House Flipping Without a Contractor

[Andrew Tinnon]

Hello,

I am currently located in the Denver, Colorado area, looking to start doing some fix and flips to generate some extra income and eventually transition to a full time real estate investor. 

One of the biggest limitations I am seeing in the fix and flip market, at least in Colorado, is the requirement of a registered contractor to be on the permit for a rehab project. I have experience in construction and rehab projects so would plan on doing a lot of my own work and subcontracting out the rest to save money vs the alternative of hiring a contractor to do the whole project. 

I'm seeing that a lot of the municipalities will allow homeowners to submit building permits, but will place limitations on residency requirements and property types (i.e., not allowed on townhomes or condos, must be primary residence for 1 year). I am weighing the benefits of trying to get my contractors license as I am experienced in construction, but don't think this would be an easy process and it would be ideally avoided. 

Does anyone have any suggestions for how to get around these restrictions, or know which if any municipalities don't have these kind of restrictions?

Thanks for your help, always looking to make connections, so feel free to reach out to me directly. 

[Alan F.]

Quote from @Andrew Tinnon:

Hello,

I am currently located in the Denver, Colorado area, looking to start doing some fix and flips to generate some extra income and eventually transition to a full time real estate investor. 

One of the biggest limitations I am seeing in the fix and flip market, at least in Colorado, is the requirement of a registered contractor to be on the permit for a rehab project. I have experience in construction and rehab projects so would plan on doing a lot of my own work and subcontracting out the rest to save money vs the alternative of hiring a contractor to do the whole project. 

I'm seeing that a lot of the municipalities will allow homeowners to submit building permits, but will place limitations on residency requirements and property types (i.e., not allowed on townhomes or condos, must be primary residence for 1 year). I am weighing the benefits of trying to get my contractors license as I am experienced in construction, but don't think this would be an easy process and it would be ideally avoided. 

Does anyone have any suggestions for how to get around these restrictions, or know which if any municipalities don't have these kind of restrictions?

Thanks for your help, always looking to make connections, so feel free to reach out to me directly. 

 These laws are becoming more prevalent because unlicensed hacks are doing construction and remodeling.

[Evan Polaski]

@Alan F., I believe I only ever needed a work around on one property.  In this case, I paid a contractor that we were only going to use for a small portion of job to allow us to submit permits with his name.  Granted, this was a contractor we have worked with many times, so he knew us and trusted the work. 

If you are going to sub out some of the work to someone with a license, you may ask them what it would cost for the work and how much they would charge to be a "consultant" to let you do the same.

[Alan F.]

Quote from @Evan Polaski:

@Alan F., I believe I only ever needed a work around on one property.  In this case, I paid a contractor that we were only going to use for a small portion of job to allow us to submit permits with his name.  Granted, this was a contractor we have worked with many times, so he knew us and trusted the work. 

If you are going to sub out some of the work to someone with a license, you may ask them what it would cost for the work and how much they would charge to be a "consultant" to let you do the same.

 I've been a contractor for 33 yrs, what you described isnt legal according to the Contractors license board. Not throwing shade. I've learned alot from your posts, thx

[Terri-Leigh H.]

How extensive are your flips? Could you hire out the scope as legally required? I am in the process of getting my GC license for Jeffco and while not a cake walk, it's not horrible. Might be the commitment you need to make. Let us know if you want to chat further, we do a LOT of work with investors in Denver and the foothills.

[Evan Polaski]

@Alan F., I cannot say if it is or isn't legal in Ohio.  But as noted, this GC was on site doing work on the house.  All inspections were passed first time.  

Again, can't speak to legality of this.  I understand the arrangement is certainly different, but from a practical standpoint it isn't much different than a licensed GC staffing a team of laborers, who are actually doing all the work, and the GC checking in on quality of work.  

But in Cincinnati, I can pull my own permits if I am working on my own house. The issue I had was I bought house in name of LLC, so needed a licensed GC on permit. Additionally, to be licensed GC for residential work in Cincinnati, you simply complete a form and pay the fee. That's it. No test, no experience, nothing else needed (beyond an insurance policy number to complete application).

Again, not clear on legality, just stating that from a practical matter, it would really make almost no difference.

[Kevin Ivey]

Depends on how extensive the remodel work is, a cosmetic flip paint, trim, cabinets, vanities don't trigger permits here in WA state.  Then you can have the specialist sub pull permits for their work under their license, plumbing, electrical, roofing, etc.. 

[Peter Mckernan]

Quote from @Andrew Tinnon:

Hello,

I am currently located in the Denver, Colorado area, looking to start doing some fix and flips to generate some extra income and eventually transition to a full time real estate investor. 

One of the biggest limitations I am seeing in the fix and flip market, at least in Colorado, is the requirement of a registered contractor to be on the permit for a rehab project. I have experience in construction and rehab projects so would plan on doing a lot of my own work and subcontracting out the rest to save money vs the alternative of hiring a contractor to do the whole project. 

I'm seeing that a lot of the municipalities will allow homeowners to submit building permits, but will place limitations on residency requirements and property types (i.e., not allowed on townhomes or condos, must be primary residence for 1 year). I am weighing the benefits of trying to get my contractors license as I am experienced in construction, but don't think this would be an easy process and it would be ideally avoided. 

Does anyone have any suggestions for how to get around these restrictions, or know which if any municipalities don't have these kind of restrictions?

Thanks for your help, always looking to make connections, so feel free to reach out to me directly. 

 Getting your GC license would be a lot of work, but this is something to think about if you are going to go full-time into real estate investing. You can sub all the work out and keep all your costs low for the rehab, even go in after deals that someone else might not be able to get because your costs of labor/work is a lot lower then the other person needing a contractor to do the work. Something to really consider for you to get your license. 

[Kelsey VanSleen]

Quote from @Andrew Tinnon:

Hello,

I am currently located in the Denver, Colorado area, looking to start doing some fix and flips to generate some extra income and eventually transition to a full time real estate investor. 

One of the biggest limitations I am seeing in the fix and flip market, at least in Colorado, is the requirement of a registered contractor to be on the permit for a rehab project. I have experience in construction and rehab projects so would plan on doing a lot of my own work and subcontracting out the rest to save money vs the alternative of hiring a contractor to do the whole project. 

I'm seeing that a lot of the municipalities will allow homeowners to submit building permits, but will place limitations on residency requirements and property types (i.e., not allowed on townhomes or condos, must be primary residence for 1 year). I am weighing the benefits of trying to get my contractors license as I am experienced in construction, but don't think this would be an easy process and it would be ideally avoided. 

Does anyone have any suggestions for how to get around these restrictions, or know which if any municipalities don't have these kind of restrictions?

Thanks for your help, always looking to make connections, so feel free to reach out to me directly. 

Hi Andrew! I'm new to RE and I'm in Colorado Springs!!! I did not know this about registered contractors on the permit. If you managed the work yourself and subbed out the work to registered contractors, does that suffice since only certain work requires a permit?

Thanks for the info on CO laws!

[Matthew Paul]

Just get your license and get it out of the way . If things go right you will be doing more than 1 house , the issue will come up again .

[Kelsey VanSleen]

Quote from @Kevin Ivey:

Depends on how extensive the remodel work is, a cosmetic flip paint, trim, cabinets, vanities don't trigger permits here in WA state.  Then you can have the specialist sub pull permits for their work under their license, plumbing, electrical, roofing, etc.. 

 This is what I was wondering @Andrew Tinnon. Or am I not understanding the nuance you are discussing here? Why the need for a GC license if licensed subs do the work?

[Kevin Ivey]

@kelsey VanSleen

no there is no need for a GC license if the subs have contractor licenses.  Because they aren't really subs at that point just their own contractor not under another persons license.  Most municipality want the license # listed on the permit application. And inspections may have to be done for each individual contractor since they are responsible for their own work.  But honestly with all the counties and different little cities there are a ton of different ways things are regulated, and sometimes depends on the permit office mood and empathy.  

[Kelsey VanSleen]

Quote from @Kevin Ivey:

@kelsey VanSleen

no there is no need for a GC license if the subs have contractor licenses.  Because they aren't really subs at that point just their own contractor not under another persons license.  Most municipality want the license # listed on the permit application. And inspections may have to be done for each individual contractor since they are responsible for their own work.  But honestly with all the counties and different little cities there are a ton of different ways things are regulated, and sometimes depends on the permit office mood and empathy.  

This makes sense, thank you!

[Matthew Paul]

Quote from @Kevin Ivey:

@kelsey VanSleen

no there is no need for a GC license if the subs have contractor licenses.  Because they aren't really subs at that point just their own contractor not under another persons license.  Most municipality want the license # listed on the permit application. And inspections may have to be done for each individual contractor since they are responsible for their own work.  But honestly with all the counties and different little cities there are a ton of different ways things are regulated, and sometimes depends on the permit office mood and empathy.  

 This doesnt work , the permit office will want 1 name on the permit as the contractor , yes licensed trades will pull individual permits ( HVAC, Electrical , plumbing )  But that doesnt cover the entire job . You have all the other trades drywall , paint , framing , roofing , flooring etc .  Not one of any of these contractors will put their name on a permit for the entire job .

[Kevin Ivey]

paint flooring trim, COSMETIC  work, don't require permits in any of the municipality or county that I have worked in, in WA.

and yes I said they would all be there own boss/ permit.  

[Matt M.]

One word... Liability. What if something goes wrong post closing?

You'll also have to disclose that you didn't pull permits if you do work that requires a permit. Buyers are getting savvier, and the permit search comes up on inspection. 

[Gabriel Graumann]

@Andrew Tinnon If you're planning to make a career out of this like it sounds, make the time and get your license. Then you can act as GC on each project when desired. There are also limits to what does/doesn't need a permit, so attempting to find properties that don't require walls to be moved or other issues that may require a permit would be helpful too in the interim.

[Bill J Fay]

If you'd rather pay yourself instead of another GC to sub out your remodels, do it! Can only help but is not needed to have a profitable business.