To get a contractor's license?

Question

Has anyone's experience in real estate let them to eventually get your contractor's license if you didn't start out as one? If so please comment on your strategy/experience as to how the rehabs are performed, eg do you do your own entirely, do you use a more experienced GC for the more complex stuff and do a portion yourself, etc.

J Scott · Answer

Hopefully Aaron McGinnis will chime in here...

He started as an investor, but got his GC license in order to streamline his business (I believe that was the reason).  While he still does lots of his own projects (major tear-down/rebuild stuff), he also hires himself and his crew out to other investors -- in fact, they do a good portion of our bigger rehabs.

Aaron McGinnis · Answer

Contractor licensing is very much state-dependent. In Georgia, the process is lengthy and a total pain in the elbow.

Here, the requirements are some rather expensive bonds, insurance, possibly more insurance... plus letters saying that you've been responsible for at least 2 permitted jobs. Then you can take the test. The test isn't easy and requires $1000 worth of one-time use books.... and that's just for the residential basic test. Commercial light or commercial/industrial is harder and more expensive.

However, if you deal with permits a lot it is totally worth it IMO...

Steve Babiak · Answer

My state's (PA) seller disclosure form has a question on construction skills and licenses, so I imagine you might have to disclose your contracting license when you sell.

Karen Margrave · Answer

Each state has different licensing requirements. There are pros and cons to being licensed, so think it through. If you don't genuinely know how to build, the codes, etc., you probably shouldn't set yourself out as a contractor. Once you have your license, in construction, as well as real estate, you become an expert, and your liability is much higher, as are your chances for lawsuits.

Jim Ingersoll · Answer

I have my class A and BLD license.  In my opinion it doesn't benefit me in my real estate business very much and has additional expenses associated with being licensed.

Jim

Steve L. · Answer

My business partner got his contractors license about a year ago.  Since our first project we always acted as an "owner-builder" to pull permits.

The benefits for us:

- Easier process to pull permits and deal with cities
Almost every major rehab we do involves permitting existing space or adding new space, it has been a lot easier to deal with cities when acting as a contractor.

- We are able to send contractors bids with many of our offers to justify we our offer price is what it is
On some of the nasty houses, we send a contractors estimate with our offer.  This has worked well.

- The ability to pick up side work/other jobs
We personally, don't really pursue this model as contractors really don't make large spreads in our market.

- Selling Feature for Agents
Investors do not have a good reputation in our market.  We find it is better to advertise ourselves as a landlord or contractor versus an "investor."  This maybe subjective but we have found we get a different reception.

There is a cost to doing this and a bond is required.

Matt T. · Answer

I've been trying to get a buddy/worker of mine to get his license for about 18 months.  I even offered to buy the study materials and give him a $1,000 bonus once it's done.  No luck so far.  I'll definitely get mine once I'm done working overseas.  Relying on someone else to pull permits is a real pain in the neck.

James Martin · Answer

I got mines back in 07. The bank that was lending me money was having problems with investors acting as a contractor and missing their refi deadline and costing the bank money on selling the loan. They came out with a rule that you had to hire a contractor to perform the renovations, so I went and got my license.

I also benefit now by renting my license to other rehabbers that have a crew to do the rehab, but need to have the job permitted. I usually charge around $500 for every $10,000 of the total job to only pull permits.

To get a contractor's license?

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