Should I get my contractors License?

Question

I am about 50% done with my study course for the Michigan General Contractor's exam. The main reason I want to get licensed is so I can pull permits on my own, and do most of the work on my rentals/fix-n-flips.

My question is for those who got their contractors license. How has it benefited you? Has anyone started building small multifamily and has it paid off? I am angling towards home building and small multi-family (2-4 units) construction. Just curious to see who else out there has had success and maybe some pointers for me to think about. Your feedback would be greatly appreciated!

Greg Dickerson · Answer

I started as a builder in 1997 and scaled it into a $30 million business 7 years later and sold it. That was my vehicle to generate cash-flow to invest in other assets. I scaled my development projects along the way as well so for me it was the main thing.

Becoming a GC and running your own projects is a business and requires serious expertise and is a huge learning curve depending on your background and experience. You also need to carry insurance which is not cheap and you are responsible and liable for all warranty issues for long periods of time in certain states. It can be very rewarding and beneficial but you need to know what your doing as you can loose a ton of money fast.

Chad Haubrich · Answer

@John Lyszczyk

Depends on your goals and strategy. My dad got his GC license while he was in the military and did it on the side. Eventually we would buy houses to flip ourselves (my mom is a RE agent). He would also do small repairs that realtors leave until the last second. When he retired from the military he went full time flipping a couple houses a year, and doing small repairs, made 120k or so, and my mom matched that in sales. We have an investor who pays for the purchase, we do most the work ourselves which is more money in our pocket, and a profit split. We have multiple GC friends who do flips/rentals and repairs on the side too. It can be stressful but can’t imagine doing anything else now. One of our friends now has 10 paid off properties that bring in 10k a month, and still has his handyman business.

Michele King · Answer

I've been a commercial GC for 30 years and do my own residential construction for investment. With the correct expertise it's a huge benefit. I have 30 years of learning the right way and the wrong way.  Your benefit ultimately in constructing your own deals is the recapture of the profit and general conditions a GC would charge you to complete a project, but in the end you are buying yourself a job.  Someone has to be the PM and Superintendent and if your solo that's you. When I started out in construction I always said I had a staff of three, me myself and I. Now that I've built a machine and have staff and I reap the benefits.  However, getting your license is not a gift card unless you can do the work required to pull deals together efficiently.  Good luck.

George W. · Answer

I'm a licensed master plumber and it has benefited me being able to stamp my stuff but that's about it. You still have to own and maintain all of the equipment and overhead of having a business.

The way you should look at diy though is that you're not really saving any time. Sure you're not paying a contractor but what your paying for is their time and experience.

Personally I pick and choose what things I'll diy. Something small and simple I'll do. Something large like a big sheetrock job ill just sub out because I know people within the industry and get decent deals anyways. The time I save I can make way more doing plumbing for customers than I would save from doing sheetrock myself.

Having a contractors license is more beneficial to being a contractor than it is towards being a real estate investor in my opinion.

Steve Morris · Answer

My question is for those who got their contractors license. How has it benefited you? Has anyone started building small multifamily and has it paid off?

Know a few people that have done it and it works out well for them.  At least you're attuned to your own needs.  However:

1) You can spend a S***-ton of time at the planning bureau to keep them happy and god forbid you upset them.  That I think is the worst thing about being a GC

2) You lose a layer of liability if you don't use a 3rd party

3) With ref to 1), you're going to need to learn to deal with govt which takes time and scars.  Also you need to plan enough to make sure you hit deadlines.

4) You still need to build a network of subs.  That takes time to figure who is good and make them trust you.

5) Talk to a lawyer, but you may have added liability even after you sell a property.  Hence, the need for license and bonds.

John Lyszczyk · Answer

@Michele King

Thanks for the insight Michele. What type of commercial buildings does your company build? Apartments? Hospitals? Office Buildings?

Just curious as I supply the lumber and plywood for the rough carpentry section (untreated, PT and FT) for large projects across the nation. My company is growing and we are looking to expand into the Colorado market.

John Lyszczyk · Answer

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What is one piece of advice you would give to someone starting off as a home builder?

John Lyszczyk · Answer

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How has obtaining your license benefited you? Significant cost savings? Has your business transformed into real estate development? Have your started building small multi-family or single family homes?

Max Versteppen · Answer

Every state requires general contractors to have a license. ... For example, in the state of Florida, contracting without a license can get you fined up to $1,000, put on probation, or jail time for up to one year. And if you get caught a second time, you can end up with a 5-year jail sentence.

Should I get my contractors License?

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