The Danger Of Using Uninsured And Unlicensed Contractors in Nashville


Spencer: Hey, I’m Spencer Sutton and this Matthew Whitaker with gkhouses and today, we want to talk to you about the dangers of using an uninsured and unlicensed contractor for your Nashville rental house.

And so, Matthew, I know that we’ve been in the business for quite some time.

Matthew: Yup. A long time.

Spencer: A long time. And I remember, when I first bought my very first rental house was probably 2005.

I absolutely went and found, like, the cheapest contract labor I can find to do some work.

They Were Not Licensed!

And I found this person was not insured, they were not licensed, they were just kinda like…we like to call them Chuck in a truck.

It really didn’t work out for me.

It was not the best move, but as I grew, kinda as I understood what was the right thing to do, I changed my tune.

Why Don’t We Talk A Little Bit!

So, why don’t we talk a little bit about that for anybody who owns rental houses here?

Matthew: Yeah. I would say the issue is sometimes it, I mean, most times it does work out, right?

I mean, you saved a bunch of money, and generally, there are some really talented people out there that are uninsured and unlicensed.

One of the things I think people need to understand though is, what happens when it doesn’t?

Like, Can You Afford The Risk?

Like, if you’re doing it one time and maybe it’s on your house, you’d have to just check your insurance policy, but maybe you can get away with it.

But if you’re gonna be an investor and you’re going to do this kinda business in scale which is what we think most investors want to do.

And if it’s your home, and you want to make sure that it’s adequately taken care of.

We think that it’s worth spending a little bit of extra money getting something that’s licensed and insured.

We’re Not Giving Legal Advice!

Spencer: And I know this is not legal advice.

We’re not giving legal advice at all, but what happens if it doesn’t go well?

Let’s just say you hired somebody to work at some of your houses.

A few rental houses that weren’t insured and they get hurt on the job. What can happen?

Matthew: Yeah. And this does happen. I mean, I’ve actually seen people get hurt.

You know, the person that hired them is liable and you may say, “Well, I hired a property manager to hire an unlicensed person.”

But That Can Even Go Through This Shield, Let’s Call It, Of A Property Manager.

So, if you hired an unlicensed, kind of uninsured contractor, or your property manager does, you could ultimately be liable and you may say, “Well, I’ve got liability insurance.”

It depends on…you’d have to read your insurance policy, but I’ve been told that there are some insurance policies and maybe the most of them because it makes a lot of sense.

If You Hire An Uninsured, Unlicensed Contractor

If you hire an uninsured, unlicensed contractor, it may not cover you because basically, that insurance company sees you as not essentially doing your diligence on the people that are working, so why should they be liable for something like that?

Spencer: Right. So,

    • What can happen?
    • Like, let’s say somebody gets hurt, are you going to be responsible?
    • Could you be responsible for lost wages, injury, like hospital?

Paying For Hospital Bills!

Matthew: Yeah. Paying for hospital bills. I mean, that person could essentially sue you.

Well, they may have health insurance.

Let’s say…you may say, well, they fall off a ladder and then they have, you know, a broken hip or a broken leg, and you say, “Well, they have health insurance to cover that.”

I mean, it’s entirely possible that health insurance could sue you personally for those bills.

You Would Be Ultimately Responsible!

Because that person was working essentially for you and there are cases out there where this has happened where, again, you would be ultimately responsible for that person’s medical bills, for their lost time at work, for taking care of them.

I mean, just not something that you wanna, you know, Warren Buffett always talks about like inverted risk.

Like, you don’t want to ever get yourself into a risk that is way bigger than what you’re willing to pay, and this goes also with things like gambling.

Like, you don’t want to push all your chips if you can’t afford that.

Putting All Your Chips And Betting!

And to me, doing this, hiring unlicensed, uninsured contractors is basically like putting all your chips and betting all your chips every single time.

Now, again, you’ve got a great hand generally, and generally, this works out which is why people do it.

I mean, it has a very high success rate, but the downside risk is, you know, is basically could be a financial failure.

Spencer: Yeah. So, I think this is a great point.

I mean, when we talk to investors all the time and we’re talking about maintenance and maintenance cost, a lot of them focus on just the cost, like, what does it cost to get this work done?

Step Back And Look At The Big Picture!

And that’s, again, that’s very understandable, we get that, but we hope this video kinda helps you kinda broaden, kinda step back and look at the big picture of what could take place and the risk involved in that.

So, whether you’re hiring a property manager to take care of your properties or whether you’re doing it yourself.

Just Make Sure!

You need to just make sure, if at all possible that you hire somebody who is insured and has the proper licenses to do work on your property so that you just mitigate a lot of that risk.

And if there’s anything that we can do for you here in Nashville, we would love to.

So just reach out to us.

You can email us at [email protected]

You can call us, 615-925-3880, extension 3.

We would love to talk to you.

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