Builder's License in Michigan

8 Replies

I'm preparing to go under contract on my first small BRRR deal and I'm curious how many investors in Michigan have their builder's license? I've been working on homes my whole life and the numbers are slightly tight on this one especially with material costs currently. The high end of some of the estimates from contractors would essentially put me in a break-even to very small cashflow deal, but if I could do a lot of the work myself, which I'm willing to, and then sub-contract out some of the trades, then it would save me considerably and it would cashflow nicely.

House has been vacant for years and is in rough shape so it's essentially a total gut. I'm also purchasing off a family member that didn't know what to do with it/wasn't ready to let it go when her father passed. Due to the familial dealing, she's in no rush which would allow to me to get my license. 

What are the pro's and con's of having your builder's license and investing full time?

Originally posted by @Jonathan Mason :

I'm preparing to go under contract on my first small BRRR deal and I'm curious how many investors in Michigan have their builder's license? I've been working on homes my whole life and the numbers are slightly tight on this one especially with material costs currently. The high end of some of the estimates from contractors would essentially put me in a break-even to very small cashflow deal, but if I could do a lot of the work myself, which I'm willing to, and then sub-contract out some of the trades, then it would save me considerably and it would cashflow nicely.

House has been vacant for years and is in rough shape so it's essentially a total gut. I'm also purchasing off a family member that didn't know what to do with it/wasn't ready to let it go when her father passed. Due to the familial dealing, she's in no rush which would allow to me to get my license. 

What are the pro's and con's of having your builder's license and investing full time?

 If you are the homeowner, you can act as your own builder.  The only real advantage of having a builder's license is if you've been acting as a builder and most likely have already formed relationships with the trades and suppliers.  Also, you can get better deals at some suppliers (Home Depot for instance).

@Joe Villeneuve Well, I'm planning on purchasing and titling through my LLC. City building department won't let me pull permits on a property that I'm not living in full time or planning to live in post renovations. I'll be opening all the walls and bringing everything to code and then drywalling and finishing, so the scope is large enough I wouldn't want to do without permits.

How else should I think about going through the process to avoid getting a builder's license? 

Originally posted by @Jonathan Mason :

@Joe Villeneuve Well, I'm planning on purchasing and titling through my LLC. City building department won't let me pull permits on a property that I'm not living in full time or planning to live in post renovations. I'll be opening all the walls and bringing everything to code and then drywalling and finishing, so the scope is large enough I wouldn't want to do without permits.

How else should I think about going through the process to avoid getting a builder's license? 

 Hire a retired builder to manage the project.  Pay them to pull the permits and oversee construction.

...or, don't buy in R.O.

Years ago, like in 2002 give or take one of my real estate attorneys said that if I bought/rehabbed/sold X number of homes per year I should really get my realtor and builder's license. I do not recall the numbers, nor do I have any idea if that number has changed over the years, or if this rule is still in place. You said this is your first BRRR deal so chances are these rules will never come into play, but we have no idea what other types of deals you are doing as well. Most know about the pro when it comes to pulling permits but there is also a pro if you are doing larger numbers of deals to get the proper licenses in order. It took me a few years, but I did end up getting the realtor and then builders license and eventually became a broker. The other pro is the knowledge that comes from the courses and continuing education. At the same time is it overkill for one project? Maybe, only you can decide and that might be a con.

I know I am not answering your other question but not here to promote skirting the rules and reg’s. Joe had a great suggestion about a retired GC. Also asking some of your subs for suggestions is a way to go. They all know guys with licenses, and you never know someone may be willing to help out for a few bucks.

Some cities are easier to do this in then others, Royal Oak is a bit of stickler and they are very involved. They can be intrusive so best to be on your best behavior.

Thanks @Scott M. this is my first of hopefully many many more BRRR deals. I started off investing in Real Estate in 2019 with a STR up north as a means to "house hack" a cottage for my family and I. However, it's been doing more than just pay for itself which has started to kick me into a growth mindset finally. I'm at a place in life where I have an expanding family and I'm ready to start building a portfolio long term.

This first deal I'm using really to learn. I've renovated personal homes myself I just obviously haven't had to rehab an investment property yet. If all goes to my plans though, I'll hopefully be doing a lot more after the first one. The continued education is more of a Pro than anything for me. I took real estate courses and construction management in college and loved it, I was too naive at that point to realize that it was a a viable option in life I should be taking.


It sounds like you took the exact path I've been thinking about.. I've been considering getting my Real Estate license as well as my Builder's license. Would you still recommend the same path for someone that is just starting out where you were those years ago?

Hey Jonathan, I don’t recall how long it took me but it took me several years to get the licenses in place. By the sounds of it, unlike you, I found the classes to be torture. I hated school as a kid so have never been fond of the process, especially the testing, but I do enjoy the knowledge after that process is done!

I just know my attorney told me for years “You need to get the licenses”. If it wasn’t for him pushing me I would have never done it. But that has more to do with me not liking classes and testing than anything else. Now that I have them and went on to get the brokers license I am grateful.

By the sounds of it you are the opposite and love schooling, learning and even took classes in this subject before and enjoyed it. For that reason alone, I would say yes, why not. It is something you enjoy doing and learning about so sounds like a great fit for you. You also get the benefit of not having to have a realtor take you to homes, you can do that yourself and you can pull your own permits, do your own work and by the sounds of it increase your profit margins.

I don’t see any downside for you. I don’t think it is a requirement for you by any means at this time, but there is no downside.

@Jonathan Mason Royal Oak prices have gone more than double in the last 5 years or so.  There are lots of demo-rebuilds in the city.
The market is more tuned for FLIPS due to the price point OR people do short-term rentals where the rentals can be higher.

Not sure if your purchase price is higher and not factored in the cost for rehabs to support after market value?

Good luck.