Licensed vs Unlicensed Contractors

[Francis I.]

Hello BPers!

I have a property in Charles county MD under contract, which the numbers work really well. Purchase price is $51,500. ARV is $230,000+. Rehab estimate is about $70,000. HML loan at 3 points and 13%. I am doing a 27 * 8 one-level addition on the rear of the house to create space for a master's bathroom, master's walk-in closet, utility room and a full bathroom on the main level. I have 3 bids from contractors so far:

Contractor 1: $90,000 (licensed general contractor, I made the mistake of telling him how much I am purchasing the property for). 

Contractor 2:  $70,000 (licensed general contractor. Lessons learned, I didn't reveal the purchase price). Price sounds reasonable but he estimates 3 to 4 months job completion.

Contractor 3: $20,000 labor-only rehab estimate and I would supply the materials (which I estimated so far to be between $35,000 to $40,000). The contractor is unlicensed. I do have the time to get materials and I'd be pulling permits myself and getting the architectural plan for the addition work. He did show me pictures of some past jobs which he has done. He estimates 2 months of job completion. I am inclined to go with contractor 3, but how do I deal with the risk of worker injury or accident on the job? In the event I go with contractor 3, any tips on the best way to manage the entire process? Any tips on sourcing for quality materials at good price in Maryland?

Thanks!

[Cody L.]

Doesn't sound like you're saving a ton by using #3. And the fact you have to ask suggests you'll not sleep well. And how much time are you going to take having to be a material runner.

While I personally don't give a crap about a "license" for anything (I don't need the government involved in my hiring choices), }2 might be a better fit for your situation.