How to Start a Foreclosure Clean Up Business
Foreclosure Cleaning Biz: Easy to Start; Little Skill Required
Foreclosures have been a hot news topic since the fall of 2007 when the whole subprime mortgage mess started. It was featured on 60 minutes in December 2008, showing how busy one Miami foreclosure cleanup business had become so quickly.
Fast forward to January 2010, and the nation is bracing for another wave of foreclosures – in the millions. Proof? The 1/14/2010 Philadelphia Inquirer article, Pa., N.J. outdo U.S. foreclosure-action rate, states:
. . . almost three million U.S. properties saw some kind of foreclosure threat last year (emphasis added) . . . Foreclosure activity still hit a record high for our report in 2009, capped off by a substantial increase in December [2009] . . . In the long term, a massive supply of delinquent loans continues to loom over the housing market, and many of those delinquencies will end up in the foreclosure process in 2010 and beyond . . .
So, now that you see the growth potential, following is what you need to do to start a successful foreclosure cleanup business.
3 Things to Do Start a Foreclosure Cleanup Business
Empty homes are targets for a range of undesirable activity, eg, vagrancy, drugs, prostitution, vandalism, etc. This is one of the principal reason lenders, banks and homeowner associations hire foreclosure cleaning companies to come in, clean them out and get them ready to be resold/rented. If this business interests you, do the following:
I. Name Your Business. The name of your foreclosure clean up business is very important because it should signal to the public at large what you do.
Foreclosure Cleaning Business Naming Tip: Try to make "Foreclosure Cleaning/Cleanup/Trashouts" etc. part of your business name.
II. Get License and Insurance: Foreclosure cleaning is a business where you need insurance. Why? For the following reasons:
3 Reasons Your Foreclosure Cleanup Business Needs to be Licensed and Insured
(i) To get contracts: Many banks and real estate companies simply won't hire you if you're not licensed and insured. It’s one of the first things they ask for when they contact you. As these are the entities with the vast majority of properties; hence, who will give you the most foreclosure cleaning jobs, you definitely want to meet these basic requirements.
(ii) To be covered in case of lawsuits: This is a business where it's easy for an accident to happen – and a lawsuit to follow. For example, if a worker hurts his back moving furniture, or commits a theft, or inadvertently damages the wood floors in a house you're working on/in, insurance will cover stuff like this.
In foreclosure cleaning, you do everything from boarding up windows to fixing holes in sheetrock to winterizing a property. Some jobs can take hours, while others take days or even a week or more (it’s rare that it goes beyond this).
The point is, there are a lot of instances where accidents and incidents can happen. Having insurance covers you.
(iii) Present a Professional Image: You may be thinking, "Well, I won’t bid on jobs with banks and real estate companies."
Newsflash – sometimes even individual property owners will ask if you're licensed and insured. Having it will immediately brand you as a professional entity, not “just” a man with a van, for example.
III. Line Up Help: Why would you want to do this before you even have one job? Let me explain. As previously mentioned, this is the kind of business where you will need to use variety of professionals because every job is different, eg, locksmiths, painters, electricians, handy men, general contractors, floor specialists, etc.
Hence, before you start, it would be wise to build up a rolodex of reliable home improvement specialists you can call on. Even if you have certain skills yourself (eg, handyman, general contracting), it's easy to get so busy that you won’t be able to handle all the foreclosure cleaning jobs yourself. You'll need to outsource work.
So, lining up professionals your foreclosure clean up business can call on from the outset will help you avoid getting backlogged.
How to Start a Foreclosure Cleanup Business: Now the Fun Starts!
Once you get the above things in place, get a website explaining your foreclosure cleaning services and start marketing. Good luck!
Learn more about how profitable this business can be in the NBC news video below.
