Quote from @Collin Smith:
Hello BP Community,
I’m in the Phoenix metro area and am looking to acquire my first investment property to flip. To keep expenses down I would like to perform some of the cosmetic work myself. I’ve done several live-in flips and have gotten confident at flooring, baseboards, and paint. However, since this would be an investment property (held for 1 year or less), ARS 32-1121(A)(6) requires all work be performed by licensed contractors if the cost of material and labor is $1,000 or more. I’ve also read that the sales contract must disclose the improvements and the names of the contractors. However, after reading through some other forum posts it sounds like most contracts for flips do not include disclosures for the cosmetic items.
Do most AZ flippers who do their cosmetic work themselves not disclose it? Or would be worth pursuing a R-62 Minor Home Improvement License as an extra precaution? This bumps the cost of material and labor up to $5,000. There is no prior experience requirement, you just need to pass the Statutes and Rules Exam (SRE).
Curious how other flippers in Arizona go about this. Thanks!
Great question and one I have been trying to find out myself. We are in a similar position, and the last flip we did, we put everything cosmetic under a contractor we work with regularly (CR-61/$50k) who was on the job. He obviously oversaw everything and approved, and we of course pay extra for that. We sub out anything not under his license.. HVAC, electrical, major plumbing, etc.
I know for a fact there are a lot of people not following the ARS on that. $1,000 doesn't get you very far these days. I didn't realize the R-62 was relatively easy to obtain, I will have to look further into that!
My wife and I have done multiple live in flips and a couple traditional flips now, looking to scale that part of our business. This is definitely one of those road blocks that is on my list to explore. Hopefully more people will chime in.
