How to Start a Foreclosure Cleanup and asset Preservation firm

Rent To Own Homes In Nashville Tn - How to Start a Foreclosure Cleanup and asset Preservation firm

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A new article on June 3, 2009 from Msn Money writer Michael Brush indicates that there is a third wave of foreclosures still to come from prime borrowers (i.e. Those previously "safe-borrowers" with sound prestige and fixed-rate mortgages) as a follow of job losses thanks to the worsening cheaper ("Coming: A 3rd Wave of Foreclosures").

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Rent To Own Homes In Nashville Tn

The article states that "In the first quarter, the percentage of these borrowers who were behind on their mortgages or in foreclosure had doubled from a year earlier, to nearly 6%" and goes on to say that "Credit Suisseanalyst Rod Dubitsky unbelievable last week that 8.1 million mortgages, or 16% of all mortgages, will go into foreclosure over the next four years. A weak economy, continued declines in home prices and rising delinquencies among prime borrowers all but ensure that foreclosures "will march steadily higher," he says." Not such great news for the economy, but good news in fact for entrepreneurs curious in beginning a foreclosure cleanup company to clean and heal foreclosed homes for the banks.

To put this in perspective, this means that there will be over 2 million foreclosures a year and more than ,025,000,000 up for grabs in money that will be spent on cleaning up these foreclosed properties (since the average bill is 00+ to clean up one of these properties).

Let's take a look at how you can position yourself to capitalize on this arrival foreclosure movement

Set Up Your company Properly

If you want to be hired for cleanup or preservation work, you'll need to control your company as a professional company. The good news is that you can set up a company swiftly and inexpensively, and commonly on your own. Many people determine to set up an Llc (Limited Liability Company) because of how swiftly and in fact it can be done but you'll want to check with your accountant or other company professional to adopt the type of company entity that's right for your personal situation.

If you do determine to start an Llc, you can commonly find all of the documents you need online from your state's government website. commonly the branch you're finding for will be called the "Industrial Commission" or "Corporation Commission" or similar. Try typing in "start a company + ______ (your state)". Anything ending in ".gov" is commonly a good place to start as it indicates a government site.

Once your company is set up, you'll need an employer Identification whole (Ein), which is like a Ssn for your business. You can register for one online: type in "Irs" & "Ein" into a crusade motor to find the online registration link.

As soon as you have your Ein (which you can commonly get immediately online), you can open up a company bank list for your company. This step is very, very important. In the excitement of things, many people get caught up in the day-to-day dealings of running a company and use their personal accounts to pay for company expenses. Not only does this gift an accounting nightmare at the end of the year, but it could gift problems for you with the Irs if you don't keep your personal and company finances separate.

Once you legally set up your business, you may be required to register your company with your county or city in order to get a company license to operate. You can start by calling City Hall or the Office of the County Clerk to quiz, as to either or not you need a city/county/state company license and if so, how to get one.

So to recap:

1. Legally set up your company
2. Get your Ein # and set up a company bank list
3. Apply for a company license
4. If you want to do preservation work, determine either or not you need a contractors' license

Get guarnatee

You in fact must have a market Liability guarnatee procedure and Workers' recompense guarnatee in order to run your business. Not only is guarnatee important for protecting yourself from liability and protecting those that work for you in the event of a work-related injury, but many asset supervision associates will not do company with you if you do not meet their minimum guarnatee requirements.

Insurance will likely be one of your largest start-up costs, however, most guarnatee associates allow you to pay the excellent on a monthly (rather than yearly) basis, which right on makes this charge more affordable.

General Liability guarnatee policies can cover the following: physical injury, asset damage, contractual liability, personal and advertising injury, professional liability (also known as Errors & Omissions (E&O) insurance, this coverage protects you and your company from litigation caused by charges of professional neglect or failure to perform your professional duties), hired auto and non-auto liability and umbrella liability.

You'll want to speak directly with your guarnatee agent to get a better idea of the extent of the coverage provided by their singular procedure and one that is best powerful for your personel needs

Workers' recompense guarnatee is required in most states when you have W2 employees, and some states also want your guarnatee to cover your 1099 contractors also. Workers' recompense ("Workers' Comp") covers your employees' curative and disability expenses associated to work-related illness and on-the-job injuries.

In the states where you are not required to cover your 1099 contractors you would need them to provide proof that they carry their own Workers' recompense insurance. Although tempting to shift the financial burden of maintaining a procedure onto your 1099 contractors, in all reality, you are probably better off to take on the cost of all staff Workers' recompense (all W2 employees and 1099 contractors). The theorize is that it's difficult to find only independent contractors that have their own policy. In addition, this commerce has such high turnover that if you put this restriction on your independent contractors, you'll waste important time and lost revenues trying to find replacements in a hurry.

Here's a great tip: sometimes you can get "pay-as-you-go" guarnatee where your workers' recompense guarnatee premiums are based on your actual payroll, rather than an estimated amount. This is great for associates that are just beginning out or have a ranging workload. Type in "pay as you go workers comp" into a crusade motor for results in your area.

As a second tip, we've used Farmers guarnatee for years and have all the time had excellent buyer aid and great rates. Just Google "Farmers Insurance" for an agent in your area.

Foreclosure Cleanup v.s. asset Preservation Services

As the name suggests as a Foreclosure Cleanup Company, you'll be cleaning out all of the junk in the house (also called a "trashout or a "junk out"), as well as cleaning the interior of the home. You may also be required to remove vehicles on the property. commonly foreclosure cleanup associates are also responsible for doing a basic landscape cleanup which includes hauling out any junk from the front/back yards, cutting the grass and trimming trees/bushes.

Cleaning up the asset is the extent of services offered by a Foreclosure Cleanup Company, whereas a asset Preservation company is also complex in the "securing" of the asset and the "preserving" of the property.

Here are some of the services that a preservation company may offer (note that a asset Preservation company will ordinarily also offer cleanup services):

Securing the Property
o Initial vacant asset inspection
o Lock changes
o Boarding of windows and doors
o Temporary roof heal
o Securing swimming pools

Preserving the Property
o Exterior Debris extraction
o Abandoned vehicle extraction (cars, boats, etc.)
o Interior Debris extraction (junk-out)
o Hazardous waste extraction
o Interior cleaning services including floor covering cleaning
o Window washing/graffiti extraction
o Window change
o Pool services (draining, acid washing, maintaining, etc.)
o Pest control services
o Yard maintenance/landscaping
o Snow extraction
o Winterization
o Gutter cleaning
o Pressure washing
o Carpet extraction & change
o Tile/Floor repairs
o Painting
o Sheetrock/drywall repairs
o Carpentry repairs
o Plumbing fixtures repairs & replacements
o Fire & mold remediation
o Fence repair

Here are a few things to consider when determining the extent of the services you want to offer:

A Contractors' License is ordinarily not required for Foreclosure Cleanup company but is likely required for preservation associates doing work over a clear dollar value (usually 0 - 00+). Sometimes this license can be obtained by attending a procedure and successfully passing a test whereas other states want previous, verifiable commerce experience.

The guarnatee premiums tend to be higher on associates that offer preservation services as they are carefully to be a "general contractor". However, the earnings possible is much higher as preservation services tend to run from a few thousand dollars upwards instead of 0 - 00 for each cleanout.

Usually what people do is start out initially contribution just the foreclosure cleanup services and then when things pick up, they'll add preservation items to the list of services they offer. This let's them get their foot in the door without having to spend a whole lot of money upfront when setting up their company.

Source the Right equipment & Tools

The great thing about beginning a foreclosure cleanup company is that the first expenses are quite low as much of the equipment and tools needed for cleaning foreclosures can likely be found in your own garage:

o Cleaning chemicals (i.e. All purpose cleaner, disinfectant, toilet bowl cleaner, window cleaner)
o Cleaning supplies (broom, mop, scrub pads)
o Vacuum cleaner
o Garbage bags and shovels
o Work gloves and disposable plastic gloves
o Lawn mowers & lawn tools
o Wheelbarrow

For the smaller items you don't have on hand, check your local dollar store. Their prices can't be beat and they commonly have the same chemicals and cleaning supplies as the other retailers. Once you start doing some volume, consider shopping for your supplies at Sam's Club or Costco to keep your expenses low.

You can also find used equipment in great shape (such as vacuums) by going around to your local Saturday morning garage/yard sales. If you have a "Re-Use" center or a Salvation Army, you may consider checking there also as they often have vacuums and other small equipment or yard tools for sale.

For hauling junk, you'll need some sort of trailer and a vehicle large enough to pull it. If you don't have a truck and a trailer, you can all the time borrow a friend's truck and rent a trailer from U-Haul or just go ahead and rent a consuming truck from U-Haul. (Remember though, that you'll be charged a daily rate plus a per-mile rate when you rent a consuming truck whereas if you use your own truck and just rent the pull-trailer, you'll only incur the daily rental rate for the trailer.)

Sometimes you'll be required to clean a asset that doesn't have electricity or water. In the event that there's no electricity, you'll need a generator to control the vacuum cleaners and other electrical equipment. These can be rented at Lowe's or Home Depot and is a much better alternative to purchasing one outright unless you're going to use it on a quarterly basis (a new one will run you about 0+).
To save on expenses, it's best to rent equipment in the beginning.

Once you get up and going, it may be worth finding into purchasing equipment of your own. Check the online classifieds ads (such as Craigslist, Kijiji and Backpage) for used trailers, generators, etc. You should also check with U-Haul as they have been selling some of their excess trucks as of late.

Stay Safe on the Job

As a company owner, you're responsible for holding your staff safe while working on the job. Working safely is renowned to the condition of your staff and the prestige of your company (and also keeps your guarnatee premiums low). It's imperative that you recap protection issues prior to allowing Anything to work on the job - you must provide both classroom and on-the-job protection training to all new hires.

Now, it doesn't have to be Anything fancy; you can spend 20 - 30 minutes reviewing protection policies, safe working practices and answering any questions and then you'll be done! Make sure you have people sign in and out of the meeting and that you document that a protection meeting took place.

It's also very foremost that you become well-known with Osha and protection Standards as well as the condition & protection hazards associated with this commerce so that you can keep your staff safe, avoid accidents and precious fines. You can find the Osha Pocket Guide to building protection (it's a short and an easy read) at the main website (Osha Dot gov) by searching for the article name.

Another way to safe your staff and your company is to make sure that you check references before you hire someone. Insist that they list non-related references (i.e. Not mother, sister or best friend) and instead list references of old employers or person they know in a professional capacity. We also do drug testing and background checks - it might sound paranoid to some, but the protection of our staff, our customers' asset and our company's prestige is far too foremost to risk not spending on a background check or drug test.

Price Your Services Right

In this industry, the bottom price all the time wins the bid (unless, of course, the bottom bidder has a terrible track article of not completing work and is utterly irresponsible and unprofessional, in which case the company has just committed "reputation-suicide" and will never be hired again). Lenders don't want to spend any more than they have to on these properties so you want to make sure you price your services comparable with the going market rates (but at the same time, priced so that you still make a great behalf and don't leave any money on the table).

For cleaning out foreclosures, most banks expect to spend in any place from 0 - 00 for a cleanout (trashout, interior clean and first landscape cleanup), but it could be a bit more or a bit less, depending on your area. It's foremost to know that most lenders have prescribed "price caps" for the maximum amounts that they'll pay for services.

If you're also providing preservation services, a great site that we've used before to determine our prices for doing repairs is www.CostEstimator.com for getting the market rates for building costs - you can get a free 30 day trial (no need to enter prestige card - it in fact is free!). There are over 3,000 cost items adjusted for over 210 local, geographic regions to originate your bid and you can add as many others as needed. If you want to sign up after the trial, it's only /month.

Market Your Services

It's true - "nothing happens until somebody sells something"... And you'll need to get out there and sell, sell, sell your business. Once you've done a few jobs, you'll find that word of mouth advertising and referrals will provide a large pool of new jobs for you, but in the meantime, you do need to do everything possible to let customers know you exist.

A large part of work will come from the relationships that you build with Real Estate Agents ("Realtors") who list bank-owned homes (often referred to as Reo listings). They are often given the task of bidding out the cleaning and repairs of new listings by the asset supervision company so you'll want to make sure the agents in your area know your company handles this type of work.

A great way to find out which Realtors in your area list Reos is to go online to the major bank's Reo websites and "data mine" the touch information for the listing agents (name, email, phone numbers). It can be painstaking work, but right on worth it.

Here's an example of a bank Reo sites to get you started collecting Realtor information

Wells Fargo (Properties managed by Premier Asset Services): pasreo.com/pasreo/images/pas_logo.jpg

Note: In order to access agent information, adopt the state and click search. Then, individually adopt each listing and click on "Print asset article Cvs". Each listing and corresponding information (such as agent 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. Don't be shy about asking the Realtor if he/she has any jobs for you to bid, either - most of them are very accommodating and willing to give a new company the occasion to provide estimates.

The other way jobs are bid out is through large Asset supervision associates (also referred to as Marketing & supervision Companies, Reo Field aid associates and asset supervision Companies). Essentially, the lender says, "ok - I have thousands of properties to get rid of. Here, national Abc Asset supervision Company: clean, fix and sell these properties for us". And the national Asset supervision company will then subcontract out the work to local foreclosure cleanup and asset preservation companies. In order to work for these companies, you commonly need to sign up your company as a possible vendor. Many times this can be done online.

There are both positives and negatives associated with working for the larger companies. On the clear side, you will probably be given a few projects to work on at a time so you will be kept relatively busy. On the negative side, they commonly want you to offer 'wholesale pricing' and don't pay until 30 - 60 days after you invoice them for the work. Working for one of these companies, however, will give you the touch you need to go after more work.

Other possible customers contain wholesale asset investors (groups of investors that purchase foreclosed homes at the auctions and then sell them to smaller investors at a wholesale price), investors, landlords, asset supervision companies, Realtors and so on.

You should also consider attending your local networking events such as the accommodation of commerce meetings and any local investor meetings in order to hand out your card and network with possible customers. The more you get out there, the better occasion you'll have of securing some great, long-term customers!

This is right on an consuming commerce and a very profitable one for those of you who don't mind getting your hands a bit dirty! Good luck!

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