Do You Need to Be A Contractor to Flip Houses?
Hey house flippers! I’ve been asked a few times by some of my awesome fans and followers that see I am a contractor and think they have to be to flip houses. They then look at the requirements to be a contractor and think to themselves “WHOA. This is something that is really impractical for me. There’s no way I can do it.” Well hang tight, because you actually don’t need to be a contractor to flip houses.
I became a contractor for the purpose of building new homes not for flipping houses.
In fact, it is probably better that you aren’t a contractor if you want to flip houses.
Seems counter-intuitive doesn’t it? Here’s why:
There are a lot of barriers to entry. Depending on where you live and what your municipal and state requirements are you’ll be subject to taking long-form tests, training, and board requirements of managerial on the job experience requirements, college degree, or a combination, etc.
There are a lot of costs and liability associated with holding the license.
You are required to hold contractor’s liability insurance which is expensive for this line of work because of how litigious the industry is. You’ll also have to get workers comp or be exempt from it depending on whether the licensee is an individual or entity.
People love to sue. Especially in this field. Contractors are target of many lawsuits whether legit or not.
Perhaps the most important. You don’t need to hold a contractor’s license to flip houses for most work that needs to be done. So long as the work being done is not deemed by your local zoning as work requiring a permit.
**Disclaimer: Always check the building code and licensing requirements of your city/jurisdiction.**
Cosmetics like new paint, floors, cabinets, trash cleanups don’t require a permit. Usually. Again check your local code first.
The trades that DO need a permit should be outsourced as you won’t be able to do them using a contractor’s license anyway. New roofs need to be done by a roofing contractor. A/C replacements need to be done by an HVAC subcontractor. Electric by an electrician. You catch where I am going. Holding a general contractor’s license is not beneficial to you.
Don’t let a contractors license (or not having one) hold you back from your investing goals guys! In most cases the costs of having one far outweigh the benefits. Hope this post helps clear things up.
Peace and Happy Flipping.