How to Start Up a Foreclosure Clean-Out Business on a Shoestring Budget

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What is bad news for one person could turn into good news for you. It's unfortunate that so many homeowners are losing their homes through foreclosure, but that's an opportunity for you to turn into a business by cleaning out and cleaning up what they've left behind. If you have a truck for hauling, this is one business you can start on a shoestring.

Obtain any permits, licenses and registrations required. You will need a business license from the state. Check with the county and city as well. Getting rid of garbage from a foreclosed home means a trip to the dump. That may include a special license as well. You may have to be bonded before your customers feel comfortable with your services. Contact the Internal Revenue Service to obtain an Employer Identification Number, EIN. Check with your insurance agent to see if you need liability insurance.

Narrow down the services you'll offer. Cleaning up a foreclosed home ranges from surface cleaning the interior of the home, to major sanitation and debris removal. Occasionally homeowners don't take care of their home after they realize the bank is taking it. You may not want to handle clean-outs that include removal of animals, human waste or other health-affecting services.

Decide whether the exterior of the house and yard is included in the clean-out services. Moving, especially if the homeowner has avoided the reality they have to move until the last minute, often results in old furniture, clothing and appliances being left behind as well as garbage. The yard may not have been maintained and is overgrown and trashed. If there is a pool it may not have had the filter running for proper maintenance. On the one hand, the more services you offer the more likely you'll be hired. On the other hand, the more services you offer the more equipment you'll require, which adds expenses. It's also likely you'll have to hire employees, which means paying the employer's share of FICA and other taxes.

Outfit your truck with the basic equipment you'll need. Specifically what you'll need depends on the services you're offering. If you're cleaning out the interior of the home but not the exterior and yard, you'll need cleaning supplies and equipment. Try second hand stores or repair shops for reasonably priced vacuum cleaners and carpet steam cleaners. You could rent the steam cleaner when you need it, to keep your start-up costs on a shoestring budget. Decide whether the increased elbow grease from scrubbing floors by hand offsets the cost of an electric floor cleaner.

Design and print flyers that outline your services and prices. Since you won't know how big a job is involved until you visit the house and see what shape it's in, you may decide to only offer a bid, rather than a per square foot clean-out charge. Another alternative is that prices could be stepped with a surface cleaning fee at the lower end and a full service clean-out, cleanup fee at the upper end.

Contact realtors who specialize in bank-owned and foreclosed properties with the flyer. Realtors are hired by banks to sell foreclosed properties. The agents also have a good idea of what properties will become bank-owned in the near future and require cleaning. Wear clean work clothes when meeting with realtors. A shirt with your business's name on the front adds an air of professionalism. Leave a business card with the realtor and staple one to the flyer. Contact the realtors every 30 days or so to gently remind them about your clean-out services.

Tips & Warnings

  • If you don't have a truck, considering acquiring a trailer and outfit your vehicle with a trailer hitch.
  • Be careful when entering a foreclosed home. These properties are sometimes unlawfully occupied by the former owner or squatters.

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