Protecting my assets with first house flip

[Mike Arskiy]

Hi, first of thanks for all the great advice! I've been reading for a while and now I need some help with my specific case.

I am in PA. My first house flip. I am settleing on a bank owned house in the end of the month. Paid all in cash. For some work in the house I may use contractors with no insurance and no licence. What would be the best way to protect my personal assets? Transfer deed to LLC or home insurance is enough?

Thanks!

[Kevin Romines]

I would be very cautious about hiring contractors that don't have verified licenses, proper insurance coverage, bonds, and are in good standing with the state and all insurance / bonding companies. If you do this, you are now an employer. If they get hurt on your job, you better have a workers comp. policy in place and you might have to have licenses such as a general contractors license as well as the insurance and bonds that go along with that?

The better route is to only hire licensed / bonded / fully verified in good standing contractors. You need to be listed on their policy as both an additional insured as well as a certificate holder. As an additional insured you will be protected on their policy just as they are. As a certificate holder, you will be notified if their policy should ever lapse or terminate for any reason. You only need this until the project is fully completed.

If that contractor uses subs, then you need to get all lien waivers, this will eliminate the potential that the sub places a mechanics lien against your property because even though you paid the general, the general stiffed the sub and now you have to pay again.

Learn the t ways to do this. Treat it as a business and you will be less likely to run in to the many pitfalls that are out there.