What's the issues using non licensed contractors?

[Champ Leong]

If I want to hire my best friend, for example, who has done work for me and I know his work is good quality, what issues will this present in my BRRR? Will I have an issue getting hard money? etc TIA!

[Jason Brown]

Ok I've got to jump on here and say that I really do think the whole "use unlicensed contractors and you'll regret it for the rest of your life" bit is a little overblown.

A lot of this fear comes from the fact that we see a lot of newbie investors on these boards complain about getting screwed over by so and so's shoddy work which inevitably ends in us finding out that the person they used wasn't licensed which should have been their first warning sign I get that.

However another common thread I see in these posts is that a lot of these new investors couldn't tell you the basic general mechanics and systems of a house to begin with and therefore were completely reliant on the contractor's competency, craftsmanship and morals. 

My primary contractor or project manager if we are only calling licensed guys contractors is my go to on almost all jobs big and small.

If it involves altering any of the 4 systems being roof, plumbing, electrical or HVAC we'll bring in a licensed guy so they can pull permits and do it by the book. We don't need the city breathing down our necks it's just not worth it.

However for flooring, framing, drywall, tiling, painting, light carpentry, kitchen and bathroom remodels, and light electrical I honestly don't think you've got to pay a guy twice over just because he's got a license.

There is a lot of talent out there and its not always for illegitimate reasons they are lacking in licensure. My tip is if your altering or replacing any of the major systems get a licensed pro. If not then run your numbers and make your own judgment call.