Starting a Foreclosure Clean Up Business, need advise on marketing, and how to get paid for services

Geokat
Home Inspector
33026

Answers (3)
Don Tepper
Agent
Fairfax, VA

There are lots of previous threads on your question. Here's what I've answered, modified slightly to address your specific needs:

Ignore any advice to "charge $x [often around $1] per square foot." Bad, bad advice. Terrible advice. Your price depends on two primary factors: (1) your hourly rate, and (2) how long it'll take to do the job.

First element: Hourly rate. What is your time worth? $10 an hour? $20? $30? $40? Don't sell yourself short. Plumbers, electricians, auto mechanics, and others aren't afraid to charge what they think they're worth. You shouldn't be, either.

Second element: Number of hours required. First, you may work faster or slower than your competitors. That's OK. Second, some jobs will be easier. Some will be more difficult. You've got to factor in the length of time for each job.

Then you multiply hourly rate times number of hours. Let's say you figure it'll take you (or you and someone else, if you're going to be using some help) 20 hours to do the job. And you think you're worth $30 an hour. 20 times $30 is $600.

Then you add on your overhead. That's the time you spend on your business that isn't revenue-producing. It includes marketing, recordkeeping, driving around to provide estimates, etc. A good ballpark figure for overhead is 30%, but once you get rolling, you should adjust that figure up or (more likely) down. So, in our example, you boost $600 by 30%, and come up with $780. Also, factor in any special or unusual expenses--let's say the rental of a piece of equipment for a special task.

If you need to use a subcontractor to do some of the work (let's say flooring repair), find several companies that perform that service--wholesale, not retail. You don't want to go into your local retail flooring center and get a quote from them on repairing a 3' x 3' area on an oak floor. Find some suppliers up front. Generally understand what they'll charge, and make sure they can give you quick quotes when you need it. Let's say that a floor repair person quotes $150 for work. You'd take that figure and mark it up to cover your expenses and the services you'd be providing (a one-stop shop). A 30%-50% markup might be considered reasonable; it's up to you. So when you present your bid on cleaning and repairs, you present one number. You'll know what you're doing yourself and what you're contracting out for. The primary thing your customer wants to know is: What will it cost? And: When can it get done.

Then stick to your numbers. If someone else bids cheaper, let them. If you try to be the cheapest, there's always going to be some dummy who'll do it for less. Always. You want to be known for offering a good, dependable value. Or even (eventually) for offering an excellent high-quality service with a price to match. But start off offering excellent value at a fair price.

You might contact Building Service Contractors Association International. They're at http://www.bscai.org They have books and manuals and getting started in the janitorial/custodial business, how to do bidding and estimating, and how to expand into niche markets. (I used to work for them, and wrote a number of books on bidding and estimating.)

And here are a couple of other resources that might help:

http://bit.ly/Cleanout1
http://bit.ly/Cleanout2

Tue Nov 10 2009, 09:42
Property Pros L...
Builder/Developer
Sacramento, CA

You can get all the contacts and even pricing guidelines from here:

Tue Nov 10 2009, 07:33
Michael Unger P...
Agent
Broward County, FL
FIRST ANSWER

Great opportunities are out there today.
I have been to several "distressed property" workshops /seminars. there usually is a discussion on vendor , 3rd party services as you are suggesting.
If any of these workeshops or seminars are available I recommend taking one. You will be able to see what is important to your potential client. Once you understand what's important to your potentail clients you will be able to formulate on your marketing / business plan.
Your searches for clients should be among realtors who specailize in foreclosures. Having access to the MLS would be a great asset for you.
Getting paid is more important than getting business. THis is best discussed with your potential client. Most brokerages who speicalize in REO's / Foreclosures carry fairly high accounts receivable from the banks / asset mangers. A good cash flow plan and execution will setermine if you are succesful or just out of business in 90 days.
I have seen very sucessfull Foreclosure Clean Up Businesses and many not so sucessfull. It's usually the control of cash that makes the difference.

Good Luck.

Mike
Broker Assoc in South Florida

Mon May 18 2009, 11:49

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