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Comment on financing v leasing / Do DIY techs need license 
January 18, 2020
Comment on financing v leasing from article on January 13, 2020
            I know Mitch well and respect him very highly, but at this point I must disagree. Most residential customers are now aware that they are paying a monthly bill that far exceeds the life of the system. They would much rather buy the system than lease it. I would never lease a car when I can buy it and own it. While I can't necessarily sell the system over to someone like I can the car, I certainly don't have to feel obligated to continue to pay a high monthly monitoring bill for something I already paid for over the last 36 or 60 months. It simply makes no sense. It would be like buying a car for $600 that includes the gas but after 60 months I'm still paying $600? My question would be, when did I ever pay off the car?
H Groff
            I think you can spin a deal anyway you want.  There could be an attraction for leasing a residential alarm.  The pitch would be, why get stuck with equipment that may become outdated; lease it; we will service it and we will monitor it, and we will update it when necessary.  No out of pocket expense.  
            OK, I don’t like the pitch either.  I don’t think most residential customers will want to lease and have to think about the commitment and chance that the system will eventually have to be removed.  Also, the sale isn’t that expensive, usually, to dissuade the sale.  On the other hand, if you describe the lease opportunity in a positive light it will have certain advantages for you because you will always own the equipment.  I cannot comment on the tax consequences; that’s Mitch’s area of expertise.
            Leasing is more common in the commercial setting.  Unlike a residential consumer, a commercial subscriber can fully expense the alarm lease as opposed to having to depreciate the purchase of the alarm system.  The advantages to you are obvious, same as in a residential setting, but far more significant; you continue to own the equipment.  Some alarm systems are mandatory, so, for example, if you own the fire alarm system in the building you have a pretty good lock on that building, no matter how many times it changes owners.  Even intrusion systems that are leased would more likely be retained by a new owner.  
            Some DIY sellers want to lease the DIY equipment.  It’s not a bad idea because too often getting back the equipment after the contract expires or terminates is a hassle.  If you continue the own the system there can be little complaint that you terminated the monitoring service and left the customer with useless equipment.  
            So there are pros and cons for selling or leasing.  Installment sales or lease to buy have, in my opinion, no pros, only cons.  Selling your RMR accounts as you install them or sign them up has only one pro, immediate cash, and lots of cons [kiss your retirement fund good-bye].  
Do DIY techs need license
            We are looking to launch a self-monitoring security system that a lot of companies today treat as a DIY system, but as a value add, we want to install it for the customer and show them all of the features it has to get a better experience.  We are trying to figure out if a technician doing this type of system has to be a fully licensed security technician even though it is not professionally monitored.
            It’s not the professional monitoring that is causing you to be licensed, it’s sending a technician into the home that requires the license.  They are installing a security system.  States define what systems, qualifications and licensing it requires.  Each state would need to be checked to see what license, if any, would be required.  If no wiring is being performed there may be no license in some states.  
            A thorough review, state by state, should be performed before launching your operation.  Both the company and the technicians will need to be licensed in at least some of the jurisdictions.  K&K’s licensing department can get you the answers.   Call our Licensing Coordinator Eileen Wagda at 516 747 6700 x 312 for assistance.

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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301