How to Start a Foreclosure Cleaning Business

Pinterest Facebook

A foreclosure cleaning business, also known as an REO (Real Estate Owned) cleaning business, is a type of service that specializes in cleaning and maintaining properties that have been foreclosed upon by banks or other lending institutions.

When a property is foreclosed, it often requires cleaning and restoration before it can be put back on the market or sold to new owners.

Foreclosure cleaning businesses offer a range of services to ensure that foreclosed properties are in good condition and ready for sale. These services may include general cleaning, removal of debris and trash, carpet cleaning, window washing, lawn maintenance, and sometimes minor repairs.

The foreclosure cleaning business belongs to the cleaning services industry and available data shows that the global cleaning services market size was valued at $55,715.0 million in 2020, and is projected to reach $111,498.8 million by 2030, registering a CAGR of 6.5 percent from 2021 to 2030.

Steps on How to Start a Foreclosure Cleaning Business

Conduct Market Research

Conducting market research is essential for any business, including a foreclosure cleaning business. First, you have to determine who your target customers are by analyzing the demographics, psychographics, and behavior patterns of potential customers.

In this case, your target market will be banks, real estate agents, or property management companies that handle foreclosed properties.

You are also expected to research other foreclosure cleaning businesses in your area and evaluate their strengths and weaknesses, pricing strategies, customer reviews, and marketing tactics. Design a survey to gather information about the needs and preferences in your area.

You can use online survey tools like SurveyMonkey or Google Forms to create a survey and share it with potential customers. Check online reviews on banks, real estate agents, or property management companies that handle foreclosed properties to understand the pain points and identify areas where your cleaning business can offer better services.

Attend networking events of banks, real estate agents, or property management companies that handle foreclosed properties in your area. Based on the information you have gathered, determine a pricing strategy that is competitive and profitable.

a. Who is the Target Market for Foreclosure Cleaning Business?

Foreclosure cleaning businesses typically work directly with banks, real estate agents, or property management companies that handle foreclosed properties. These organizations outsource the cleaning and maintenance tasks to specialized businesses to ensure that the properties are well-maintained and can be sold or rented out as quickly as possible.

b. Is the Foreclosure Cleaning Business a Profitable Business?

Yes, the foreclosure cleaning business is a profitable business and but is important to note that the profitability of a foreclosure cleaning business can vary depending on various factors, including the local real estate market, competition, the volume of foreclosed properties in your area, and your ability to effectively market and manage your business.

c. Are There Existing Niches in the Industry?

No, there are no existing niches when it comes to foreclosure cleaning business because foreclosure cleaning business is a niche idea in the janitorial cum commercial cleaning services industry.

d. Who are the Major Competitors?

Cleanups Unlimited
All Clean Foreclosure Cleanup
Five Star Property Preservation
National Field Representatives
Field Asset Services
First Allegiance
Safeguard Properties
Cyprexx Services
Mortgage Contracting Services
Assurant Field Asset Services
American Mortgage Field Services
Field Asset Services
National Vendor
PK Management Group
VRM Mortgage Services
Northsight Management
Lender Processing Services
MCS Valuations
Cityside Management Corporation
Altisource Field Services.

e. Are There County or State Regulations or Zoning Laws for Foreclosure Cleaning Businesses?

No, there are no county or state regulations and zoning laws for foreclosure cleaning businesses, and players in this industry are expected to work with the existing regulations governing such businesses in the county or state where their business is domiciled. Please check with your zoning or planning department to find out what options are available to you.

f. Is There a Franchise for Foreclosure Cleaning Business?

Yes, there are franchise opportunities for foreclosure cleaning businesses, and here are some of them;

Jan-Pro Franchising International
Stratus Building Solutions
360clean
PuroClean
AdvantaClean
Paul Davis Restoration
Coverall
Rainbow International Restoration
PuroSystems
CleanNet USA.

g. What Do You Need to Start a Foreclosure Cleaning Business?

A Feasibility Report
Business and Marketing Plans
Business Licenses and Permits
A Good Office facility
EIN (Employer Identification Number)/Federal Tax ID Number.
A Corporate Bank Account
Cleaning Supplies and Equipment
Employees
Startup Capital

Choose a Memorable Business Name

When looking to start a business, before you can begin to file the necessary documents with the constituted authorities or start your website, it is necessary that you come up with a name that you will be recognized with. It is essential that the name you come up with can easily be pronounced, is unique and easily memorable.

Some of the catchy business name ideas suitable for a foreclosure cleaning business are;

Creative Foreclosure Cleaning Business Name ideas

Clean Total® Foreclosure Cleaning Services, LLC
Rhodes Cleaners® Foreclosure Cleaning Services, LLC
Vivo Clean© Foreclosure Cleaning Services, Inc.
Perfect Pro® Foreclosure Cleaning Services, Inc.
Orlando Pirus® Foreclosure Cleaning Services, Inc.
Benny Amen™ Foreclosure Cleaning Services, LLC
Cleanest Guys© Foreclosure Cleaning Services, LLC
Sean Jirus® Foreclosure Cleaning Services, Inc.
Jarome Maxwel® Foreclosure Cleaning Services, Inc.
Duke Harrington™ Foreclosure Cleaning Services, Inc.
Bobbie Marlington™ Foreclosure Cleaning Services, LLC
Owen Joel© Foreclosure Cleaning Services, Inc.
Detriot Brothers® Foreclosure Cleaning Services, Inc.
Houston Sisters™ Foreclosure Cleaning Services, LLC
Pat Hardaway© Foreclosure Cleaning Services, Inc.
Terry Tangerine™ Foreclosure Cleaning Services, LLC
Blue Sky Group® Foreclosure Cleaning Services, Inc.
Othniel Davies™ Foreclosure Cleaning Services, LLC
Dan Elba® Foreclosure Cleaning Services, Inc.
Fredda Malcom© Foreclosure Cleaning Services, Inc.

Register Your Business

a. What Type of Business Structure is Best for Foreclosure Cleaning Business?

The ideal business structure for a foreclosure cleaning company is determined by a variety of factors, including the size of the company, the number of owners, the level of personal liability the owners are ready to accept, and the tax consequences of the various business structures.

However, we normally recommend a limited liability company structure. An LLC is a hybrid corporate form that provides the flexibility of a partnership while also providing its owners with limited liability protection. An LLC can have one or more owners, and the owners are not personally accountable for the debts or liabilities of the business. This business form is frequently used for small to medium-sized organizations.

b. Steps to Form an LLC

Choose a Name for Your LLC.
File Articles of Organization.
Choose a registered agent.
Decide on member vs. manager management.
Create an LLC operating agreement.
Comply with other tax and regulatory requirements.
File annual reports.

c. What Type of License is Needed to Start a Foreclosure Cleaning Business?

General Business License
Zonal Permits
Signage Permit
Sales tax permit
Chemical handling permit
Environmental permits.

d. What Type of Certification is Needed to Start a Foreclosure Cleaning Business?

In reality, you don’t need any special certifications to start a foreclosure cleaning business but you can work towards owning one or more of the following certifications;

Institute of inspection cleaning and restoration certification – IICRC
International janitorial cleaning services certification – IJVSC
House cleaning technician certification – HCT
Cleaning business owner certificate – CBO

e. What Documents are Needed to Start a Foreclosure Cleaning Business?

These are some of the basic legal documents that you are expected to have in place if you want to legally run a Foreclosure cleaning business in the United States of America;

DBA
EIN
Business and liability insurance
Federal Tax Payer’s ID
State Permit and Building Approval
Certificate of Incorporation
Business License
Business Plan
Employment Agreement (offer letters)
Operating Agreement for LLCs
Insurance Policy
Sales tax permit
Chemical handling permit
Environmental permits
Online Terms of Use
Online Privacy Policy Document
Contract Document
Company Bylaws
Memorandum of Understanding (MoU)

f. Do You Need a Trademark, Copyright, or Patent?

Essentially, it is not necessary to obtain a trademark, copyright, or patent for a foreclosure cleaning business, although it may be helpful in protecting your intellectual property and brand. For example, registering a trademark for your foreclosure cleaning business can help prevent others from using similar branding that may cause confusion among customers.

Cost Analysis and Budgeting

a. How Much Does It Cost to Start a Foreclosure Cleaning Business?

The cost required to start a foreclosure cleaning business may vary significantly and it could be high, moderate, or low. But on average, you can budget as low as $5,000 to as much as over $100,000 to start your foreclosure cleaning business.

b. What are the Costs Involved in Starting a Foreclosure Cleaning Business?

Business Registration Fees – $750.
Legal expenses for obtaining licenses and permits – $1,300.
Marketing, Branding, and Promotions – $2,000.
Business Consultant Fee – $2,500.
Insurance – $1,400.
Rent or lease – $50,000
Other start-up expenses include commercial satellite TV subscriptions, stationery ($500), and phone and utility deposits ($2,800).
Operational Cost (salaries of employees, payments of bills et al) – $30,000
start-up inventory – $5,000
Store Equipment (cash register, security, ventilation, signage) – $1,750
Website: $850
Opening party: $3,000
Miscellaneous: $3,000

c. What Factors Determine the Cost of Starting a Foreclosure Cleaning Business?

The size of the foreclosure cleaning business
The choice of locations
The required licenses and permits
The type of additional services offerings
The cost of hiring and paying a business consultant and attorney
The cost of branding, promotion, and marketing of the foreclosure cleaning business
The cost of furnishing and equipping the foreclosure cleaning business office facility
The cost of the insurance policy covers
The cost of registering the business
Cost of recruiting and training your staff
The cost for the purchase and customizing of uniforms
The cost for the grand opening of the foreclosure cleaning business

d. Do You Need to Build a Facility? If YES, How Much Will It Cost?

No, it is not compulsory to build new facilities for your Foreclosure cleaning business, you just need a budget-friendly office to start the business because your services will be deployed in your client’s facilities.

e. What are the Ongoing Expenses of a Foreclosure Cleaning Business?

Cleaning supplies and equipment such as cleaning solutions, detergents, disinfectants, paper towels, trash bags, and other supplies. Maintain equipment such as vacuum cleaners, mops, and brooms.
Labor costs (wages, taxes, and benefits).
Transportation expenses
Marketing and advertising such as online ads, flyers, and business cards.
Insurance such as liability insurance, property insurance, and workers’ compensation insurance.
Business licenses and permits
Website and software expenses
Income taxes and other taxes, such as sales tax.

f. What is the Average Salary of your Staff?

Chief Executive Officer (Owner) – $65,000 per year
Manager – $45,000 per year
Accountant/Cashier – $38,0000
Marketing and Sales Officer – $35,000 per year
Cleaners – $30,000 per year
Security Officers – $26,150 per year

g. How Do You Get Funding to Start Foreclosure Cleaning Business?

Raising money from personal savings and sale of personal stocks and properties
Raising money from investors and business partners
Sell shares to interested investors
Applying for a loan from your bank/banks
Source for soft loans from your family members and your friends.

Write a Business Plan

a. Executive Summary

Vivo Clean© Foreclosure Cleaning Services, Inc. is a New York City-based professional foreclosure cleaning company dedicated to providing comprehensive property preservation and cleaning services to banks, lending institutions, real estate agents, and property management companies.

We are well-equipped to assist in restoring foreclosed properties to market-ready condition, ensuring they are clean, well-maintained, and appealing to potential buyers or renters.

With years of experience in the property preservation industry, we understand the unique challenges and requirements associated with foreclosure cleanups. Our team of trained professionals is equipped with the necessary skills, knowledge, and specialized equipment to handle a wide range of cleaning and maintenance tasks efficiently and effectively.

Vivo Clean© Foreclosure Cleaning Services, Inc. is poised to become a trusted and sought-after foreclosure cleaning company. With our expertise, commitment to excellence, and dedication to customer satisfaction, we are confident in our ability to meet the demands of the foreclosure market and drive the success of our business.

b. Products and Service

We offer thorough cleaning services for both interior and exterior areas of foreclosed properties, including rooms, bathrooms, kitchens, and common areas.
We specialize in the removal and disposal of debris, trash, and unwanted items left behind in foreclosed properties. We ensure a clean and clutter-free space.
We utilize advanced carpet cleaning techniques to revive and restore carpets, eliminating stains, odors, and allergens.
We provide comprehensive window cleaning services, ensuring crystal-clear windows that enhance the property’s appearance.
Our services encompass lawn mowing, trimming, and basic landscaping to maintain a well-groomed and inviting exterior.
We handle minor repairs and touch-ups, addressing issues such as painting, drywall patching, and fixture replacement to enhance the overall condition of the property.

c. Mission Statement

At Vivo Clean© Foreclosure Cleaning Services, Inc., our mission is to provide exceptional foreclosure cleaning services that contribute to the revitalization of properties and communities. We are committed to delivering high-quality, reliable, and efficient cleaning and maintenance solutions to our clients, ensuring that every foreclosed property we work on is restored to its best possible condition.

We aim to be a trusted partner in the property preservation industry, known for our professionalism, attention to detail, and commitment to customer satisfaction.

Vision Statement

Our vision is to be the leading foreclosure cleaning company, setting industry standards for excellence and innovation. We strive to establish ourselves as the go-to provider for banks, lending institutions, real estate agents, and property management companies seeking reliable and comprehensive property preservation services.

We envision a future where our expertise and dedication contribute to the successful reintegration of foreclosed properties into the market, helping to revitalize neighborhoods and communities across our service areas. Through continuous growth, strategic partnerships, and a commitment to excellence, we aim to make a lasting positive impact in the property preservation industry.

d. Goals and Objectives

The goals and objectives of the foreclosure cleaning business are to make the property presentable and attractive to potential buyers or renters.

e. Organizational Structure

Chief Executive Officer (Owner)
Manager
Accountant/Cashier
Marketing and Sales Officer
Cleaners
Security Officers

Marketing Plan

a. SWOT Analysis

Strength:

A team of trained professionals with extensive knowledge and experience in foreclosure cleaning.
Strong commitment to delivering high-quality cleaning services with meticulous attention to detail.
Streamlined processes and effective utilization of resources to ensure timely and cost-effective service delivery.
Positive reputation and established relationships with banks, real estate agents, and property management companies.
Access to and proficiency in using specialized equipment and tools for effective foreclosure cleaning.

Weakness:

Fluctuations in the real estate market and varying foreclosure rates may impact the demand for foreclosure cleaning services.
Restricted service area due to the need for on-site presence, limiting the potential client base.
The business is influenced by the overall economic conditions, foreclosure rates, and industry trends.

Opportunities:

Identify new geographic areas or target markets with potential for growth in foreclosure cleaning services.
Offer additional property preservation and maintenance services to broaden the client base and increase revenue streams.
Collaborate with contractors, real estate agencies, and property management companies to access a wider range of opportunities.

Threat:

Presence of established competitors and other property preservation companies offering similar services.
Economic downturns and housing market fluctuations may reduce the number of foreclosures and demand for cleaning services.
Stay updated on industry regulations and ensure compliance with changing legal requirements related to property preservation and cleaning.

b. How Do Foreclosure Cleaning Companies Make Money?

Foreclosure cleaning companies generate revenue through various channels associated with their services. Here are the primary ways in which foreclosure cleaning companies make money:

Cleaning and Maintenance Services
Contractual Agreements
Additional Services
Emergency and Post-Disaster Cleanup
Referral Commissions.

c. Payment Options

Credit and debit cards
PayPal
Apple Pay and Google Wallet
Gift cards and store credit
Installment payments
Cash on delivery of services.

d. Sales & Advertising Strategies

Clearly define your target market, including banks, real estate agents, property management companies, and other stakeholders involved in the foreclosure process. Tailor your sales and advertising efforts to reach these specific audiences.
Establish strong relationships with key players in the industry. Attend networking events, join industry associations, and engage in community activities to connect with potential clients.
Create a professional and user-friendly website that showcases your services, highlights your expertise, and provides contact information.
Utilize online advertising channels such as Google Ads, social media advertising, and online directories.
Optimize your online presence for local search by ensuring your business information (name, address, phone number) is consistent across online directories, creating local business listings on platforms like Google My Business, and encouraging positive customer reviews.
Develop targeted direct mail campaigns to reach out to banks, real estate agencies, and property management companies in your area.
Implement a referral program to incentivize satisfied clients, real estate agents, and industry partners to refer your services. Offer discounts, referral bonuses, or commission-based incentives for successful referrals.
Participate in trade shows, foreclosure industry conferences, and local events to showcase your services, network with potential clients, and stay updated on industry trends and developments.
Use these testimonials in your marketing materials, website, and social media platforms to build trust and credibility.
Encourage satisfied customers to leave reviews on platforms like Google, Yelp, or industry-specific review sites.

Financial Projection

a. How Much Should You Charge for Your Product/Service?

The cost of foreclosure cleaning services in the US can vary depending on various factors such as the location, size of the property, and the level of cleaning required. On average, though, a foreclosure or vacant house cleanout can cost you anywhere between $110 to $650 for basic services.

b. How Much Profit Do Foreclosure Cleaning Business Owners Make a Year?

It is difficult to provide an exact figure as profit margins can differ significantly from one business to another. However, according to industry reports and anecdotal evidence, foreclosure cleaning business owners can typically expect a profit margin ranging from 10% to 30% of their annual revenues.

This means that if a foreclosure cleaning business generates $200,000 in annual revenue, the owner might expect a profit of $20,000 to $60,000 before taxes and other expenses.

c. What Factors Determine the Amount of Profit to Be Made?

The capacity of the foreclosure cleaning business
The types of additional services offered
The locations of the foreclosure cleaning business
The management style of the foreclosure cleaning business
The business approach of the foreclosure cleaning business
The advertising and marketing strategies adopted by the foreclosure cleaning business.
The number of years the foreclosure cleaning business is in business

d. What is the Profit Margin of a Foreclosure Cleaning Business?

Typically, the profit margin for a cleaning business ranges from 10 percent to 30 percent of the gross revenue. However, for a foreclosure cleaning business, the profit margin may be slightly lower due to the competitive pricing and higher overhead costs.

e. What is the Sales Forecast?

Below is the sales forecast for a foreclosure cleaning business. It is based on the location of the business and other factors as it relates to such startups in the United States;

First Fiscal Year (FY1): $360,000
Second Fiscal Year (FY2): $440,000
Third Fiscal Year (FY3): $520,000

Set Up your Shop/Office

a. How Do You Choose a Perfect Location for Foreclosure Cleaning Business?

The demography of the location
Accessibility of the location
The number of foreclosure cleaning companies and real estate facilities in the location
The local laws and regulations in the community/state
Traffic, parking, and security et al

b. What State and City is Best to Start a Foreclosure Cleaning Business?

Miami, Florida
San Diego, California.
Chicago, Illinois
Austin, Texas
Nashville, Tennessee
Seattle, Washington
Denver, Colorado
Los Angeles, California
New York City, New York
San Francisco, California

c. What Equipment is Needed to Operate a Foreclosure Cleaning Business?

You would need working tools and equipment such as jet snakes, brushes, industrial vacuums, dry clothes for cleaning, brooms, dust masks, safety shoes, and overalls vacuum cleaner with attachments, bowl cleaner, brooms, dust pan & brush, dry mop, wet mop & bucket, latex gloves, wet floor signs, extension cord, disinfectant cleaner, soft scrub, high duster, caddy with a handle to keep your supplies in, and truck.

Hire Employees

If you are looking to start a standard foreclosure cleaning company, then you need to hire at least a handful of employees that can man different key positions in the organization. You should also make provisions to hire contract staff (cleaners and handymen) whenever you have a foreclosure cleaning contract that you and your staff members may not be able to handle.

Launch the Business Proper

You may decide to start a foreclosure cleaning business without organizing any special launch party. However, if you want to create a hype around the business, and announce your name in a big way in the industry, then it is advisable to organize a launch party to officially open your foreclosure cleaning business.

a. What Makes Foreclosure Cleaning Business Successful?

Choose good locations to launch the business
Make sure your partner with key stakeholders and offer a wide range of cleaning services and support (give your customers options)
Throw an open house grand party before officially starting the foreclosure cleaning business
Be deliberate with your marketing sales approach
Encourage the use of word of mouth to promote your foreclosure cleaning business
Leverage all available online and offline platforms to promote your foreclosure cleaning business

b. What Happens During a Typical Day at a Foreclosure Cleaning Business?

The business is open for the day
Staff resume and are deployed to locations or project sites to carry out foreclosure cleaning services and necessary repair works
Administrative work is done concurrently
Stocking of cleaning and other supplies are done
The office is administratively closed for the day.

c. What Skills and Experience Do You Need to Build a Foreclosure Cleaning Business?

Excellent janitorial and cleaning skills
Excellent customer services skills
Interpersonal skill
Accounting and bookkeeping skills
Business management skills
Bargaining skill
Work experience in the janitorial services industry
Experience in managing people
Experience in business administration
Experience in handling different types of cleaning chemicals and tools.