Rental Property Investor · Milford MA · Member since 2022 · 13 posts · 4 votes
I am rehabbing a SF for the first time (I do have few rentals but never did full remodel rehab before). I got several quotes from general contractors licensed and non licensed. The rehab work is full remodel of a house.
Option A: Hiring non licensed contractor and get permit as homeowner. Pay only labor cost to contractor. Material to be purchased by me.
Option B: Hire licensed contractor, pay labor and material both. Contractor gets a permit and all.
Option A is much cheaper and will force me to gain knowledge (which I can use in future rehabs) but I know it involves risk.
Lender · PA · Member since 2019 · 533 posts · 461 votes
4y
@Kailas Tare As a rehabber and lender I would suggest that on your first full gut rehab. you use a contractor. If you have some experience in some of the trades that do not require a license you may be able to get the contractor to allow you to do some of the work and draw some of the funds thus paying yourself. It is my experience that a contractor with an established crew can complete the rehab in much shorter a period of time than you can. For instance he may regularly use electricians and plumbers who will more easily make themselves available on his schedule but, would not be as responsive to you. Time is money in a rehab. so the longer it takes the more it costs.
Many hard money rehab lenders will not let you be your own contractor unless you have a track record. If you can spend time at the property you will be able to get all of the subcontractors cards and observe the order of construction and get a valuable learning experience. Good luck.
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
4y
@Kailas Tare Are you sure you’re allowed to pull the permits yourself? In most jurisdictions, an Owner Occupant can pull permits as an owner but Not for for a rental property.
Real Estate Agent · Clearwater, FL · Member since 2020 · 19 posts · 16 votes
4y
Kailas,
In Florida, you aren't allowed to pull a permit as a homeowner unless it is your primary residence. Are you sure the owner is allowed to pull a permit on an investment property in your jurisdiction? I would verify that before you make any decisions.
If you can pull the permit and it is significantly cheaper, I would almost lean towards Option A with some type of payment plan. Your permit will require inspections by the city. So, try to workout a deal with the handyman where you can pay them each time the inspector comes out to take a look, if at all possible. This way you can make sure you are paying for work that is being done correctly. Also, do not pay them the full amount until your final inspection has been completed and the permit has been closed. Save at least 10-20% of the project cost for after the permit has been closed. If you pay them in full before it's closed and you have an issue, it will be a pain to get them back out there. This applies to both Option A and B.
Lender · PA · Member since 2019 · 533 posts · 461 votes
4y
@Kailas Tare As a rehabber and lender I would suggest that on your first full gut rehab. you use a contractor. If you have some experience in some of the trades that do not require a license you may be able to get the contractor to allow you to do some of the work and draw some of the funds thus paying yourself. It is my experience that a contractor with an established crew can complete the rehab in much shorter a period of time than you can. For instance he may regularly use electricians and plumbers who will more easily make themselves available on his schedule but, would not be as responsive to you. Time is money in a rehab. so the longer it takes the more it costs.
Many hard money rehab lenders will not let you be your own contractor unless you have a track record. If you can spend time at the property you will be able to get all of the subcontractors cards and observe the order of construction and get a valuable learning experience. Good luck.