One of the most highly talked about and debated questions within the world of real estate investing is ‘should’ or ‘should you not’ get licensed in your state? There are numerous articles on BiggerPockets discussing pros and cons and everything in between, but I wanted to throw my $.02 into the debate.
There are a ton of financial reasons to pursue the license, but in this article, I’m going to focus on how another aspect. First though, to address what I see as the main concern of getting a license – Yes, there are costs associated with being licensed; however, if you want to make a career out of investing, the fees are actually a good thing.
How so? Look at the fees as a measuring stick. If you can’t cover your licensing fees each year, then either A) you aren’t working hard enough or B) you just aren’t cut out to be an investor. Perhaps a bit harsh, but a very realistic way to look at things.
With that financial point out of the way, let’s get to the gist of things. The key reason I am for getting your real estate license as an investor is: freedom. After all, isn’t that the true goal of anyone getting into real estate?
I define true freedom as living on YOUR schedule, and only YOUR schedule. You do ‘this’ activity when you want to. You then go and do ‘that’ activity when you want to. There are no “needs”, only “wants”. Let’s look at a few examples…
Visiting Property Listings
I realize many investors build relationships with agents who just tell them the entry information on a property over the phone so they can go check it out on their schedule; however, that is technically breaking rules (at least here in Michigan), so I’m not going to allow that as a valid point.
As a licensed agent, you can go check out a home whenever you want. Assuming it is a foreclosure, you can look at it at 5 in the morning, or 5 at night. Your schedule is completely in your control.
As a non licensed person, you have to wait to be fit into the agent’s schedule. If they can show you only at 5 pm, you now all of a sudden you find yourself having to plan your schedule around someone else’s schedule. I personally do not consider that freedom.
Doing Due Diligence
If you are working with an agent, you won’t have to do this work, so yes, that does create freedom for you in the sense you can do other things with your time. However, do you really want the fate of a potential deal to be put into someone else’s hand because they potentially have other, more important needs on their schedule?
As a licensed agent, you can run comps from the comfort of your own home in your underwear. When time is of the essence, wouldn’t it just be worth it to be able to A) do it when you “want” it and B) keep the fate of the deal in your own hands?
As a non licensed person, you have to sit around biting your nails wondering, “when oh when is my agent going to email me with the local comps?” When a potential deal arises, there really is no time for waiting; you have to get on things and get on them now! Remember, if licensed you’d really only be serving yourself (unless you were doing buying/selling for other clients), your agent (if they’re any good at least) will have multiple people they are serving. A room filled with only you is much more favorable then a room filled with you and ten other people.
After your due diligence is completed, this is a crucial step. As a licensed agent, you can fill out all the forms and contracts yourself and get them submitted with your signature. The best part is, you do it when YOU want to. It would behoove you to do it as soon as possible; but, at the end of the day, you can do it on YOUR schedule when you feel like it.
As a non licensed person, you are at the mercy of your agent. Sure they fill these out for you, but they will still need your signature. You could be out with the family when your smart phone rings, the documents will be there waiting to be signed and sent back.
Instead of sitting there “waiting” because you are at the mercy of another person’s life events, why not make your OWN schedule so that you can do things when you want to? The three examples above are just a few cases for being licensed, but believe me . . . the ways a license can “free you up” are truly worth the fees each year. The icing on the cake is that while you are living your schedule the way you want, you are also saving money due to the fact you are licensed. “A penny saved is a penny earned.”, so in all actuality, you are being paid to have freedom. How convienient is that?