If you are interested in becoming a property investor to rehab houses to sell or rent for profit, there are a few things you will need to consider regarding hiring contractors and subcontractors to get the work done. It's a good idea to consider being your own general contractor. Here's why.
More profit in your pocket
General contractors manage all the various aspects of construction and remodeling jobs, including hiring the various professionals who will work on the investment properties, purchasing materials, and staying in budget. Instead of hiring a general contractor, you can take on that role yourself. That way, you'll cut out the middleman, so to speak, which will put more profit in your pocket. This is true regardless of whether you invest in one or dozens of properties.
Since your profit depends largely on the improvements the contractors and subcontractors will make, it's crucial for you to hire experienced professionals who have the necessary credentials, which includes registration, bonding, insurance, and licensing. You can get a list of credentialed and licensed contractors from your state's licensing board. Also, check your municipality for a list of local contractors who have met any additional local requirements.
Protection with general contractor insurance
Whether you completely gut a property and install new electrical wiring, plumbing, flooring and walls or you only make a few cosmetic changes to a property, it's a good idea to make sure you are protected with general contractor insurance. This type of insurance can cover various problems, such as theft of equipment or if a subcontractor completely disappears before they complete their work. General contractor insurance may also help cover costs of unexpected repairs that are due to poor workmanship, depending on the specifics of the insurance coverage you obtain.
More importantly, if any of the subcontractors get hurt while working on one of your investment properties, your general contractor insurance will cover their injuries—but only if you include workers' compensation coverage as part of your insurance strategy. True, each contractor and subcontractor should have their own coverage, but you also need to cover them in case they get injured at no fault of their own.
Also, be sure your vehicles and equipment are also covered in your insurance coverage. Because of this, it's a good idea to have your vehicles registered under your business name rather than under your personal name. Fortunately, general contractor insurance policies can be personalized to meet the specific needs of your property investment company. Contact a company like Paul S. Critchlow Insurance Agency to learn more.