Well said Mike. Thank you so much for this post. I too am at the cross roads of,to be or not to be, an agent/broker.
Because I am such a newbie to the investing and real estate world, I want to learn all that I can and walk into a room prepared to the hilt with knowledge of what I am doing. I would think that getting my license, albeit not necessary for investing, would give me the confidence to pursue investing/real estate transactions and open the doors to deals that I may not have opened otherwise.
But, this is just me. Perhaps some personalities are better suited to learn as they go from the actual investing itself and surrounding themselves with a team of knowledgeable investors.
Originally posted by Scott M.:
if you buy / sell more then X number of homes in Michigan (I forget how many now to be honest) you have to be a licensed agent
I'm a licensed broker in the State of Michigan and know of no such rule/law. I've never seen it in any of the study material, nor on a test. Plus, I know a lot of investors who are not licensed agents and close 100s of deals a year.
I wholeheartedly agree with Jon, however. I see absolutely no disadvantage to being an agent/broker in conjunction with being an investor. In fact, some of my very best deals come from connections within the office, other Realtors, or straight out of the MLS. I watch for certain patterns with properties that come on and off the market on the MLS. More times than not, it has paid off. If I weren't a Realtor, I wouldn't have MLS access. Plus, when the investing slows up, I have my broker license to fall back on for helping others buy and sell.
If everything is disclosed properly, there's no downfall to being licensed. Afterall, there is only one way to do things: by being honest and disclosing as required. If you do that, it doesn't matter whether or not your licensed.
I have to respond to a comment made about my previous statement saying; 3 yr college level course to get your RE Lic.. I wasn't referring to what you needed to know to pass the test but rather what you will learn if you study and and master the material given to you. As I look through my exam books right now, here are just a few of the topics covered in depth:
Conditions of purchase
legal aspects/securities law LLC, S;yndication, partnerships, joint ventures, TIC;s/Tenant in common ownership-security/non security Investor participation, breach of contract, buyer's liabilities, Equity purchase transactions, Lease Purchase/Lease Option contract-legal burden of proof, Boundary disputes, easements, enchroachments, Promissory notes, due-on-sale regulations, Converting nonrecourse paper into recourse paper, deficiency in recourse loans, modification of notes, errors in payoff demands, AITD/Wrap mortgages, short payoffs on recourse/nonrecourse. Tiered tax rates on profit, commingling of funds. Interest earned on delayed 1031 exchanges, Option money tax consequences. Every Contract that you could possibly want when buying and selling real estate is in this book. I could go on and on. Don't get me wrong, I'm not trying to talk anyone into getting their license and I agree if all you want to do with your license is put signs in yards and get listings-the test is easy with a few hours of study. On the other hand if you have a need to know about any of the above topics, then, that info is available to you. I can't tell how many times I have referred to this info with Investors I have worked with. Not to mention, Attorney's and CPA;s who are giving bad advice and aren't up on current Real Estate Tax Law changes and current case law rulings. Some of which, in today's market are changing daily. The bottom line is for me; Both Investors and Realtor's have created a bad name for themselves. Realtors-are used car salesman to the general public, and incompetent to Investors. Investors on the other hand are Scammer Jammers, who want to turn good stable neighborhoods into low income rental neighborhoods to the general public and users and idiots to most Realtors. Either occupation gets no respect from people inside or outside of our Industry so why don't we start working together, for a change. Finally, I just want to say that I have never found my License to be a burden when purchasing any property I so desire. As an added benefit, I have opened doors and got inside information that I would have never had access to had I not gotten my license.
depends on what you want to do. IF you plan on paying 100% of retail for every property you own,its no problem.
IF you are making 20-40 offers at 20 cents on ARV,,'somebody' is gonna think your stealing them and throw the monkey wrench of lawyers and 'sue the bastard' involved. Whether they are the home owners who see what you sold it for,,,and forget what you spent on it,,,or the kids of,neighbors of,relatives of,,,somebody is going to push the issue,whether it is right or wrong. AND that scale of justice lady has a blindfold on for a REASON!!!
I have been licensed before,would I again??NO,easier to function without it. But it does keep you on the pulse of the market and contacts you cant get otherwise. Havent heard where they have prosecuted for buying too cheaply,,but I am sure it will happen. After all,,, anyone can sue anyone else over any thing,,,and defense attorneys are sorta expensive.
If you are a good rehabber and a known investor,,,your going to get good deals coming your way 'without' the expense and responsibility of the license.
When you mention the fact of being a real estate licensee,,,you also have some people clam up from being hounded to death from them.(notice I did NOT say Realtor,,,thats another whole can of worms)
Personally I would NOT get a license,but thats me,do whats right for you!!