Rehab a BRRR using permit as owner or find general contractor

[Kailas Tare]

I am rehabbing a SF for the first time (I do have few rentals but never did full remodel rehab before). I got several quotes from general contractors licensed and non licensed. The rehab work is full remodel of a house.

Option A: Hiring non licensed contractor and get permit as homeowner. Pay only labor cost to contractor. Material to be purchased by me.

Option B: Hire licensed contractor, pay labor and material both. Contractor gets a permit and all.

Option A is much cheaper and will force me to gain knowledge (which I can use in future rehabs) but I know it involves risk.

Option B is peace of mind but costly.

What do you guys suggest?

[Steven Goldman]

@Kailas Tare    As a rehabber and lender I would suggest that on your first full gut rehab. you use a contractor. If you have some experience in some of the trades that do not require a license you may be able to get the contractor to allow you to do some of the work and draw some of the funds thus paying yourself. It is my experience that a contractor with an established crew can complete the rehab in much shorter a period of time than you can. For instance he may regularly use electricians and plumbers who will more easily make themselves available on his schedule but, would not be as responsive to you. Time is money in a rehab. so the longer it takes the more it costs. 

Many hard money rehab lenders will not let you be your own contractor unless you have a track record. If you can spend time at the property you will be able to get all of the subcontractors cards and observe the order of construction and get a valuable learning experience. Good luck.