able to establish a business with a license or a real estate investment portfolio?

A broker is the only real estate professional who can create a business with a real estate license. Real estate sales agents must operate under the jurisdiction of a broker. A real estate investor can also establish a business in Florida and doesn't have to have a license to operate. 

Can I be a real estate agent and a real estate investor simultaneously?

Yes. Both roles are independent of the other to operate. The only stipulation is that a real estate agent must have a license, while a real estate investor doesn't have to have a real estate license. So, you can operate as an agent and an investor. 

Unfortunately, being a real estate agent is hard. It takes a lot of effort to be successful, so it is not advisable to be both an agent and an investor, particularly in the earlier stage of life. 

Does a real estate business portfolio only include real estate investment properties?

No. You can operate numerous real estate businesses and include them in your portfolio of businesses, including a brokerage, an investment firm, and even a training school. 

Can I expand my real estate business into other states?

Yes. However, each state has different rules that apply to your business type. If you operate a brokerage, you must determine if your active license will suffice in another state or if you have to take another exam and get licensing for that state. 

The National Association of Realtors refers to this as license reciprocity. This is when the new state you plan to operate in recognizes your active license from another state. 

If you want to operate as a real estate investor, you'll have to discover if the state has more licensing requirements than the one you established your initial business in.