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A new article on June 3, 2009 from MSN Money article 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 audio credit and fixed-price mortgages) consequently of job losses thanks to the worsening overall economy ("Coming: A 3rd Wave of Foreclosures").

The article states that "In the first quarter, the percentage of these borrowers who were behind on the mortgages or in foreclosure had doubled from a year earlier, to nearly 6%" and goes on to say that "Credit Suisseanalyst Rod Dubitsky predicted the other day that 8.1 million mortgages, or 16% of most mortgages, will get into foreclosure over the next four years. A weak economy, continuing declines in house prices and rising delinquencies among primary borrowers all but make sure that foreclosures "will march steadily higher," he says." Not really such great information for the overall economy, but good news certainly for entrepreneurs interested in starting a foreclosure cleanup business to completely clean and restoration foreclosed homes for the banking institutions.

To put this in perspective, this implies that you will have over 2 million foreclosures a year and a lot more than $2,025,000,000 shared in money that'll be spent on cleaning up these foreclosed properties (because the average costs is $1000+ to clean up one of these properties).

Let's check out how you can position yourself to capitalize upon this coming foreclosure movement

Set Up Your Company Properly

If you want to be hired for cleanup or preservation function, you'll need to operate your business as a professional company. The good thing is that you can setup a business quickly and inexpensively, and usually on your own. Many people decide to setup an LLC (Limited Liability Firm) because of how quickly and easily it could be done but you will want to check with your accountant or other business professional to select the type of business entity that's right for your personal situation.

If you do decide to start an LLC, you can usually find all the documents you need online from your own state's government website. Usually the branch you're looking for will be called the "Industrial Commission" or "Company Commission" or identical. Try typing in "start a business + ______ (a state)". Anything ending in ".gov" is generally a good spot to start as it indicates a government site.

Once your business is established, you'll need an Company Identification Quantity (EIN), which is like a SSN for your business. You can sign up for one online: enter "IRS" & "EIN" into a search engine to get the online registration link.

Once you have your EIN (which you can generally get immediately online), you can start a business bank-account for your organization. This step is very, very important. In the exhilaration of issues, many people get caught up in the day-to-day dealings of owning a business and make use of their personal accounts to pay for business expenses. Not merely does this present an accounting nightmare at the end of the year, nonetheless it could present problems for you with the IRS unless you keep your individual and business finances independent.

Once you legally set up your business, you may be required to register your business together with your county or city in order to get a business permit to operate. You can begin by calling Town Hall or any office of the County Clerk to inquire concerning whether or not you need a town/county/state business permit and if so, ways to get one.

So to recap:

1. Legally setup your business

2. Obtain your EIN # and create a business bank account

3. Obtain a business license

4. If you want to accomplish preservation work, determine whether you need a contractors' license

Get Insurance

You absolutely must have a Commercial Liability Insurance coverage and Workers' Compensation Insurance in order to run your business. Not merely is insurance essential for safeguarding yourself from liability and protecting those that work for you in the event of a work-related injury, but many asset management companies will not do business with you if you don't meet their minimum amount http://www.bbc.co.uk/search?q=garbage removal insurance requirements.

Insurance is going to be one of your largest start-up costs, however, most insurance companies allow you to pay out the superior on a monthly (instead of yearly) basis, which definitely makes this expense more affordable.

General Liability Insurance policies can cover the following: bodily injury, property damage, contractual liability, personal and advertising injury, professional liability (also referred to as Errors & Omissions (E&O) insurance, this coverage protects you and your business from litigation caused by charges of professional neglect or failure to execute your professional duties), employed auto and non-auto liability and umbrella liability.

You'll want to speak directly with your insurance professional to get a much better idea of the extent of the coverage supplied by their particular policy and one that is most effective for your own needs

Workers' Compensation Insurance is required in most states if you have W2 employees, and some states additionally require your insurance to cover your 1099 contractors also. Workers' Compensation ("Workers' Comp") covers your workers' medical and disability expenditures related to work-related illness and on-the-job injuries.

In the states what your location is not required to cover your 1099 contractors you would need them to provide proof that they carry their own Workers' Compensation insurance. Although tempting to change the financial burden of maintaining a policy onto your 1099 contractors, in every reality, you are most likely better off to defend myself against the price of all staff Workers' Compensation (all W2 employees and 1099 contractors). The reason is that it's difficult to find only independent contractors which have their own plan. In addition, this market has such high turnover that if you place this restriction on your independent contractors, you'll waste materials valuable time and lost revenues trying to find replacements in a hurry.

Here is a great tip: occasionally you can get "pay-as-you-proceed" insurance where your employees' compensation insurance premiums derive from your actual payroll, instead of an estimated amount. This is great for companies that are simply starting out or possess a fluctuating workload. Enter "payg workers comp" right into a search engine for results in your area.

As a second suggestion, we've used Farmers Insurance for a long time and have often had excellent customer support and great rates. Just Google "Farmers Insurance" for a realtor in your area.

Foreclosure Cleanup v.s. Property Preservation Services

As the name suggests as a Foreclosure Cleanup Company, you'll be cleaning out all of the junk in the house (also known as a "trashout or a "junk out"), and also cleaning the interior of the house. You may also be asked to remove automobiles on the property. Usually foreclosure cleanup businesses are also accountable for doing a basic landscape cleanup which include hauling out any junk from the entrance/back trimming the grass, trimming trees and back yards/bushes.

Cleaning up the house may be the extent of services offered by a Foreclosure Cleanup Company, whereas a house Preservation Company can be mixed up in "securing" of the property and the "preserving" of the property.

Here are some of the services that a preservation company may offer (remember that a Property Preservation Company will generally also offer cleanup services):

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

A Contractors' Permit is generally not required for Foreclosure Cleanup Firm but is likely necessary for preservation companies doing work over a specific dollar value (usually $500 - $1000+). Sometimes this license can be acquired by attending a program and effectively passing a check whereas other claims require previous, verifiable industry experience.

The insurance premiums have a tendency to be higher on companies that offer preservation services because they are considered to become a "general contractor". Nevertheless, the revenue potential is much higher as preservation services tend to run from a few thousand dollars upwards instead of $800 - $1500 for every cleanout.

Usually what people do is begin initially offering just the foreclosure cleanup services and then when things pick up, they'll add preservation items to the list of services they provide. This let's them get their foot in the entranceway without needing to spend a whole lot of cash upfront when establishing their company.

Source the proper Equipment & Tools

The best thing about starting a foreclosure cleanup company is that the original expenses are very low as much of the equipment and tools needed for cleaning foreclosures can be within your own garage.

For small items you don't have on hand, check your local dollar store. Their prices can't be beat and they will often have the same chemical substances and cleaning supplies as the other suppliers. Once you start doing some volume, consider shopping for your materials at Sam's Golf club or Costco to keep your expenses low.

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

For hauling junk, you'll need some sort of trailer and a car large enough to draw it. Unless you have a vehicle and a trailer, you can generally borrow a friend's pickup truck and rent a trailer from U-Haul or just go ahead and lease a moving truck from U-Haul. (Keep in mind though, that you'll be billed a daily rate plus a per-mile price when you lease a moving pickup truck whereas if you are using your own truck and just lease the pull-trailer, you'll only incur the daily rental rate for the trailer.)

Sometimes you'll be necessary to clean a real estate that doesn't have electric power or water. When there's no electricity, you'll need a generator to use the vacuum cleaners and other electric equipment. These can be rented at Lowe's or House Depot and can be a much better option to purchasing one outright unless you are going to use it regularly (a fresh one will work you about $500+).

To save lots of on expenses, it's best to rent equipment in the beginning.

Once you get up and going, it could be worth http://nicholasv877.website2.me looking into purchasing equipment of your own. Check the web classifieds ads (such as for example Craigslist, Kijiji and Backpage) for utilized trailers, generators, etc. You should also check with U-Haul because they have been selling some of their extra trucks lately.

Stay Safe face to face

As a business proprietor, you're responsible for maintaining your staff safe and sound while working on the work. Working safely is key to the health of your personnel and the reputation of your business (and also keeps your insurance costs low). It's essential that you review security issues prior to allowing anyone to work on the job - you need to provide both classroom and on-the-job safety training to all or any new hires.

Now, it doesn't need to be anything extravagant; you can spend 20 - 30 minutes reviewing safety policies, safe working methods and answering any questions and you'll be done! Make sure you have people register and out from the conference and that you document that a safety meeting took place.

It's also very essential that you become familiar with OSHA and Safety Specifications as well as the health & safety hazards associated with this industry so that you can keep your staff safe, costly fines and steer clear of accidents. You will find the OSHA Pocket Guidebook to Construction Protection (it's a brief and a simple read) at the primary site (OSHA DOT gov) by searching for the report name.

Another way to protect your staff and your business is to ensure that you check references before you hire someone. Insist that they list non-related references (i.e. not mom, sister or best friend) and rather list references of previous employers or somebody they understand in a professional capacity. We also do drug testing and background checks - it could sound paranoid for some, but the security of our staff, our customers' home and our company's status is far too important to risk not spending $20 on a history check or drug check.

Price Your Services Right

In this industry, the cheapest price always wins the bid (unless, of course, the cheapest bidder has a terrible history of not really completing function and is utterly irresponsible and unprofessional, in which particular case the company has just committed "reputation-suicide" and can never be hired again). Lenders don't want to invest any even more than they have to on these properties so you want to be sure you cost your services similar with the going marketplace rates (but simultaneously, priced to ensure that you still make a great profit and do not leave any money up for grabs).

For cleaning up foreclosures, most banks expect to spend anywhere from $500 - $1500 for a cleanout (trashout, interior clean and initial landscape cleanup), but it could be a bit more or a little less, depending on your neighborhood. It's important to understand that most lenders have prescribed "price caps" for the maximum amounts that they'll pay for services.

If you are also providing preservation solutions, a great site that we've used before to determine our charges for doing maintenance is for getting the market rates for construction costs - you may get a free thirty day trial (no need to enter credit card - it really is free!). There are over 3,000 cost products adjusted for over 210 local, geographic areas to create your bid and you may add as much others as required. If you would like to sign up following the trial, it's only $15/month.

Market Your Services

It's true - "nothing at all happens until somebody sells something"... and you'll need to get out there and sell, sell, sell your business. Once you have done a few careers, 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 feasible to let customers know you exist.

A large portion of work should come from the relationships that you build with REALTORS ("Realtors") who list bank-owned homes (also known as REO listings). They are generally given the duty of bidding out the washing and repairs of new listings by the asset management company so you'll want to make sure the agents in your town know your firm handles this kind 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 get in touch with information for the listing agents (name, email, phone numbers). It can be painstaking work, but definitely worth it.

Here's a good example of a lender REO sites to truly get you started collecting Realtor information

NOTE: In order to access agent select the state, information and click search. Then, individually select each listing and click on "Print Property Survey CVS". Each listing and corresponding information (such as for example agent name, telephone # and email) will become created within an Excel spreadsheet. You can gain access to the page

Remember to follow up with a phone call a couple of days later. You shouldn't be shy approximately asking the Real estate agent if he/she has any jobs that you should bid, either - the majority of them are very accommodating and ready to give a new organization the chance to provide estimates.

The other way jobs are bid out is through large Asset Administration Companies (also referred to as Marketing & Management Companies, REO Field Service Companies and Property Administration Companies). Essentially, the lender says, "ok - I have hundreds of properties to get rid of. Here, national ABC Asset Management Company: clean, fix and sell these properties for all of us". And the national Asset Management Firm will subcontract out the task to local foreclosure cleanup and house preservation companies. To be able to work for these companies, you usually have to sign up your company as a potential vendor. Often this is often done online.

There are both advantages and disadvantages associated with doing work for the larger companies. On the positive side, you will probably be given a few tasks to work on at a time which means you will be kept fairly busy. On the detrimental side, they often want you to provide 'wholesale pricing' and don't pay until 30 - 60 days once you invoice them for the work. Working for one of these companies, nevertheless, will provide you with the experience you need to go after more work.

Other possible clients include wholesale property traders (groups of investors that purchase foreclosed homes at the auctions and then sell them to smaller investors at a low cost price), traders, landlords, property management companies, Realtors and so forth.

You should also consider attending your local networking events like the Chamber of Commerce meetings and any nearby investor meetings to be able to hand out your cards and network with potential clients. The more you get out there, the better chance you should have of securing some great, long-term customers!