Foreclosure cleaning businesses have been popping up ever since the 2008 Recession hit and foreclosures ranked at an all time high.
But you're here because you know that your cleaning biz can earn another 2k-3k each week if you add foreclosure cleaning to your list of disinfecting services.
I'm Ippei, a master of all things online business, passive income, and local lead generation...
And in this article, I'll answer common questions like:
1. How much money do you need to add this service to your cleaning biz?
2. How to bid foreclosure jobs
3. Creating Your Foreclosure Cleaning Pricing Structure
Let's get into your foreclosure cleaning business:
How to Start a Foreclosure Cleaning Business in 2021
Thinking About Launching a Foreclosure Cleaning Biz? Here's What You Should Know:
Starting a foreclosure cleaning business fills a need in the real estate market that isn’t going anywhere anytime soon. But first, you will need to connect with foreclosure real estate agents, inspect the property first, finalize your letter of agreement, and add up your direct and indirect costs.
Total Costs to Start Up:
We're going to dive into all the numbers and details that come with starting your own foreclosure cleaning business...
But first, let's take a look at the average startup costs for small, medium, and large scale perspective.
These numbers will give you an accurate portrayal of the numbers you're looking at before you decide to get started.
Cost Breakdown:
If you're curious how I arrived at these numbers (which you should be!)...
Here is an itemized look at the business expenses I included to arrive at my average startup costs for a foreclosure cleaning business.
Average:
Low:
High:
Licensing/Franchise Fee (Range of Cost):
$150
$100
$200
Insurance (Annual Cost):
$1,250
$500
$2,000
Cleaning Tools & Products:
$500
$300
$700
Business Cards:
$50
$30
$80
Branded Shirts:
$150
$100
$200
Office Equipment Cost (Laptop, Printer, etc.):
$1,250
$600
$2,000
Total Cost to Start Up:
$3,350
$1,630
$5,180
Average Profit of a Foreclosure Cleaning Business:
According to:
https://bizfluent.com/info-7929693-expected-margin-house-cleaning-business.html,
The average annual revenue of a foreclosure cleaning business is:
Average:
Low:
High:
Average Annual Revenue (Minus Start Up Costs):
$108,600
$90,500
$126,700
Average Monthly Revenue:
$9,050
$7,542
$10,558
Average Online Boutique Profit Margin:
19%
10%
28%
Take Home Pay:
Let's be honest, you wouldn't be reading this article if you didn't want to know what the potential take home pay from this endeavor will be for you.
You didn't go into business for yourself for nothing right?
Well here are the numbers.
This is what you can expect to profit in take home pay from starting your own foreclosure cleaning business...
Or potentially adding it on to your existing cleaning company services:
Average:
Low:
High:
Average Annual Profit:
$60,000
$50,000
$70,000
Average Monthly Profit:
$5,000
$4,167
$5,833
Now let's get into my step by step guide to opening your own foreclosure cleaning business in 2021.
To keep things simple, I've broken up these nine steps into three phases:
1. Get Customers
2. Closing Cleaning Deals
3. Pricing Foreclosure Cleaning
Plus, stick around to the end to hear my secret key to getting unlimited business for your foreclosure cleaning business.
Ready?
Let's get started.
Phase 1: Get Customers
1. Foreclosure Auctions: Pay Attention to Who Wins
Although some states and counties now offer online foreclosure auctions, the mass majority are still done publicly.
Usually at your local county courthouse.
Foreclosure auctions are required to be accessible to the public, as well as free to attend.
And sometimes, depending on the size of the auction, hundreds of properties may go up for auction on the auction day!
Hello new leads!
Yep, you guessed it.
Every single person who purchases a foreclosed property at one of these public auctions is a new lead for your foreclosure cleaning business.
Which means that while you’re there, you need to pay close attention to who wins each property.
Bring a notebook to jot down names, and have your business cards ready.
As soon as a winner is announced, approach them with your card and offer your services.
If you are unsure of how to find local foreclosure auctions near you, try searching for judicial auctions in your city or county public records.
You can also try Google.
Just type in the name of the city or county near you, and then a phrase such as “public record foreclosure auction”.
2. Google "Foreclosure Real Estate Agents"
Speaking of Google..
You can also type in “foreclosure real estate agents” to find local real estate agents within the foreclosure industry.
You might think that with the housing marketing doing so much better than it was way back in 2008 that there won’t be many real estate agents that specialize in foreclosures…
But you might be surprised.
Most of the time, there is someone to be found in almost every niche, and the area of real estate foreclosure is no exception.
Real estate agents get paid whether the home is a foreclosure or not.
The only difference is that in the case of the foreclosure, the seller is the bank.
Connecting with a real estate foreclosure specialist can be an invaluable resource.
If you already own your own cleaning service, then you probably already know the power of networking.
Almost every great business person does.
When you take time to network and build relationships with foreclosure specialists, and you make a good impression on them…
They are likely to recommend you to their client when the need arises.
Considering the fact that almost every single foreclosure is going to need to be clean…
I’d say your chances are looking pretty good for getting a recommendation.
3. Local Banks: Connect with Foreclosure Sales Officer
Another local networking opportunity will be through your neighborhood banks.
Banks will usually have a designated foreclosure sales officer who handles foreclosures.
Although their job is primarily to assist their clients with alternatives to foreclosing on their home…
Things don’t always go to plan.
In the cases where they are unable to help someone save their property from foreclosure:
You can come in.
It’s simply playing the game of forming the right connections.
So create a list of all the local banking institutions in your area, and set up appointments with their foreclosure sales officers.
A phone call might suffice, but it’s always best to create a face to face connection with someone.
They will be much more likely to think of you when the situation presents itself if they’ve had a personable conversation with you…
Rather than just hearing your voice over the phone.
Ultimately, you will have to be prepared with a lead generation strategy that will attract new customers to your business on a consistent basis.
Fortunately we can teach how to do exactly that through our local lead generation coaching program and online course.
Phase 2: Closing Cleaning Deals
4. Soft Close to Get Time to Inspect
There’s nothing worse than quoting a job, site unseen, and showing up only to realize that you have sorely underestimated the workload.
Avoiding this rooky mistake is a crucial aspect to making sure that adding foreclosure cleaning services to your cleaning business offerings remains profitable.
Cleaning up foreclosure properties is a much different ball game than cleaning someone’s personal home or office building.
When someone finds out that they are being evicted from their house, they are often extremely angry.
Which means that on top of leaving almost everything behind…
They tend to be vengeful.
Foreclosure properties are often left with shattered windows, locks without keys to be found, trash everywhere, and sometimes worse.
To accurately decide how much work, time, money, and equipment will go into each job, you will have to walk the property in person.
No if, ands or buts about it.
The size of the property, amount of belongings left behind, and level of destruction will all play into your final quote.
You may need to rent dumpsters, hire locksmiths, and sort through piles of crap that you are responsible for disposing of properly.
When you are negotiating with a potential client, make sure that you don’t commit to a number without having seen the property first!
This is where the “soft close” comes in.
5. Agree or Counter Offer (Oral Agreement)
If you find yourself at a foreclosure auction in conversation with a potential client, and they are quoting you the square footage of their property and price tag quote…
You’ll need to master the art of the “soft close”.
Essentially, you’ll want to commit to handling the job without directly committing to their price before having seen the property.
You can keep this very simple.
Say things like, “I can absolutely get all of this handled for your, and your price sounds good. I just need to take a look at the property myself and get back with you to confirm a final quote.”
Or, “That sounds great, but I never give my final price without inspecting a property first because I like to make sure that all my projects get done right. Then I can confirm your price!”
The goal is to affirm your ability and willingness to get the job done, and take the hassle of cleaning out the foreclosed property…
Without committing to their offer before taking a look at the property yourself.
So that if you show up and the house is way bigger than they said…
Or it’s completely wrecked and the price is far too low for the amount of work that will be needed…
You can effectively counter offer a reasonable amount, and explain why your pricing structure is what it is.
It’s also a good idea to flesh out your contact list for various contractors beforehand.
If you haven’t had experience cleaning foreclosure properties before, you might not have all the contacts that you need for jobs like this.
Contacts You May Need:
Make sure that you have several different contractors in your list for each category that you can call in for a quote when the need arises.
6. Finalizing Your Letter of Agreement (Written)
Once you’ve arrived at an agreed upon price, don’t make the mistake of leaving the agreement at word of mouth only.
Always get a written contract or letter of agreement signed.
This letter of agreement states the final price, including all legal disclosures, that you will send to the party in ownership of the foreclosure property.
Protecting your business legally is something that many people forget, and ultimately end up learning the hard way.
Make sure that your letter of agreement protects your business legally, and that it thoroughly details everything that you will be responsible for doing to the property.
As well as the pricing agreement and payment structure.
Phase 3: Pricing Foreclosure Cleaning
7. Start with Adding Up Expected Hours to Complete
If you are already in the cleaning business, then you probably have a pretty straightforward method to assess the time it will take to clean a property.
You will need to adapt this method to properly quote and approximate time for cleaning foreclosure properties.
Each one will be different, and present a unique set of problems and challenges.
Don’t just go off of a number of rooms or square footage of the property.
You’ll also want to ask yourself more detailed questions.
How much trash has been left behind?
Will you need to rent a dumpster?
If so, what size?
And how many days will you need it for?
Are there a lot of heavy items that will require lifting?
How many people will you need to complete the project in a timely manner?
Are there keys to the property?
Or are you going to need to call a locksmith to get inside?
Walking through the property, you note that the ranch style house has 2 bathrooms and 3 bedrooms, having about 1700 square feet total. You also notice that there's a few heavy items, a fridge, a dresser, and a bookcase, so you know it's a 2 person job. You notice that the class in the downstairs kitchen window and the back door have been knocked out. So you know you’re going to need to call a window repair company. You estimate that the job should take about 8 hours. Since there are a lot of larger items to haul out, you estimate that you need to rent a mid size dumpster.
8. Direct Costs to Add Up
It’s important to stay organized throughout this process.
Especially once you start lining up clients and working on multiple foreclosure properties during the same week.
Or even on the same day.
To help with the organization process, it’s important to create lists for each individual project that detail the costs involved.
Each list should include all of the direct costs involved to complete the job.
Because so much is subject to the specific property involved, understand that costs will flex from project to project.
Even if it’s for the same service or item.
For example:
If you spend $350 on glass repair for a window on one project, but the same repair company isn’t available for your next house…
Then you might spend more or less for a similar repair on your current project if you have to hire a different glass repair company
The cost will flex.
This is why it’s so important to build out a specific itemized list for each project, and not just estimate or “copy and paste” info from previous projects.
Direct Foreclosure Cleaning Costs Total: 920 Dollars
9. In-Direct Costs to Calculate
Your indirect costs are the costs that accumulate in business, usually over the course of year.
They aren’t specific costs related to a particular job.
They are the general operating expenses that play into the profitability of every job you do…
Without you evening realizing it.
Which means that you need to do your best to account for these indirect costs, and factor them into your pricing structure.
When you are first starting out, calculating these costs can be confusing.
Especially when you haven’t had a full year of business to look back on to create next year’s estimates from.
But do your best to project estimates for your current year.
You can go back and adjust these numbers once you’ve gotten your first year under your belt!
It's easier to do this if you add up the annual costs of being in the foreclosure cleaning business...
And then dividing out those costs per month, and then per week, and then per job.
Let's just say for example that you think you can close 2 foreclosure cleaning deals each week (8 per month):
Indirect Foreclosure Cleaning Annual Costs Total: 6,560 Dollars
Monthly Indirect: Then, take that $6,560 and divide by 12 to get your monthly cost: 546.67
Per Job Indirect Cost: Divide Your Per Month Cost ($546.67) by 8 (the number of jobs you anticipate getting each month).
In this case, the per job indirect cost is $68.34.
**This cost will be consistent per job that you do, as long as you are completing 8 jobs per month.
Pros and Cons
of starting a foreclosure cleaning business
Pros
For many aspiring entrepreneurs, one of the greatest draws to launching a business is the freedom to set your own schedule. There’s no boss to dictate your day, or look over your shoulder… You are in control of your time. This can be both freeing, and stressful. But for most small business owners, it is one of the most gratifying aspects of being self employed.
The good news for you here is that it really doesn’t take a whole lot to get started as a foreclosure cleaning business. Cleaning supplies themselves aren’t that expensive, and the minimal amount of equipment you will need to invest in is still very reasonable. In comparison to many other business models… This initial investment is on the low end of things.
Even if you start out as a one man operation, your foreclosure cleaning company has the potential to scale and grow. You might want to work yourself up to managing several foreclosure cleaning crews in your area, and eventually branch out from there and consider a franchise model. The potential here is limitless if you’re willing to hustle and work hard.
Cons
After you’ve paid your cleaning crew and calculated your overhead costs, the profit margins for a cleaning business are pretty slim. Plus, there is only so much that an office space will be willing to pay to have their facilities maintained, so there will be a cap on how much you can realistically charge for your services.
Sometimes it can be tempting to close on a foreclosure cleaning job as quickly as possible. Especially in the beginning when money is tight. But this is a dangerous game to play. If you don’t do a “soft close”, and then inspect the property before giving your final project quote… You could end up with far more work on your hands than you expected. The last thing you need is to lose money because you expected the property to be in a certain condition, only to discover after you’ve signed the contract that it is far worse than you expected.
If you have any visions of earning steady passive income from your cleaning business… I encourage you to lay those aside. Your income as a foreclosure cleaning company will be directly linked to your hours. While owning your own foreclosure cleaning business can eventually lead to consistent passive income, that is a long way down the road.
In the beginning, it probably won’t be realistic to hire several crews to complete all of the cleaning jobs that you book. You will need to be willing to do the dirty work yourself when starting out. Eventually, you can work your way into a position of oversight and management, rather than getting down on your hands and knees at each job. But it’s important that you are willing to put in the hard work on your own for a while.
Foreclosure Cleaning is Profitable If You Cover This...
The bottom line for starting your foreclosure cleaning business comes down to booking enough jobs.
If you don’t have the leads coming in…
Then this business model simply won’t be profitable for you.
When the 2008 recession hit the US in full force, foreclosure cleaning businesses skyrocketed and business was everywhere.
One man’s downfall was literally another man’s success.
But as the housing market has gotten progressively better and more stable in recent years…
How can you guarantee booking enough foreclosure cleaning jobs in 2021 to make it worth your time and effort?
Sure, you can book your calendar full of local foreclosure auction dates.
And you can schedule appointments with all your neighborhood banks to speak with their foreclosure specialists.
And you can call up all the real estate agents you know.
And sure…
You can even drive around in hopes of stumbling across a foreclosed property.
But the one thing that all of these methods have in common is that they are all incredibly time consuming.
What if I told you that there was a sure-fire way to book as many leads for your foreclosure cleaning business as you could ever need, and then some?
Well there is, and it’s the method I’ve been using for years that took me from making only 2K a month to 36K a month in only two years.
It’s local lead generation.
When you harness the power of Google and localized SEO strategies to generate leads for small businesses…
The results are amazing!
Not only can this method unlock all the leads you could want for foreclosure cleaning, but it can also be an incredible foundation for online business.
Local lead gen is a sustainable, fast growing, scalable business model.
Plus it solves the biggest need that small businesses consistently say that they need:
More leads!
Take a look at how we can help you get started with online lead generation, here.
