The trick to Foreclosure Cleaning Business isn’t always how to start a business; it’s when to start. And it’s also not always about creating something new.
When Steve Jobs built Apple, computers had been around for decades. Jobs didn’t make the first computer, he figured out how to make them smaller so that more people could have access to one. Cars weren’t new when Henry Ford introduced the Model-T. Ford innovated ways to sell cars for cheaper so that more people could buy them.
Hindsight is 20/20. It’s easy to look back at Ford and Jobs and conclude there were more opportunities in their time. However, opportunities still abound today, if you have an eye to spot them. One entrepreneurial venture that is booming right now is cleaning out foreclosures.
What is the Foreclosure Cleaning Business?
The housing bust has created a glut of foreclosed properties. Nearly 4.4% of all mortgages have received a foreclosure notice. Once homeowners move out, banks look to get the property on the market and sold as soon as possible. However, there is one major obstacle banks face in moving the houses to sell: cleaning.
Former mortgagees have no incentive to get properties in saleable condition when they leave their homes. Foreclosed homes need a lot of TLC before they are ready for an open house. With a large inventory of bank-owned properties, there’s a need to hire cleaners.
How large of a need? From 2007-2010, foreclosure home cleaning businesses expanded 1,000%.
What’s the Work Like and What Does it Pay?
First, those looking to start a foreclosed home cleaning business need a flexible schedule. Second, Banks often need cleaners at a moment’s notice with a strict deadline. Third, weekend work is required averaging between $500 to $2,500 per house.
In addition, foreclosure cleaners can make extra money through selling items left behind by the previous homeowner. However, before you take ownership check with the client first. Often times they’ll ask you to clear out anything left behind in the house. It’s your choice whether to dump the stuff, keep it, or sell it.
According to John Preston, “He was asked by a client to dump a left-behind treadmill and washing machine. He indicted, he ended up making an extra $300 (in addition to his cleaning fee) by selling them on Craigslist!”
How to Start Your Own Foreclosure Cleaning Business
The good news is that you don’t need much to start this type of business. All you need is a contact number and cleaning supplies. The crux of business success is getting jobs. To accomplish this task, you’ll need to do a bit of networking.
The best place to network is with real estate agents who specialize in selling real estate owned properties. They aren’t too difficult to locate. Simply call up local realtor offices and ask for the agents in charge of selling foreclosures.
While realtors are great leads, you can also;
- advertise on websites that have cleaning service directories.
- contact local banks directly
- reach out to real estate law firms.
Keep in mind, these steps doesn’t guarantee cleaning jobs, but banks won’t know how to reach you if you don’t advertise.
Picking the Right Stage of Foreclosure
As you explore the possibility of purchasing foreclosed real estate, you will need to learn more about the three major stages of foreclosure. These stages are pre-foreclosure, auction/trustee sale, and real estate owned. There are pros and cons to completing your purchase during each of these stages, so you might find that you prefer to close the deal at a particular stage. This is entirely up to your personal preference.
- During the pre-foreclosure stage, the homeowner has received a certified letter stating that the home will be foreclosed upon if payments are not made current by a certain date. You can approach a real estate owner at this time and offer to purchase the property before the foreclosure occurs. There is little risk involved with purchasing property during this stage and you can also enjoy the satisfaction of helping someone get out of a bind, though you need to make sure there are no judgments or liens on the property before you finalize the deal.
- During the auction stage, the property has been put up for auction or put up for what is referred to as a trustee sale. This step occurs when the owner fails to bring the payments up to date in accordance with what was stated in the letter that was received in the previous stage. During this stage, you can purchase the property by paying the lender so it does not have to take the property back. As a result, you can often receive a discounted price. To buy the real estate at this time, however you will need to have the cash needed for the purchase. You also have to purchase the property “as is,” which can be a risk if there are problems with the property.
- If no one purchases the property at auction, the lender had to buy it back. It is at this point that it is considered Real Estate Owned. At this stage, the lender may attempt to make a profit from the property. Nonetheless, you can typically get a good discount at this stage. In addition, waiting until this stage provides you with more time to do research on the property ahead of time.
Real estate investment can be an excellent way to make extra money and to plan for your future. At the same time, you need to take the time to learn about this type of business and to understand the pros and cons of investing at the various stages in order to make sure you minimize your risks and maximize your profits.”