Are you interested in starting a property preservation business? If YES, here is a complete guide to starting a property preservation business with little money and no experience plus a sample property preservation business plan template.
A property preservation company helps lenders, banks and financial institutions who have foreclosed properties to clean and maintain services on such properties on behalf of these institutions. Banks under the law are not granted the authority to be involved in property management business, and due to this they usually outsource this related responsibility to property preservation companies.
Due to the downturn of the economy, which led to an increase in the number of foreclosed properties; more and more property preservation copped up to fill in the gaps for the banks, lenders, and other financial institutions. This kind of business is not one where you get to mull on whether to accept a contract or not.
Snappy decisions are usually demanded as this is a pretty demanding sector, and so if you submit a proposal and you are contacted in response to your proposal; it is to the benefit of your business if you accept the contract offer immediately.
This also means that you would have already had in place the required assets and human resources. This is a highly competitive market, and so if you cannot meet the bank’s immediate needs or cannot accept the contract on the spot, you may not likely get a second chance.
Steps to Starting a Property Preservation Business
1. Understand the Industry
According to research, the property preservation business is expected to grow positively over the next five years, and might slow down afterwards.
This is probably due to the fact that the economy which took a poor hit is slowly recovering, leading to an increased consumer confidence coupled with low interest rates, which invariably leads to an increase in house ownership with fewer demands for the services of property preservation businesses.
This projection has led to property preservation businesses, changing strategies and adding more services to that which they offer so as to remain relevant in changing times.
Interesting Statistics About the Industry
This market has no dominant companies with a major stake in the marketplace. The industry has brought in $62 billion in revenue, with growth for 2011 to 2016 pegged at 3.3%. According to research, there are 239,987 existing businesses that have employed over 766,000 people.
This industry is one that is prone to fluctuations as fluctuations especially in the housing sector have a huge effect on it. As at 2010, the number of foreclosures filed in the united states numbered to 3,825,637, which according to a research was a 23% increase since 2008, which means that those who venturing into this business stand a good chance of making it big.
The general demands and also costs that is associated with operations, while using advanced technologies, as well as implementing industry best business practices and keeping up with the latest regulatory changes; has certainly made this industry a hard one for just anyone to venture into. The business is not one that is considered for the faint of heart.
Despite the above challenges however, the market still has a high number of distressed properties which means that property preservation firms will continue to remain vital in the coming years, with a lot of work still being need to be done.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic compositions of those that demand for the services of a property preservation business are banks, servicers, lenders and investors. Those are the ones that usually seek out the services of a property preservation business so as to outsource part of their responsibilities.
Real estate firms, construction firms, are also part of those that would require the services of a property preservation business.
3. Decide Which Niche to Concentrate On
The niches within the property preservation industry are obviously ones where services that are offered are mostly uniform in nature except for some businesses that offer additional related services. Some areas of specialization in the property preservation businesses include;
- Managing facilities
- maintenance services
- Collection of rent
- property accounting
- managing trash and recycling
- legal representation of property owners
- property repair and renovation
- repair contractors coordination
- security management
- and screening tenancy applicants
Small property preservation business owners may offer just one or two of the above listed services, however, medium to large scale property preservation business owners, might offer more or all of the above listed services, thereby having a large number of clients.
The Level of Competition in the Industry
Starting a property preservation business is certainly not for the faint of heart. It is a business that is operated in a volatile business environment, where the economy can ensure that many businesses close shop, and so due to this, there is a huge level of competition within the industry.
The main things needed to start this business are assets and human resources, which are to be available at all times. It is far easier for businesses that have long been established with a good reputation to thrive in this industry – small, medium, or large – than for new ones to.
However, you can start your business by being affiliated to the established companies, so as to get jobs sent your way. Established reputable companies already have a relationship with the REO managers and agents in banks and financial institutions and so when it comes to competing for jobs, they will always have an unfair advantage.
4. Know Your Major Competitors in the Industry
Well known brands are those that have done better than others in the same industry. This is due to the fact that they have several factors to their credit such as consistency, and aggressive marketing strategies that is used to ensure that they remain on top. Below are some of the well-known brand property preservation businesses in the United States of America;
- Dynamite property preservation
- Hud property Preservation
- Five Brothers Property Preservation
- Carrington Property Services
- Mortgage Contracting Services
- Cyprexx Services
- Field Asset Services
- Lenders Asset Management Corporation
Before starting a property preservation business, as an entrepreneur you should carry out a proper research and be certain this is the business you want to go into as this business is not one to be entered into anyhow. Also, the business is one that is affected by the economic downturn of a country.
It has been projected that in the next five years, there might be a slump in demand for the services of a property preservation business. This has led to property preservation businesses also offering additional but related services, and also being proactive as to how to remain afloat in the coming years, when business might be slow.
Also, it is important when starting this business to be in good business relationship with REO managers and agents, and also ensure that your business remains visible especially online so that you can be noticed. Another thing is to ensure that you have the requirements on ground, so that you are able to start the job once contracted.
5. Decide Whether to Buy a Franchise or Start from Scratch
As an entrepreneur starting your business from the scratch should depend on what your long term vision and objectives for your property preservation business is. Starting from the scratch gives you certain opportunities than buying a franchise does, especially as you would be able to determine the pace in which your business should go, and if you should change strategies or not.
However buying a franchise is not all that bad especially in this kind of competitive market. A franchise offers you the opportunity of carrying out your business without being worried about how you would get your clients, and if you have enough budget with which to carry out the advertisement of your property preservation business as the franchise gets to take care of all that.
With a franchise though, certain decisions are not yours to make, and you will be helpless to the decisions taken by the franchising company you are under.
6. Know the Possible Threats and Challenges You Will Face
Challenges and threats are part of every business, which could be external on internal. Some of the threats and challenges you would go through with your property preservation business include a buoyant economy.
This means that there will be fewer foreclosures, as more people will be able to afford to pay for their houses, which will invariably lead to banks and financial institutions not demanding the services offered by a property preservation business.
Another challenge is from competitors especially established property preservation businesses that are likely to get noticed for jobs faster than your business. Every entrepreneur should be ready to face the challenges and threats peculiar to his or her business with laid down strategies.
7. Write a Business Plan
Starting a new business can be a confusing and scary experience especially if you have no business plan that will act as a guide in helping you with the basics, which is why a well crafted business plan is the beginning of a successful property preservation business.
A business plan forces you to research on the business you are about to go into, and brings you out from the clouds to face reality, by facing the harsh fact of if the business will succeed. Simply put, a business plan is the road map that will assist you in the planning of your property preservation business.
Through your thorough research, you might end up changing some strategies that you had earlier thought will help in the business, but which research has forced you to see how impracticable or useless to your business the strategies would have been.
It will force you also to take a hard look at yourself as you will need to be open about who you are and what you intend to achieve in the business plan.
Most people write a business plan just so they would have a document in place, but a business plan is more than having a document in place, it is so that you could draft strategies that will help you focus on your opportunities as well as competition, and force you to think of your business even if you did not initially have the business skills.
The business plan should also be able to show investors, or those you would work with (banks, lenders, and financial institutions) how serious you are in becoming a property preservation business to contend with. Your business plan should be one that is objective, factual, simplistic, clear, and realistic when presenting the goals of the company.
writing a business plan can be complex or overwhelming, which means you might have to engage the services of a business plan writer or consultant to help put your ideas and strategies in shape for your property preservation business.
If however, you know that you are on a tight budget and cannot afford the services of a consultant, you could go online and download a business plan template that you can use to draft out a business plan for your business.
8. Choose a Suitable Location for your Business
Before you choose an area where you would decide to locate your property preservation business, you would have to be sure that the area has a lot of foreclosed houses, which will mean that there will be more jobs to go round. It would not speak well of your business acumen if you decide to locate your property preservation business in an area where there aren’t enough foreclosed houses, as this would be detrimental to your business.
The truth is this business is the type that can be run comfortably from home, and so if you have a clear space in your garage for keeping your tools and equipment, and also a den where you can file all your paper works; then you can comfortably run this business from home.
This means that you do not have to worry about getting money to rent a facility. You would also have to ensure that working from home is comfortable for you.
Now, why this is a business that you might be able to locate anywhere, it would be advisable for you to have a target region or area where you intend to carry out jobs. If you get jobs that are so far out, you are required to preserve it, whether it is snowing or raining hard.
While you should strive to ensure that you carry out the details of your contract, it shouldn’t be at your detriment (health or physical). Even if you contract the job out, you will still be required to inspect it before you can be paid. This does not mean however that you cannot rent a facility.
You can rent a facility regardless of the scale – small, medium, large – of business you would want to start off with, as long as you have got the financing to pull it off.
9. Hire Employees for your Technical and Manpower Needs
Most of the equipment and tools needed to start this business are very basic ones, as the more heavy and technical equipment, can be hired only when it is needed. Most of the basic equipment can be gotten at fairly used for cheap, or bought online.
They can also be bought at local hardware stores. If you are operating on a tight budget, you might want to get the equipment for fairly used so that you could pay less. Below are some of the equipment and tools that you would need if you intend to start your property preservation business;
- Portable Heater
- Hard Hat
The nature of the property preservation business means that you can comfortably operate the business from home. However, if you would be renting a facility, then you should be ready to go on a scale that can bid for big jobs from banks.
Regarding the number of people that it would to run this business efficiently, that would depend on the kind of contract you get, as no one can do it alone; at most you would have to contract parts of the jobs out to independent contractors or hire some people that would handle basic repairs and such.
If you need to employ anyone, it would mostly be for administrative tasks. You could get a secretary, a security personnel and an accountant, while the rest will be hired on contracts. This is basically 3 to 5 people.
The Service Delivery Process of the Business
The production process that is involved in the property preservation business is highly dependent on the kind of job to be carried out. The process could range from providing repairs, changing locks, de-freezing the pipes, capping the gas supply, changing rotting boards, and such other services to make the house marketable.
Other processes involve taking care of or mowing the lawns, packing snow from the driveway during winter, and ensuring that the house is secured.
10. Write a Marketing Plan Packed with ideas & Strategies
Every business needs to generate income if they want their business to grow and thrive, and most ways money can be generated is if people are aware of the services of the company through advertising and publicity, which in essence is termed marketing.
Property preservation businesses are ones that especially benefit from marketing, and so if you are starting your property preservation business, you would need to leverage on all sources that will ensure that your company is visible to banks and financial institutions.
Regardless of the size of business you would be running – small, medium, or large scale – you would need to bid for jobs, and be ready whenever these jobs come your way.
The industry is one of preparedness. It is to your advantage if you get affiliated with already established and large property preservation companies, who have good standings amongst banks, services, and financial institutions. Below are some marketing ideas and strategies for your property preservation business;
- Ensure that you join as many property preservation vendor directories – nationally and regionally – so that REO asset managers and agents can see you.
- Get affiliated with reputable established large property preservation firms.
- Market your services directly to REO agents and directories by continuously sending mails that include the necessary requirements.
- Use your official website to establish a presence
- Leverage on social media platforms such as Facebook and Twitter. You can link your website to these platforms.
- Attend related seminars that will help get your business noticed.
- Be ready to accept a contract on the spot once offered.
11. Work Out a Reasonable Pricing for your Services & Products
The factors that will enable you to set the right prices for your property preservation business is to ensure that you get the right estimation for contracts gotten. This means that while you might need to ensure that you do not over-charge the banks, you have to look out for the bottom line of your business as well.
12. Develop Iron-clad Competitive Strategies to Help You Win
If you ply your trade in areas where there is a higher chance of properties being foreclosed, it stands to say that you will meet a lot of property preservation companies already in your area, and will also have more crop up after you have started operation, this leads to a stiff competition between businesses.
This means that you will need to have competitive strategies to be able to ensure that your company is not only noticed by banks but that your business profile rises consistently.
Part of your competitive strategy lies in your readiness to promptly accept contracts on the spot. This means that your requirements have to be readily available all the time. If you are not ready when contacted, the bank will certainly offer your competitor the contract, and this means that you might not get jobs as you would be deemed to not be serious about your business.
Another way to win your competitors is to offer other services that will ensure that your business is not only proactive but remains afloat especially as the industry is regarded as a volatile one, and only the businesses that are proactive will remain long after others might have been run out of business.
13. Brainstorm Possible Ways to Retain Clients & Customers
The customers of a property preservation business are usually the banks and financial institutions, and one sure way of retaining them is to ensure that you provide excellent services all the time. This means that you are someone to be trusted and the banks will ensure that they give you contracts all the time.
Another way at retaining your customers is to be fair with your estimation. Once you over-estimate for a job, you are likely to be dropped, and understating for a job might also appear as if you do not know what you are doing.
14. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
Strategy creation to boost brand awareness is very important, because while you boost awareness, you also create a corporate identity for your property preservation business.
Most entrepreneurs that run large scale property preservation businesses usually need to hire image consultants that will help them in promoting their brand. Some of the platforms that you can use to boost the brand of your business and also advertise it are:
- Advertising your business on your official website
- Affiliating with larger property preservation companies so as to get noticed
- Promoting your property preservation business via social media platforms such as Linkedin, Facebook and Twitter
- Ensuring that you do not reject jobs when you are contracted
- Continuously mail potential clients about your company
- Ensuring that your business is listed in online and offline directories
- Attend industry seminars so you can network properly
15. Create a Suppliers/Distribution Network
Running this kind of business means that you would need to source for supply networks even if they are kept on standby, so that you should be able to carry out intensive jobs whenever you come across them.
Your suppliers will not only ensure that you get the best tools for use so that you could effectively carry out your job, they will be sure to pass along information as regards changing prices, so that you do not underestimate for a job. This means that you need to have a good business relationship with your supplier.
16. Tips for Running a Property Preservation Business Successfully
In running this kind of business successfully, you would need to be thorough and efficient in carrying out your job diligently, so as not to give your client any cause for complaints, especially as complaints are not paid for, leading to you doing more job for less revenue.
Another way at successfully running the business is to ensure that you get only reliable independent contractors to help out if the job becomes intensive. Reliable contractors will not want a dent on their reputation and will ensure that they carry out the job to your required specification.
Lastly, you will need finances to be able to carry out your property preservation business successfully, especially as you aren’t paid immediately after the job is done, but will still need cash to bankroll the job or carry on day-to-day operations.