When it comes to real estate investing, there is something to be said for hiring a talented and reputable contractor to perform the repairs, upgrades and rehab work. Hiring a bad contractor is something that you do only once because for a fix and flip or rehabbing project, the financial impact can be nothing short of devastating. Aside from following up on references and testimonials on the contractor, you’ll also need to determine if they’re properly insured because the risks of hiring an uninsured contractor are nothing short of significant. That’s precisely what The Bird Dog Program founder Kristine Zelazo will explore in today’s article.
Why is Insurance So Important for Contractors?
It’s easy to underestimate the importance of hiring an insured contractor — that is, until you run into a situation where insurance could have been extremely useful! In short, an uninsured contractor places you, the property owner, at significant risk in the event that any damage, injuries or even deaths occur while the workers are on-site.
A contractor’s insurance policy will cover a variety of different losses, from accidental collateral damage that occurs while working at the property, to covering medical bills that arise if someone is injured on the job. A single personal injury claim can literally total hundreds of thousands of dollars, with some cases involving serious, permanent injury reaching into the millions. You, as the property owner, are typically liable if the contractor is uninsured.
In short, by hiring an uninsured contractor, you’re increasing the amount of liability that you’re personally shouldering. And that’s not a good scenario since investors
Some real estate investors believe that they can avoid liability when hiring an uninsured contractor by simply drafting up a contract. But it’s rarely this easy because chances are if your contractor can’t afford the proper insurance, then they probably can’t afford to pay out of pocket for any damage, medical bills or other damages that arise. So while your makeshift contract may be valid in some cases, its true usefulness may be limited. As the saying goes, you can’t get blood from a stone.
As an investor, it’s important that you limit or avoid any unnecessary risk. Don’t incur added risk by hiring an uninsured contractor. Chances are if they’re lacking insurance, then they’re probably lacking in many other respects as well. It’s always best to work with someone who is reputable and well-established; avoid contractors who cut corners.
It’s important to note that in many states, a general contractor’s license is dependent upon him maintaining insurance coverage. So by hiring someone who’s uninsured, there’s a good chance that you’re also hiring someone who’s unlicensed. You’ve put a lot on the line to fix and flip this property; don’t go off track by hiring the wrong person for the job.
What’s more, if you hire a less-than-reputable rehabber, you risk subpar work that actually slashes your return on investment (ROI). Poorly-performed work can actually do more harm than good as potential buyers may be left wondering what other areas were cobbled together.
Learn More About Real Estate Investing With The Bird Dog Program
Many individuals consider several different investing options before they settle on real estate investing. And even when you’ve made your decision, it’s normal to be a bit nervous about getting started with fix and flips, rehabbing projects and wholesaling. In fact, many are unsure of where to begin and that’s where an experienced guide can be a tremendous asset. A real estate investing mentor like The Short Sale Gal, Kristine Zelazo can provide you with the guidance and advice you need to make significant profits either on your own or in a real estate investment joint venture through The Bird Dog Program. You’ll have lots of advantages in this regard when you enter into a joint venture with a real estate investing and short sale expert like Kristine Zelazo.
Based in Florida, Kristine works with bird dogs, investigators, buyers and sellers. She is an experienced negotiator. So if you’re an investor seeking to get started involved as a bird dog, want to start buying short sales and need a great mentor or wish to pursue a short sale transaction for the sale of your property, turn to Kristine Zelazo, the Short Sale Gal!
Click here to learn more about The Bird Dog Program, or call Kristine at 800.664.0616, x802.