This question comes up on the forums with utmost regularity – like every other week.
Investors to be want to know if having a license gives them a leg up on competition.
I don’t know that there is a definitive answer to this question – it’s a personal thing on many levels.
But, surprise – surprise, I have an opinion…
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How I Became a Licensee
This is actually somewhat amusing. Meet my wife, the love of my life, the mother of my children Patrisha Leybovich. That’s her on the right, and I am sorry about the quality of the photo – phone camera. This was taken a few a year ago when Patrisha took me to Cincinnati to listen to Gil Shaham, whom I’ve known for ages ever since the long-forgotten Aspen Festival days, play the Brahms Violin Concerto.
We rented a room in a little Chateau across the alley from the concert hall for a day. Gil was Gil, and that says it all. The food at the Chateau was 5-star. The room was small, but believe me when I say – I did not notice…
What you need to know is that the 103-pound gorgeous little thing in this picture packs the energy of a 230-pound ice hockey player coming at you at a speed of 20 miles per hour – it hurts on impact, and most people wisely step out of the way. In this way, I am not unlike most people and step out of the way more often than not…
Anyhow, Patrisha and I made a deal about 7 years ago – she takes care of today, and I take care of tomorrow, financially speaking. She has been on board with my endeavors in real estate ever since she figured out that I don’t suck at it. So, she let me run wild doing my creative finance bit for about 5 years, which brings us to how I became a Realtor.
About a year and a half ago, she took me out to dinner. The stake was good, and so was the wine – she was softening me up, and I should have known but I am not too sharp that way. You need to know that by this point in time I’d assembled 18 units which were cash flowing nicely under 100% leverage (you knew I’d throw that in).
It was apparent to both of us that even if I did nothing more but meticulously take care of the property and allow tenants to pay down the mortgage, over time Patrisha and I would be just fine.
You also know, if you’ve been reading my articles for a while, that I average one deal per year; it is always a multi-family, but it’s never more than one. The size of the deal gets bigger each year, currently I am working on my first syndicated deal, but it’s always just one per year.
However, what it looks like to my wife is that I am busy for about 4 – 5 months out of the year while I stabilize the project, and then I just take life easy – while she goes to work. See the problem…?
Well – Patrisha saw the problem. She was happy with the “we’ll be just fine” part of what I’d accomplished, but not so happy with the “over time” part, and having softened me up she said to me:
“Honey – I love you, and I think you are hot (she didn’t actually say that last thing, but I think it works in this context – don’t you?). You’ve been doing very well on keeping your end of the bargain taking care of our retirement, and I agree that we will be just fine. But, if you think that I am going to schlep my ass to work for the next 15 years while you sit at home in you underwear (that actually happened), you got another thing coming…do something – go get a license!”
I Got a License
It was the easiest thing to do to comply with my wife’s wishes of being more busy. I tried to tell her that I’d be no good at showing people pretty pink bathrooms, but I conceded that if nothing else, having a license would add to my education and put me in the flow of information.
Has it had any positive impact, and will it in your case?
Yes – having a license has had some impact, though it has been marginal. Having a license and being known in my town as a Realtor has added some clout, but not with the general public – with the other Realtors.
The 10-unit I talked about here was brought to me by a colleague and I have to believe that being there at the right time, which was a function of having a license, was the driver in that deal. Also, I did sell a few things to tenants that were ready to move on, and investor friends.
But, That’s It…
By and large, in terms of making money with my license – I don’t. Being a real estate agent is very hard work indeed, and nobody should believe anything different. I certainly don’t want to work that hard for that little. There are flat out easier ways to make money. I sell a course online and in one year it generated almost as much revenue as an average real estate agent earns in my state in the first year – most quit after the first year…
And I didn’t have to leave my house to do it. And did I mention the cash flow from the 28 units I now own which takes on average of 5 hours per month of my time? (I am about to change all that with this syndicate, but that’s different…)
Furthermore, some people say that a license allows you to save money at the front and back doors on your own deals. Here’s the thing guys; if all you want to do is chase REOs and other MLS stuff, then perhaps you can use your license. Personally, I go for the OFF-MARKET stuff where having a license means nothing.
Besides, if a Realtor brings me a deal, do you think I am going to nickel and dime them – of course not. First of all, I know how hard they had to work to find the off-market deal. Secondly, they didn’t have to bring it to me, but they did – they can keep the commission. That’s how they make a living; it’s not how I do it… Makes sense?
So – should you get a license? I don’t know. What does your wife think?
Photo Credit: afagen