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What You Need to Start a Foreclosure Cleanup Business

Updated on March 4, 2010

As far as the best business to start in the year 2010, foreclosure cleanup immediately comes to mind. Why? Mainly because according to, a lending online site for small business, cleaning businesses have been one of the top franchise opportunities for the last few years.

Cleaning Business a Top Small Business Opportunity


In 2009, two cleaning franchises were in the Top 20 (Jani-King and Jan-Pro); same in 2008 (Bonus Building Care and Jani-King). And in 2010, four of the Top 20 Franchise offerings were some type of cleaning company (Jani-King, Servpro, Jan-Pro and Stratus Building Solutions).

When you combine this type of research with the fact that home foreclosures are still amounting problem, foreclosure cleaning is a natural fit if you’re looking for a viable small business opportunity.

Mounting Home Foreclosures Make Foreclosure Cleaning a Lucrative Small Biz Opp

Even though the housing sector is showing vapid signs of a recovery, there are still millions of foreclosed properties that have yet to hit the market. Proof?

According leading financial industry experts like Standard & Poors and Moody’s, as of February 2010, there are over 7.7 million homeowners who are late paying mortgages. This means they are technically delinquent and can be foreclosed on.

Yet, many lenders are purposely not foreclosing on these homeowners because they don’t want to flood the housing market with even more inventory because this will drive home prices down yet again.

What all of this adds up to is that foreclosure cleanup businesses are going to have a lot of work – for years to come. Now that you know why starting a foreclosure cleaning business is a good idea, here’s what you need to start.

1. A Business License: In order to be eligible for things like foreclosure cleaning contracts from HUD and subcontracting opportunities with your local housing authority, you need to be a licensed foreclosure cleanup business.

Otherwise, you can kiss most foreclosure cleaning job opportunities goodbye. This is not a business where you can get by without a license. Your customers, ie banks, realtors, property preservation firms, etc. will expect you to have a license – and may even want a copy of it for their files. So, get one before you even start marketing for work.

Government Contracting Opportunities for Foreclosure Cleanup and Other Real Estate Services Businesses

Note: As of March 2010, many housing authorities around the country started to receive government stimulus money. This means local jurisdictions will have money to fund many projects that are ideal for foreclosure cleaning companies — and other real estate services companies like: Appraisers, Termite & Pest Control Companies, Building Contractors, Plumbers, Electricians, Roofing Companies, Lawn Care Companies, etc.

2. Insurance: Banks, mortgage brokers, property preservation companies, realtors, etc., simply won’t even want to deal with your foreclosure cleanup company if it’s not properly insured. In fact, says a foreclosure cleaning business owner in Atlanta:

It’s usually often one of the first things they ask for when they contact you about work.

You also need insurance to protect you, your workers and your property as you grow your foreclosure cleanup business. The work can be dangerous in that there are many ways for an accident to occur. Hence, to protect themselves from lawsuits, lenders et al tend to only contract with companies that have proper insurance.

What Type of Insurance Does Your Foreclosure Cleanup Business Need?

The type of foreclosure cleanup insurance your business needs is not a straightforward answer. It depends on many factors, eg, where you live, whether or not you have employees, the type of services your business offers (this can vary for every foreclosure cleaning business), etc.

At a minimum, you will need liability coverage and auto insurance for your vehicle(s). If you hire employees, you will also need workmen’s compensation. Each area of the country is different and every municipality has different requirements.

Call local insurance agencies in your area and tell them about the type of business you’re starting. They’ll be able to guide you in making a decision about the property type of insurance to get.

As far as what you need to start a foreclosure cleanup business, license and insurance is it as far as “getting in business.” Now, you’re ready to start marketing to “bring in the business.”


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