To start construction arbitrage you need four things: a registered business, the right contractor licence for your jurisdiction, public liability insurance, and at least one vetted subcontractor lined up before your first client calls. That is the actual list. Skills count. Capital, very little. Trade experience, none required.
If you are still getting your head around the model itself, read what construction arbitrage actually is first. The short version: you win the work as the main contractor, subcontract the delivery to a trade, and keep the spread.
What you need to start construction arbitrage: the four non-negotiables
1. A registered business
You cannot invoice professionally, open a business bank account, or comply with most licensing requirements without a legal business structure.
In the UK, the simplest route is registering as a sole trader with HMRC. It costs nothing and takes about ten minutes online. If you want the liability protection of a separate legal entity, a UK limited company through Companies House costs £100.
In the US, an LLC (limited liability company) is the standard starting point. Filing fees start around $35 in states like Montana, $50 in Arizona, and $55 in Kentucky. Some states also charge annual renewal fees - check your own state's requirements, because they vary significantly.
Either way, sort this first. Everything else - insurance, bank account, invoicing - follows the legal entity.
2. The right licence for your jurisdiction
This is the most important item on the list, and the one people most often skip or guess at.
Licensing requirements for general contractors vary by jurisdiction. In the US, roughly twenty-seven states require a state-level general contractor licence. Others regulate only at the county or city level. A handful of states - Texas, Colorado, and Illinois among them - have no statewide general contractor licence requirement, though local regulations still apply in many cities and counties within those states.
California is a useful benchmark for how seriously states take this. Under California Business and Professions Code Section 7028, doing contracting work with a combined labour and materials value of $500 or more without a current CSLB licence is a misdemeanour. First offence: up to six months in county jail or a fine up to $5,000. Second offence within ten years: 90-day mandatory minimum jail term.
That is not a grey area. Find out exactly what your state or country requires before you take a single job. The full breakdown is in do you need a contractor licence for construction arbitrage.
In the UK: there is no single national general contractor licence equivalent to the US system. But if your niche touches gas work, electrical installations, structural elements, or other regulated trades, specific competency schemes apply to the tradespeople you hire - Gas Safe, NICEIC, and similar. Your subs need those, not you. What you do need as a UK operator paying subs is covered in the next section.
In Australia: state regulators govern builder registration. In New South Wales, the NSW Fair Trading office oversees contractor licencing. Requirements differ by state and by project value threshold.
3. Public liability insurance
Non-negotiable. Get it before you quote your first job, not after.
As the main contractor, you carry liability for the finished work even if you never touched the tools. One claim without insurance is enough to end the business. That is not a hypothetical - I have seen it happen.
In the UK, basic public liability for a sole trader starts from around £6-8 per month for a simple policy, and from £30-45 per month for a construction-specific policy that covers you properly on site jobs, according to Simply Business and similar comparison sites. For most commercial projects, you will need at least £2 million cover.
In the US, a solo general contractor general liability policy starts around $65 per month for basic cover, according to NEXT Insurance - though the actual cost depends on your trade, location, and annual revenue. Commercial projects routinely require $1 million per occurrence and $2 million aggregate as a minimum, and many property managers and project owners check your certificate before signing a contract.
Do not get the bare legal minimum and assume you are covered. Match your limits to the scale of projects you are winning.
4. At least one vetted subcontractor
A client without a sub to deliver the job is a crisis. A sub without a client is just a slow week. Always line up the trade side before you need it.
This does not mean hiring anyone. It means having a short list of reliable tradespeople you have vetted - references checked, insurance certificates verified, a test job completed if possible - who you can call when work lands. The full vetting process is in how to find subcontractors for construction arbitrage.
I have over 1,400 subs in my database. You do not need 1,400 to start. You need one reliable person in your chosen trade who will return your calls and show up when they say they will.
What you need in the UK: CIS registration
If you are operating in the UK and paying subcontractors for construction work, you must register with HMRC as a CIS (Construction Industry Scheme) contractor before you make your first payment to a sub.
CIS is HMRC's system for collecting tax at source on payments to construction subcontractors. As a contractor, you verify your subs through HMRC, make deductions at the correct rate (20% for registered subs, 30% for unregistered ones), and submit monthly returns. It is not optional - it is a statutory obligation the moment you start paying tradespeople for construction operations.
You can register as a CIS contractor on gov.uk. Do it before you pay your first sub.
From April 2026, Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) also applies to sole traders with gross income over £50,000 per year. If you are operating in the UK at that scale, you will need MTD-compatible accounting software to submit your tax information.
The skills that actually matter
Construction arbitrage does not require you to know how to tile a bathroom or frame a wall. It requires you to do three things well:
Sales. You win the jobs. You respond fast, quote clearly, and close. Every job starts with a conversation that you have to win.
Organisation. You are the co-ordinating intelligence between the client and the trades. Who is doing what, when, for how much, and what happens if they do not show up. You track all of it.
Communication. Daily check-ins with the sub. Clear updates to the client. A paper trail that protects you when something goes wrong. This is the job, every day.
None of these require a trade background. They require discipline and the willingness to take the model seriously.
What you do not need
People assume they need things they do not need. To be direct:
You do not need tools. You never touch the physical work. The subs bring the tools.
You do not need employees on day one. The sub network is your labour force. A full-time hire comes much later, if at all.
You do not need a website or paid ads before your first job. Your personal network and a Google Business Profile will win job one. Marketing spend follows early margin.
You do not need substantial capital. Project costs are funded by client deposits. Your own startup costs are registration and insurance - a few hundred dollars or pounds at most. The full breakdown is in how to start construction arbitrage with no money.
You do not need construction experience. Relevant, yes. Required, no. What burns beginners is not lack of trade knowledge - it is skipping the compliance basics.
The honest starting position
Here is what job one actually looks like: a registered business, a basic insurance policy, a CIS registration if you are in the UK, one reliable sub in your main trade, and a quote that wins a small local job through your personal network or a community group.
That is it. The complexity comes later - building the sub database, scaling the client pipeline, working multiple jobs in parallel. But the start is not complicated.
What kills most early attempts is not missing something exotic. It is skipping the licence check, quoting before confirming the sub's price, or spending deposit money before the job is complete. Read what are the risks of construction arbitrage before you start your first job, not after.
The model itself - act as the main contractor, win the work, sub it out, keep the spread, run it as a system - is laid out in full on the construction arbitrage pillar page. That is the right place to start.
If you want to build this alongside people who are already doing it, the room for that is Construction Arbitrage Players on Skool.
And when you are ready to go deeper, THE FAMILY SECRET - How Construction Arbitrage Really Works is coming soon. The full inside picture of how the model actually runs.
Last checked: 9 July 2026.
Frequently asked questions
Do you need a contractor licence to do construction arbitrage?+
In most US states and many other jurisdictions, yes. Licensing requirements vary - some states require a state-level general contractor licence, others regulate only at the county or city level, and a few have no statewide requirement at all. The threshold in California is $500 in combined labour and materials. Check your own jurisdiction before taking your first job.
How much money do you need to start construction arbitrage?+
Very little. Business registration costs nothing in the UK as a sole trader, or from $35 for a US LLC depending on your state. Insurance starts from around £6-8 per month in the UK or $65 per month in the US for basic cover. The jobs themselves are funded by client deposits, not your own capital.
Do you need construction experience to start?+
No. You are managing the project, not doing the work. The skills that matter are sales, organisation, and communication - none of which require a trade background. What you do need is the discipline to vet subs properly, quote accurately, and manage the delivery without being on site.
Do you need employees to start construction arbitrage?+
No. Day one is typically one person, a phone, and a short list of subcontractors who do the actual work. The whole point of the model is that labour scales through the sub network, not through headcount.
What is CIS and do I need it in the UK?+
CIS is the Construction Industry Scheme - HMRC's tax deduction system for the UK construction sector. If you are paying subcontractors for construction operations in the UK, you must register with HMRC as a CIS contractor before making your first payment to a sub. Register at gov.uk. Failing to do so means you cannot verify your subs and face compliance penalties.
Mohamed El HadriCo-Founder
I'm a co-founder of several construction companies. I built a construction business from a 30-van operation into a lean model with 1,400+ subcontractors in the database - winning the work as the main contractor, subbing it out, and running it as a system from a laptop across multiple countries. I write this site from what actually works.
@mointhemarket · 30k followers on Instagram →Run the model with people who already do
Reading the method is step one. Inside Construction Arbitrage Players you connect with players from around the world who run construction arbitrage every day and make real money from it - share your deals, get answers, and get in the game. Founding-member access is open now.
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The Family Secret - how construction arbitrage really works - is coming soon.
A construction business built this way is a sellable asset
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