Why Foreclosure Cleanup Work Is Plentiful: A Foreclosure Cleaning Biz Owner Explains

In the post here, Why Foreclosure Clean Up Companies are Going to Be Inundated w/Business: An FDIC Rep Explains, we talked about how foreclosure cleaning companies were going to be busy for years to come.

Now the work is starting to flow in, as evidenced by the Aug 9th MSNBC.com article, Foreclosures bring out cleanup crews. The article profiles a property perservation company owner. It states:

[It (foreclosure cleaning) is] . . . a profession with brilliant prospects. In an average week, Hazel inspects roughly 90 structures, secures 20 others, and trashes out between 10 and 20 “REOs” (bank shorthand for “real estate owned”). That’s up twofold from a year ago, when he got his start.

How Much Money Do Foreclosure Cleaning Companies Make on a Typical Job?

If the business owner featured in the article mentioned above grosses between $250 and $2,000 on a typical trahshout (which he states he does in the article) and he does 10 to 20 of these a week, a cursory run of the numbers means that he grosses between $2,500 and $40,000 (yes, $40,000!) — a week. Remember, this is just on trashouts.

He provides other services as well. And this is what makes foreclosure cleaning so lucrative.

It’s facts like this that make foreclosure cleaning a great business to start. We are JUST starting to see the real need for these types of companies because banks have been so backlogged with the paperwork that needs to get done BEFORE property preservation* and foreclosure cleanup companies can be called in.

*Note: Property preservation firms perform many of the same duties as foreclosure cleanup companies. It’s up to each business owner how they want to structure their company and which services they want to offer. This is discussed in the best-selling ebook, How to Start a Foreclosure Cleanup Business.

P.S.: Foreclosure Cleaning Pricing: Learn how to price foreclosure cleaning jobs to make the most money.

Copyright © 2009 Yuwanda Black for Foreclosure Business News

Foreclosure Cleanup: The Easiest Way to Price Foreclosure Cleaning Jobs

There are several ways to price foreclosure cleaning jobs. The method discussed here is a very simple, straightforward one because all you have to do is figure out your costs and job markup.

Add costs to markup and that will you give the “what to charge” amount. The formula looks like this:

Direct Costs + Indirect Costs + Markup = What to Charge

Foreclosure Cleaning: Example of a Job Priced Using This Formula

Job Particulars: Say you are asked to submit a bid on a job for a simple trashout and cleaning of a house.

Cleaning particulars: Not a white glove clean, but a broom-swept and major appliance clean (eg, clean tub, toilets, refrigerator; sweep floors; dust cobwebs).

The home is a 2-bedroom, 1 bath, 1,100-square foot ranch. The job should take approximately 5 hours. Once you look at it, you know that you need to rent one small dumpster for the day. That will be enough to carry everything away.

For the cleaning, as it’s not white glove, you only need one person. For the hauling, you need at least two guys because there’s some heavy stuff — dressers, an old refrigerator in the garage, some mattresses, a bookcase, etc.

Estimate Time to Complete Job: 5 hours

So to cost this job out, let’s look at what your direct costs will be:

Dumpster Rental: $300

Disposal Fee: $75

Cleaning Crew: $75 (1 person, $15/hour x 5 hours)

Moving Crew: $150 ($75/day rate x 2 workers)

Misc Cleaning Supplies: $50 (broom, garbage bags, gloves, pine sol, masks, etc.)

Direct Foreclosure Cleaning Costs Total: $650

Now, let’s add in your indirect costs.

Let’s pretend that you know that all of your indirect costs are $2,000 per year (insurance, phone bills, gas, office supplies, etc.).

And, let’s say you plan on doing at least one job a week, starting part time. So, your indirect costs per month are $166 ($2,000 / 12 months).

So your indirect cost for each job is $41.66. So you would figure that into the job estimate.

Indirect Foreclosure Cleaning Costs Total: $41.66

Now you have two of the three figures you need. Let’s say you decided that you want to operate at a 35 percent markup (that is, you want to make at least a 35 percent profit on every job you do). This is different for each person and is discussed in detail in the next chapter on soft pricing.

To get the third figure — the profit — you multiply .35 x 691.66 (41.66 + 650). That’s $242.08. Not bad for four hours of work on the weekend.

Percentage of Foreclosure Cleaning Job Profit: $242.08

Totals: $242.08 + 41.66 + 650 = $933.74

Read more on Pricing, Estimates, Bids and Contracts for Foreclosure Cleaning Jobs

Learn more about how to price foreclosure cleaning jobs.

May be reprinted with the following, in full: The above was excerpted from The Pricing Guide for Foreclosure Cleaning & Real Estate Service Businesses: How to Price Jobs for Profit. Learn everything you need to know about how to price foreclosure cleaning jobs, which can be found in this ebook at http://Start-a-foreclosure-cleanup-business.com.

Foreclosure Cleaning: Advice on What to Do and What Not to Do When Pricing Jobs

price-foreclosure-cleaning-jobs1

Most of the time when clients call you for a foreclosure clean up job, they’re going to want you to give them a rate over the phone. Patiently explain to them that you have to see the property before giving doing this, which means scheduling an appointment. Once you clear this hurdle, they’re still going to want you to — what we call – “blurt out a price” right on the spot once you’re on site.

 

As an established foreclosure cleanup company owner in the metro Atlanta area explains, “We get sssssooooo many calls from realtors, investors, new foreclosure homeowners and our competition wanting to know how to price a job. They’ll say something like the following:

 

Caller:  Can you just send me over your price list so I can have it on file?”

 

OR

 

Caller:  I have a 2400 sq. ft. home with just a few items in it; can you just give me an idea of what it will cost?”

 

OR

 

Caller:  I am a new business owner and want to get an idea of how to price this job…. can you tell me what you charge?”

To all of these requests she says her response is a polite “no” because foreclosure cleaning is an industry with thin profit margins.

 

Foreclosure Clean Up: An Industry with Thin Profit Margins

 

Many of the services offered by foreclosure cleanup companies have thin profit margins. This means your business can be in trouble from the outset if you don’t learn how to price appropriately.

 

To be fair to your customers — and to your bottom line – you have to know your direct and indirect costs in order to price a job correctly.

 

Foreclosure Cleaning: What Your Direct and Indirect Costs Mean to Your Bottom Line

Direct costs are the costs that can be defined concretely for every job, eg, wages for labor and costs of supplies. You can put your hand on the receipt for everything as it relates to the job at hand; hence, it’s easy to see what the jobs costs you to do.

Indirect costs are all the other costs not accounted for in your direct costs for a particular job, but they are still necessary for you to be in business.  These costs are there whether you get foreclosure cleaning jobs or not. Hence, they should factor into every job you price.

Some examples of indirect costs are business insurance, phone, gas, paper and ink cartridges for your printer, etc.

The inability to factor in indirect business costs accurately is one reason why so many small business owners – especially those who are new to business — find it difficult to price jobs. They usually wind up not charging enough and before you know it, they’re out of business.

 

How to “Accurately” Calculate Indirect Costs

 

Accurately is in quotation marks because by their very nature, indirect costs are estimates. But you can get pretty close using some concrete formulas for calculation.

 

Your biggest indirect costs will be easy to figure out (eg, phone, insurance).

 

The intangibles in your foreclosure clean up business like gas for running around doing estimates, figuring out how long it’s going to take to complete a job and how many workers you’re going to need for a job will give you the most headaches initially.

 

The only way to figure these things out is to pull upon knowledge you already have and use common sense.

 

For example, to figure out how much you’re going to spend on gas — just figure in a certain number of miles per week. If you stay within a certain geographic area (say, 25 miles) then figure giving 1-3 estimates a week. At 50 miles per round trip, you can get an idea of how much gas you’ll be using.

To figure out how long it’s going to take to clean a house, use your own experience in cleaning your house.

 

When you clean your house, how long does it take? Other things you’ll want to keep in mind is how much larger/smaller your house is compared to the one you’re bidding on; and is it a white-glove or broom swept clean. Then, add in more time for wiggle room.

 

The above is mostly excerpted from the ebook on how to price foreclosure cleaning jobs, Pricing Guide for Foreclosure Cleaning & Real-Estate Service Businesses: How to Price Jobs for Profit.

 

P.S.: Learn how to start a foreclosure clean up business — and get on the road to creating financial security for you and your family.

P.P.S.: Find Foreclosure Jobs! Did you know that you can find a foreclosure job with a simple click of your mouse? You can using Foreclosure Business News’ new job search portal. It’s just to the right here. You can search by job title, category, keyword, city and/or state. Find your dream job in this exciting real estate niche today!

Copyright © 2009 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

The Foreclosure Cleaning Pricing Guide Is Now Available!

THE FORECLOSURE CLEANING PRICING GUIDE IS NOW AVAILABLE!

We finally finished it. Wondering what it includes?

Only the most complete, in-depth information you’ll ever find on how to price foreclosure cleaning jobs — everything from carpet laying to painting to cutting tree limbs. You’ll know exactly how to price!

Get a full Table of Contents, with excerpts from each chapter in the ebook Pricing Guide for Foreclosure Cleaning & Real-Estate Service Businesses: How to Price Jobs for Profit . 

P.S.: Learn how to start a foreclosure clean up business — and get on the road to creating financial security for you and your family.

P.P.S.: Find Foreclosure Jobs! Did you know that you can find a foreclosure job with a simple click of your mouse? You can using Foreclosure Business News’ new job search portal. It’s just to the right here. You can search by job title, category, keyword, city and/or state. Find your dream job in this exciting real estate niche today!

Copyright © 2009 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

Foreclosure Cleaning Pricing Guide

We’ve been announding here that the Pricing Guide for Real Estate and Foreclosure Cleaning Businesses was going to be published yesterday, on 8/4. We’re running a little behind schedule. It should be done within the next 4-6 days.

We’ve conducted a ton of research for this book because we really wanted to give you all some concrete information about “the money trail” of this business. What do we mean by the “money trail?”

The money trail is who gets paid by whom and how once a house goes into foreclosure. So, we break all of ths down for you — from who handles what from the time a house gets foreclosed on, until it is resold or rented. This has A LOT to do with how to price jobs, as we alluded to in the post, Foreclosure Cleaning: Why How Much You’re Paid Depends — A Lot — on the Client.

So  please bear with us. We apologize profusely for the delay, but both of us run businesses full-time (my business; my sister’s business) and writing takes a back seat to the demands of these businesses.

But we promise, this pricing guide is worth the wait.  If you’ve purchased a product from our foreclosure cleaning line, you know that they are very detailed. This book on pricing is no different. We give you different formulas for calculating jobs, pricing scenarios from actual jobs, “money” flow charts, illustrations to demonstrate dimensions, how much HUD pays for certain services, a full foreclosure cleanup glossary so you know the terminology of the industry, a tutorial on small business pricing — and so much more.

Not only will you feel confident in pricing jobs, you’ll know more about the innerworkings of the industry than ever before.

New Target Publish Date: Tuesday, 8/11.

P.S.: Learn how to start a foreclosure clean up business — and get on the road to creating financial security for you and your family.

P.P.S.: Find Foreclosure Jobs! Did you know that you can find a foreclosure job with a simple click of your mouse? You can using Foreclosure Business News’ new job search portal. It’s just to the right here. You can search by job title, category, keyword, city and/or state. Find your dream job in this exciting real estate niche today!

Copyright © 2009 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

Foreclosure Cleaning: 3 Times You Definitely Want to Hire Help

Every foreclosure cleaning job is different. You never know what you’re going to walk into. Hence, inevitably, there are going to be times when you need to hire help. If your company is small, you might resist this because you want to keep as much of the profit for yourself as you’re can.

 

Following though are three times where you definitely want to hire help on foreclosure clean up jobs.

 

1. Job is Beyond Your Expertise: Do you know how to clean out a pool? Do you know how to drain a lake? Do you know how to remove asbestos? These are all things you may be asked to do as a foreclosure cleaning business owner. This is why it’s important to line up subcontractors, as we discussed in the article, Cleaning Foreclosures Business: 5 Things You Must Know Before Starting.

 

Subcontracting Tip:  Subcontract to business owners who are licensed and insured as well. For example, if you have to hire an electrician, the bank may ask for the electrician’s certification to ensure that wiring was done correctly. If they’re not, you run the risk of being sued because if something happens on the job, as the primary contractor, you are the one the injured party is going to come after.

 

2. Job Is Too Big to Handle: When you get a large foreclosure cleaning job, one of the first things you should do – after doing a victory dance – is bring on some help. While it may be tempting to try to do it all yourself, following are two reasons you want to hire help.

 

Finish quicker: In business, time is money. The sooner you finish one job, the quicker you can start another. “But,” you may be thinking, “what if I don’t have another one lined up?” This brings us to the next reason to line up help . . .

 

Build a team: Large foreclosure cleaning jobs present perfect opportunities to test hired help and start building a team you can call on regularly. This way, when you get busy, you waste less time finding reliable help.

 

3. Client Has Tight Deadline:  Once the contract is signed, most clients are going to want you to start – and finish — as soon as possible on a foreclosure clean up job. While a job may not be large, it may be beyond your ability to finish alone in the timeframe the client wants.

 

In this case, it’s better to make less and complete the job on schedule. The reason is, you want to build credibility with clients. If you finish the job on schedule and do a good job, the client is much more likely to call you for the next job.

 

Reputation is everything in this industry. If you prove to clients that your foreclosure cleaning firm does what it says – when it says — you will build clients for life.

P.S.: Find Foreclosure Jobs! Did you know that you can find a foreclosure job with a simple click of your mouse? You can using Foreclosure Business News’ new job search portal. It’s just to the right here. You can search by job title, category, keyword, city and/or state. Find your dream job in this exciting real estate niche today!

Copyright © 2009 Yuwanda Black for Foreclosure Business News. May be reprinted on your blog, website, newsletter, newspaper, etc. with the following text, in full (including live links): To learn more about pricing foreclosure cleaning jobs, get the Pricing Guide for Real Estate and Foreclosure Cleaning Businesses at http://ForeclosureBusinessNews.com (Publish Date: 8/4/09). Also get everything you need to know about how to start a foreclosure cleaning business.