I have a house that I will be flipping. I know a great handyman who could do the work as its just basic stuff( Painting, installing new cabinets, installing flooring, tiling bathrooms, changing fixtures). Would you consider this low risk to the point where I can have my handyman do it? Or would you go with a Licensed General Contractor and pay the additional cost? I'm thinking about getting licensed roofer but letting handyman do everything else. What are your thoughts.
Sorry, when I say licensed in the above post I mean licensed and insured. And the handyman has no insurance. But again, that's the reason for the post, is the low "riskiness" of the work worth going the uninsured route?
this business has much of what you are describing, remodeling everywhere involves the level of contractor you are talking about. You have to ask the question, if an accident happens, personal injury or property damage, are you prepared to take that on yourself. You sound like you have confidence the handy man can do the work. You have a decision to make.
That type of work can normally be done with a handyman, but there are a couple things I would look out for...
1. If he does not carry insurance and you want to go that route. I would call my homeowners ins. policy and increase items as well as see if it will cover workers.
2. No matter what I would then get me a GL insurance on top of my home owners insurance, to make sure my *** is covered.
But the thing that I would look out for is how long is it going to take this handyman to do the work. A bsic rehab like that shouldn't take more than 3 weeks or so maybe 4 max. A lot of what happens in cases like this is investors hire a handyman, then the job begins to drag out for months and months. Normally, these handymen are a one man show so the job begins to drag and drag.
As long as you are aware of that and can manage those two things you will probably be ok.
Also, don't give the handyman a ton of money down. I would disperse very lightly and do not get over the barrel with this handyman or any contractor for that matter. A lot of investors get burnt that way.
Let me know if I can help in any way I have done a ton of rehabs in Chi-town.
Do you have a work comp policy that will pick up this uninsured contractor? If not, this is your greatest exposure. You could be responsible for any injury he incurs while working for you...health bills are not cheap!
Your property and general liability policy will respond to a fire he starts, etc. when you bring in a GC you are able to push off most of the risk of having claims on your property/business. This keeps your premiums under control over time.
@Will Rodgers, I admit, I go through the exact same thought process you are going through when I have work done on my house.
If it is repairs/upgrades with little chance of injury, I use my unlicensed/uninsured handyman...who is fair, reasonably priced, and does awesome work. Especially since, just because a company is licensed/insured, doesn't mean they do a good job. But then, I know I am taking the chance that if something were to happen, it would be a huge hassle/expense for me and my HI would probably get involved.
My HI does cover workers on my property, but rates are crazy high here in Hurricane Alley and putting in a claim would not help that, to say the least!
But, with all that said, for the substantial savings and greater likelihood of good work, that is the calculated risk I am willing to take.
We used to use unlicensed contractors almost exclusively since they were cheap compared to general handymen but after being in the business for a while we found that there were pleny of insured, legitimate handyman that worked for the same rate. On top of that once you have been in real estate investing for a while you realize that risk of a lawsuit is much more important than spending a few hundred more dollars on a job.
Generally the insured guys have a few more people in their crew which mean they could either work faster or on mulitple projects at one time which ends up saving you money.
Most are just guys that used to work for someone else and have enough independance to start their own company and if you can bring them consistent work they can match just about anyones price.
i am a hi skilled handy man and flip homes by my self with out paying contractors i only pay for big projects like concrete or roofing
Join the Largest Real Estate Investing Community
Basic membership is free, forever.