A new article on June 3, 09 from MSN Money writer Michael Brush indicates that there is a third wave of foreclosures yet to come from broadcasters first class (ie those previously "safe-debtors" with sound credit and fixed rate mortgages) as a result of job losses due to the deterioration of the economy ( "Coming: a 3rd wave of foreclosures") .
The article states that "In the first quarter, the percentage of those borrowers who were behind on their mortgages or in foreclosure had doubled over the previous year, by almost 6%" and goes on to say that "Credit Suisseanalyst Rod Dubitsky predicted last week that 8.1 million mortgages, or 16% of all mortgages, will go into foreclosure in the next four years. a weak economy, continued fall in house prices and rising delinquencies among issuers all first-rate, but in a way that foreclosures "will consistently higher gear," he says. " Not so great news for the economy, but really good news for entrepreneurs interested in starting a foreclosure cleaning business to clean and repair homes for the banks foreclosed.
To put this into perspective, this means that there will be more than 2 million foreclosures a year and more than $ 2,025,000,000 in prize money that will be spent to clean these foreclosed properties (since the average bill is $ 1000 + to clean up one of these properties).
Let's take a look at how you can position themselves to capitalize on this foreclosure movement to come
Set your company properly
If you want to be hired for cleaning or conservation work, you need to operate your business as a professional company. The good news is that you can set up a business quickly and cheaply, and usually alone. Many people decide to set up an LLC (limited liability company) because of how quickly and easily you can do, but we recommend you check with your accountant or other business professional to select the type of business entity is right for your personal situation.
If you decide to start an LLC, you can usually find all the online documents required from the government website of your state. Usually the branch you are looking for is called "Industrial Commission" or "Commission Corporation" or similar. Try typing in "start a business + ______ (your state)". All that usually ends in ".gov" is a good starting point as it indicates a government website.
Once your business is set up, you will need an Employer Identification Number (EIN), which is like an SSN for your business. You can register for one online: Type "" and "EIN" IRS into a search engine to find the online registration link.
As soon as you have your EIN (which you can usually get online immediately), you can open a bank account business for your company. This step is very, very important. In the excitement of things, many people get caught up in the day-to-day relationships of running a business and use their personal accounts to pay business expenses. Not only does this present an accounting nightmare at the end of the year, but could present problems for you with the IRS if you do not keep your personal finances and business separate.
Once legally set up your business, you may need to register your business with your county or city in order to obtain a business license to operate. You can start by calling the Town Hall or the Office of the County Clerk to inquire whether or not you need a city / region / state of business license and, if so, how to get one.
So, to recap:
1. Legally set the business
2. Get your EIN # and create a business bank account
3 . Apply for a business license
4. If you want to do conservation work, determine whether or not you need a license for contractors
Get insurance
it absolutely must have an insurance policy on commercial liability and workers compensation insurance, in order to run your business. Not only is the essential insurance to protect themselves from liability and protect those who work for you in case of accident at work, but many of the asset management companies not to do business with you if you do not meet their minimum insurance requirements.
insurance will probably be one of your biggest start-up costs, however, most insurance companies allow you to pay your monthly premium (rather than annual) basis, which certainly makes this more convenient shopping .
general rules Liability Insurance can cover the following: personal injury, property damage, contractual liability, personal injury and advertising, professional liability (also known as errors and omissions (E & O) insurance, this coverage protects you and your business from litigation caused by allegations of professional negligence or failure to perform your professional duties), rental car and non-car liability and the liability umbrella.
You'll want to speak with your insurance agent to get a better idea of the scope of the coverage provided by their particular policy and one that is best suited for your individual needs
workers' Compensation insurance is required in most states, when you have employees W2, and some states also require your insurance to cover 1099 also entrepreneurs. 'Compensation ( "Workers' Workers Comp") covers medical expenses and disability of your employees related to work-related illness and injury in the workplace.
In the states where they are not required to cover the 1099 entrepreneurs would need them to provide proof that bring their workers compensation insurance. Although the temptation to shift the financial burden of maintaining a policy on your business in 1099, in all actuality, you are probably better to take on the cost of compensation all the staff workers' (all W2 employees and 1,099 companies). The reason is that it is hard to find only independent entrepreneurs who have their own policy. In addition, this area has such a high turnover that if you put this restriction on your independent contractors, you waste precious time and lost revenues trying to find replacements quickly.
Here's a great tip: sometimes you can get a "pay-as-you-go" insurance where insurance premiums compensation for your employees are based on the payroll today, rather than an estimated amount. This is great for companies that are just starting out or have a fluctuating load of work. Type "pay as you go workers comp" into a search engine to get results in your area.
As second striker, we used the Farmers Insurance for years and have always had excellent customer service and great prices. Just Google "Farmers Insurance" for an agent in your area.
Foreclosure Cleanup vs. conservation properties Services
As the name suggests, like a Foreclosure Cleanup Company, you will be clean all the garbage in the house (also called a "TrashOut or "trash out"), as well as cleaning the inside of the house. you may also be required to remove the vehicles on the property. cleaning usually foreclosure companies are also responsible for making a basic cleaning landscape that includes hauling garbage from any front / back yards, mowing and cutting trees / bushes.
clean up the properties is the extension of the services offered by a foreclosure Cleanup Company, while a property Preservation Company is also engaged in "fixing" of
property and the "conservation" of the propertyHere are some of the services that a conservation society can offer (note that a property preservation society in general also offer cleaning services) :.
Protection of ownership
initial vacant property inspection or
or block changes
or boarding of windows and doors
or temporary repair roof
O pools Protection
preserving the property
or removing external debris
or removal of abandoned vehicles (cars, boats, etc.)
or internal debris removal (junk-out)
or the removal of hazardous waste
or interior cleaning services carpet cleaning
or washing / graffiti removal window
or window replacement
or services Swimming (draining, acid washing, maintenance, etc.)
control services or parasites
or maintenance / landscape
or snow removal
or Winterization
or Gutter cleaning
or pressure Cleaning
or carpet removal and replacement
or Tile / flooring repairs
or Painting
or plasterboard / drywall repairs
or carpentry repairs
or Plumbing fixtures and repairs replacements
O Fire & mold remediation
or fence repair
here are some things to consider when determining the extent of the services you want to offer:
licenseto Contractors 'it is generally not required for foreclosure cleanup company, but it is likely necessary for conservation companies that do the job for a certain dollar value (usually $ 500 - $ 1000 +). Sometimes this license can be obtained by attending a course and passing a test, while other states require previous experience in auditable sector.
The insurance premiums tend to be higher for companies offering storage services as they are regarded as a "general contractor". However, the earning potential is much greater, as a conservation services tend to run from a few thousand dollars upwards instead $ 800 - $ 1500 for each cleanout.
Usually what people do is they start initially offer only the foreclosure cleaning services and then when things pick up, will add storage elements to the list of services they offer. This allows them to get their foot in the door, without having to spend a lot of money in advance when setting their company.
Source Equipment & Tools Right
The great thing about starting a foreclosure cleaning company is that the initial costs are quite low as most of the equipment and tools necessary for foreclosures cleaning can probably be found in your garage:
or cleaning chemicals (ie for all uses cleaner, disinfectant, toilet bowl cleaner, window cleaner)
or cleaning supplies (broom, mop, scrub pad)
or Vacuum
or garbage bags and shovels
or work gloves and plastic gloves, disposable
mowers or lawn lawns and tools
or Wheelbarrow
For smaller items that they do not have on hand, check your local dollar store. Their prices can not be beat and usually have the same chemicals and cleaning products of other retailers. Once you start to get a bit 'volume, consider shopping for supplies at Sam's Club or Costco to keep expenses low.
You can also find used equipment in great shape (as blank) going around for your Saturday morning garage sales / local shipyard. If you have a center of "reuse" or Salvation Army, you may consider monitoring as there is often empty and other small appliances or garden tools for sale.
To transport garbage, you will need some kind of trailer and a vehicle big enough to pull it. If you do not have a truck and a trailer, you can always borrow a friend's truck and rent a trailer from U-Haul or just go ahead and hire a moving truck from U-Haul. (Remember, though, that you will be charged a daily fee plus a per-mile rate when you rent a moving truck while if you use your own trucks and just rent the pull-trailer, you only incur the daily rental rate for the trailer.)
sometimes you will be required to clean a property that does not have electricity or water. In case there is no electricity, you'll need a generator to operate the vacuum cleaner and other electrical equipment. These can be rented at Lowe's or Home Depot and is a better alternative to purchasing a full license unless you do not plan to use it on a regular basis (a new one will run about $ 500 +).
To save on costs, it is better to rent equipment in the beginning.
Once you get up and go, it may be worth looking into equipment with their purchase. Check the on-line classifieds ads (like Craigslist, Kijiji and Backpage) for trailers, generators, etc. You should also check with U-Haul as they were selling some of their excess trucks as of late.
Stay safe on the job
As a business owner, you are responsible to keep your staff safe while working on the job. Working safely is key to the health of your staff and the reputation of your business (and also keeps the low insurance premiums). And 'imperative that you examine the security issues before allowing anyone to work on the job - you need to provide both classroom and safety training in the workplace to all new hires.
Now, should not be anything fancy; you can spend 20 - 30 mins reviewing security policies, safe working practices and answer any questions and then you'll be done! Be sure to have people sign in and out of the meeting and to document that a security meeting was held.
It 'also very important that you become familiar with OSHA and safety standards, as well as the risks to health and safety associated with this industry so that you can keep the security personnel, avoid accidents and hefty fines . You can find the Pocket of OSHA Construction Safety Guide (this is a short and easy to read) at the main site (OSHA DOT gov) by searching for the name of the report.
Another way to protect your personal and your business is to make sure to check references before hiring someone. They insist that list the unrelated references (that is, not the mother, sister or best friend) and instead of the reference list of previous employers or someone you know in a professional capacity. We also do drug testing and background checks - may seem paranoid to some, but the safety of our staff, the property of our customers and the reputation of our society is too important to risk not spend $ 20 on a check background or drug test.
PRICE Right Services
In this area, the lowest price always wins the bid (unless, of course, the highest bidder has a terrible experience no complete work and is totally irresponsible and unprofessional, in which case the company has just committed "reputation-suicide", and will never be hired again). Lenders do not want to spend more than they have to be on these properties so you want to make sure you price your services comparable with market conditions (but at the same time, the price so they still make a big profit and don ' t leave money on the table).
to clean out foreclosures, most banks expect to spend anywhere from $ 500 - $ 1500 for a cleanout (TrashOut, clean inside and start cleaning the landscape), but could be a bit 'more or a little' less, depending on your area. It 'important to know that most lenders have prescribed "price cap" for the maximum amounts that pays for the services.
Even you are, if it provides storage services, a great site we 've E' ve used before in order to determine our prices to make repairs is Www.CostEstimator.com to get the market rates for the building costs - you can get a
free 30 day trial (no need to enter your credit card - it really is free!). There are over 3,000 items of cost, adjusted for more than 210 geographic regions, local to create your offer, and you can add as many as needed. If you wish to subscribe after the trial, it's only $ 15 / month.
market your services
It 's true - "nothing happens until somebody sells something" ... and you'll need to go out and sell, sell, sell your business. Once you've done a couple of jobs, you realize that the word of mouth advertising and referrals will provide a large pool of jobs for you, but in the meantime, you need to do all we can to let people know customers that you exist.
A lot of the work will be the relationships that you build with real estate agents ( "real estate agents") that list bank owned homes (often referred to as REO listings). They are often tasked to bid out the cleaning and repair of new ads by the asset management company so you'll want to make sure that the agents in your area know about your company manages this type of work.
A great way to find out which real estate agents in your list of REOs region is to go online to REO websites and "my data" the main bank contact information for listing agents (name, -mail, phone). It can be painstaking work, but definitely worth it.
Here's an example of REO bank sites for initiating the collection of estate agent information
Wells Fargo (properties managed by Premier Asset Services): pasreo.com/pasreo/ images / pas_logo.jpg
NOTE: to gain access to agent information, select the status and click search. Then, select each list, and click "Print CVS property relationship". Each listing information and correspondents (as the agent's name, phone #, and email) will be created in an Excel spreadsheet. You can access the page
Remember to follow up with a phone call a few days later. Do not be shy to ask the real estate agent, if he / she has all the jobs to bid, or - most of them are very accommodating and willing to give a new company the opportunity to provide estimates.
The other way in which jobs are bid out is through the large asset management companies (also known as Marketing & Management Companies, REO field services companies and property management companies). Basically, the lender says, "ok - I have thousands of properties to get rid of here, ABC National Asset Management Company: clean, safe and sell these properties to us.". And the National Society of Asset Management will then subcontract the work of cleaning and conservation of foreclosure properties local companies. In order to work for these companies, typically you need to register your company as a potential supplier. Many times this can be done online.
There are both positives and negatives associated with work for larger companies. On the positive side, you will probably be given a couple of projects to work on at a time so you will be kept relatively busy. On the downside, they usually want to offer 'wholesale' prices and not paid up to 30-60 days after their invoice for the work. Working for one of these companies, however, will give you the expertise to go after more work.
Other possible customers are wholesale investors properties (groups of investors who buy foreclosed homes at auctions and then sell them to small investors at a wholesale price), investors, landlords, property management companies , real estate agents and so on.
it should also consider attending the local networking events, such as the Chamber of Commerce meetings and all meetings with local investors, in order to distribute your network adapter, and with potential customers. The more you get out there, the better chance you will have to secure some large, long-term customers!
This is definitely a challenging and a very lucrative sector for those of you who do not mind to get your hands a little 'dirty! Good luck!
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