Every New Year’s Eve as I prepare for the coming year, I reflect on the saying, “May you live in interesting times.” Sounds nice, doesn’t it?
On its face, it seems to invoke feelings of hope for the future and for progress—maybe this year we get flying cars. Turns out, this saying has a different meaning in 2020. The times seem more cursed than interesting, considering the murder hornets and global pandemic and all.
I don’t have to tell you that this year has been pretty crazy. In the midst of all the economic uncertainty and job market instability, you might be thinking, “This seems like a great time to get my real estate license!”
But wait—should you really get your license during a recession?
I happened to get my license in 2007, a whole year before the greatest housing crash since 1929. So I thought it would be interesting to discuss whether you should get your license now, since I’ve always recommended that investors or those interested in real estate take the plunge.
Does my eternally optimistic advice hold up to these “interesting times,” which feel shaky at best? I will let you decide that for yourself as I break down some pros and cons of getting your real estate license in 2020.
Before we start, I look at getting licensed in three categories:
- Getting a license to enhance and/or supplement your real estate investing.
- Becoming a part-time agent on top of your normal job for extra money and experience.
- Going full-time as a real estate agent or Realtor.
They are all very different situations—with another three articles, I could write about the pros and cons of each. While we are just talking about getting your license, I’ll touch on working with that license for the next six months, as well. In short, I think all three options are viable in 2020 (yes, even going full-time as a real estate agent).
1. Investing Restrictions
When you are licensed, you are under a governing body in the form of your state licensing board that dictates what you can and can’t do. On top of that, the brokerage firm you join may not allow you to do certain things, and I know from experience some that some won’t allow wholesaling or sandwich lease options, for example.
On top of this, the new COVID-19 restrictions on showings, closings, and other procedures put an extra layer of complexity on top of our normal real estate lives. I’ve even heard from my broker that agents are turning in other agents for not following state-mandated sanitation procedures, which makes sense since they are responsible for protecting their clients’ homes.
2. Quarantine Risks
The impact of the first quarantine was quick and severe. Going from normalcy to not being able to see houses or have closings stopped the real estate market cold. Sure, policies were put in place quickly to get things moving again, but it just goes to show what we have today can be thrown out the window tomorrow (or in October).
If you are thinking of getting your license in 2020, just know that there are always factors outside your control that can halt your new venture in its tracks. There is also the risk of a crisis legislative process or tax laws getting hurriedly passed that will surprise us all and force us to shift.
3. Upcoming Economic Impacts
Today, the extra $600 per month unemployment bump expires. And in September, companies that accepted PPP money can lay off workers and remain eligible for loan forgiveness. The current prediction on looming evictions alone is staggering, at a conservative 20 million people affected. These three things will have a strong impact on the economy for the last half of the year.
Shrinking buyer pools, landlords evicting tenants, and higher unemployment will impact the real estate market. With uncertainty, sellers hold off on selling and buyers (those who can still qualify) wait to make sure they don’t buy at the top of the rollercoaster track.
All that said, there are some things about getting your license now that may balance out these cons.
1. Lower Interest Rates and Inventory
Even with everything happening, as of right now, we are still experiencing low interest rates and low inventory in most markets. The interest rates help aspiring home owners in terms of affordability and purchasing power—buyers are borrowing mortgage funds at near-record-low rates right now. And low rates coupled with low inventory means any listings you do have will get multiple offers and fly off the shelf.
2. Less Competition
When trouble and uncertainty hit, there are always agents who get washed out of the market. The National Association of Realtors’ official numbers says that the number of Realtors is down to mid-2018 numbers after six years of steady growth. So, this could be a good time to get your license and work out a deal with a local brokerage that lost some of their part-time agents.
This happened in the last downturn, as well, and gave rise to agents who can think on their feet to come in and sell bank-owned foreclosures or facilitate short sale transactions. I don’t trust agents who have only seen the good times and have never weathered business in a recession. It builds character, or as Angela Duckworth says in her book Grit, “Enthusiasm is common. Endurance is rare.”
3. More Tools to Work With
If you are waiting for the next recession to hit (see con No. 3) to expand your portfolio or finally start buying some real estate, you want as many tools in your toolbelt as possible. Direct access to the MLS, direct access to tax records, and a network of other agents are three of the most powerful tools an agent/investor can have.
When you are ready, will you wait for your agent to get back to you with time-sensitive information on that killer fourplex you saw, or will you want to have everything you need to act now? Not only that, but navigating the MLS, looking at records, and pulling comps are invaluable skills to the professional investor.
Quite a mixed bag in this list, isn’t it? I can’t predict what will happen for the rest of this year or how elections typically affect real estate markets (though I wish I could). I never would have envisioned anything close to this on January 1 at 12:01 a.m. as I thought about living in interesting times.
I hope this article helps you decide if getting a real estate license in 2020 makes sense for you. I’ve never regretted getting my real estate license and still encourage investors to do so. In my opinion, the benefits far outweigh any of the pitfalls—even if your year is full of murder hornets.
Have you considered getting your real estate license? Why or why not?
Share your thoughts in the comments.
Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.