How to Start a Thriving Property Preservation Business: A Step-by-Step Guide

Are you looking for a rewarding business opportunity that provides a valuable service? Consider starting a property preservation business. Property preservation, also known as REO preservation or default property management, involves securing, maintaining and repairing properties that have gone into foreclosure or default. As banks take over more properties, the demand for property preservation services is growing. If you have experience in construction, home repair, property management or a related field, starting a property preservation business could be a great way to put your skills to use while building a sustainable company.

In this blog post, we'll walk you through the key steps to get started in the property preservation industry, including how to find clients, hire and train contractors, set your fees, and build a successful business model. With hard work and persistence, you can turn your skills and passion into a thriving property preservation company.

The Property Preservation Market

The property preservation market serves banks, mortgage lenders, government agencies and other organizations that take ownership of properties after a default. As the number of foreclosures and defaults has risen over the past decade, the demand for property preservation services has grown significantly. This market is not geographically limited and services a wide range of properties from lower-end homes to luxury estates.

The target audience for a property preservation business includes:
- Banks and mortgage lenders that take ownership of properties after foreclosure
- Government agencies like HUD that oversee defaulted government-backed mortgages
- Asset management companies that are contracted to handle defaulted properties
- REO brokers and agents who need preservation services to prepare properties for resale

While the property preservation industry experienced a downturn after the housing crisis, demand has stabilized and continues to provide opportunities for new businesses. Focusing on providing high-quality, reliable services at a competitive price is key to building a sustainable property preservation company with long-term clients.

Your Property Preservation Services

As a property preservation business, your core service is securing, maintaining and repairing properties that have gone into default or foreclosure. This includes tasks like cleaning, yard maintenance, debris removal, emergency board-ups, lock changes, minor repairs and more. The key to standing out in this industry is providing high-quality, reliable services with a quick response time. Developing a solid process to inspect properties, identify needed services, dispatch contractors and complete work efficiently is essential.

Property preservation services can be delivered on an ongoing basis through scheduled maintenance or on an emergency, as-needed basis. You will need to hire licensed and insured contractors to handle tasks like repairs, board-ups and lock changes. For services like yard maintenance, cleaning and debris removal, you can hire your own employees or use contractors.

To develop your property preservation services, start by creating maintenance and inspection checklists to evaluate the condition of properties. Build a network of reliable contractors and establish fair pricing for common services. Develop an efficient work order system to dispatch contractors, track completed work and bill clients. Focus on building close relationships with your clients by providing detailed reports on services rendered and the status of properties under your care. The key is delivering high quality work on time and within budget.

The Economics of a Property Preservation Business

The costs involved in a property preservation business primarily include labor, materials, insurance, and transportation. Labor costs will depend on whether you hire employees or use contractors. Materials include things like cleaning supplies, tools, locks, and lumber for emergency board-ups. Commercial auto insurance, general liability insurance, and workers compensation insurance are also required to operate legally. Factor in costs for vehicles, fuel, and maintenance to transport your crews to job sites.

To determine pricing, evaluate the going rates for specific services in your area. You'll want to charge enough to cover costs and make a reasonable profit. Many property preservation companies charge by the job or by the hour for services. Developing flat rates for common tasks can also simplify billing. Negotiating longer-term service contracts with clients at a discounted rate is a good way to ensure consistent work. Be willing to adjust your pricing to remain competitive, especially when entering a new market.

An effective pricing strategy for a new property preservation company includes:
- Charging slightly below the competition to win new clients
- Offering discounts and specials for long-term or high-volume clients
- Adjusting rates annually based on increases in costs of goods and labor
- Charging higher rates for emergency services to account for additional costs
- Developing flat rates for routine services to simplify billing for clients

With time and experience, you can determine optimal pricing to maximize profits while remaining affordable for your clients. Focus on providing value through high-quality work and building close relationships -- this will allow you to maintain fair pricing for your services.

Marketing Your Property Preservation Business

There are several effective marketing strategies for promoting your property preservation services:

Search Engine Optimization (SEO): Optimize your website for search engines like Google to rank for terms like "property preservation" and "REO property management." Provide content on your site like blog posts, photos, and client reviews. Build links from industry websites and directories. SEO can help you gain organic traffic and leads.

Social Media Marketing: Create profiles for your business on sites like Facebook, LinkedIn, and Twitter. Post updates, share photos, engage with followers, and promote your services. Build connections with others in the industry. Participate in relevant LinkedIn groups to gain new clients. Social media is a great way to build brand awareness and relationships.

Direct Marketing: Contact banks, mortgage companies, asset managers, and REO brokers in your area to promote your services. Send marketing emails, letters, postcards or make phone calls describing your business and the value you provide. Ask for the opportunity to submit a proposal or bid on an upcoming property preservation project. While time-consuming, direct marketing to targeted companies can be an effective way to gain new clients.

Online Advertising: Run pay-per-click ads on search engines like Google Ads to appear in the results for industry keywords. Place ads on websites and in newsletters of organizations in the default servicing and REO industry. Online advertising increases visibility and helps drive traffic to your website.

Networking: Look for opportunities to network with others in the property preservation and default servicing space. Attend or sponsor industry conferences and events. Join your local chamber of commerce and real estate investor association. Networking in person is a great way to build relationships, gain referrals and find new clients.

A combination of online and offline marketing strategies will help establish your business as an industry expert and gain new clients. Be patient and consistent, as it can take time to build awareness and trust in your services. Focus on providing value to your clients through high quality work and customer service. Satisfied clients will become your best source of repeat business and referrals.

Sales Strategies for Your Property Preservation Business

To gain new clients, focus on the following sales strategies:

Develop a professional sales presentation highlighting your services, experience, qualifications, and competitive pricing. Include client testimonials and before/after photos of properties you have preserved. Pitch your business in person to banks, mortgage companies, government agencies, and REO brokers. Explain the value you provide in securing and maintaining properties to minimize losses and maximize resale value.

Build a targeted list of prospective clients in your area. Make phone calls to set up meetings and pitch your services. Be prepared to submit a formal proposal if there is interest. Provide case studies and references from current clients. Follow up consistently but professionally.

Attend industry conferences and events to network. Engage decision makers and look for opportunities to share information about your business. Offer a special discount or promotion to attendees to gain new clients.

Monitor foreclosure listings and auction notices to identify banks and mortgage lenders taking ownership of properties in your area. Contact them immediately to offer your preservation services and get on their approved vendor list. The quicker you can inspect and secure a property after foreclosure, the more value you provide to the client.

Submit requests for proposals (RFPs) and bids on new property preservation projects. Price work competitively while still maintaining profitability. Provide a detailed scope of work and timeline for completing the project. Follow up and address any questions or concerns from the client.

Build relationships and trust through consistent communication and high-quality work. Educate clients on the latest industry standards and best practices. Look for opportunities to take on additional responsibilities and become a trusted partner. Satisfied long-term clients will continue to hire your services and refer you new business.

Operations and Execution

To operate an effective property preservation business, focus on the following:

Develop efficient processes for inspecting properties, identifying needed services, and dispatching contractors. Create detailed checklists and work order forms to keep jobs organized and on schedule.

Build a reliable network of licensed and insured contractors to handle services like repairs, board-ups, debris removal, and lock changes. Meet with contractors in person, check references, and review licensing to ensure quality work. Provide ongoing training and oversight to maintain standards.

Invest in high-quality equipment and supplies to properly secure and maintain properties. This includes items like commercial cleaning supplies, emergency board-up materials, locks, tools, and safety gear. Keep vehicles well-maintained to transport crews and equipment to job sites.

Create a simple and accurate billing system. Track completed work orders, hours spent, and materials used at each property. Send detailed invoices with photos and descriptions of services rendered. Follow up with clients to ensure all billing questions are addressed.

Conduct regular inspections of ongoing and completed work to identify any issues. Get feedback from clients and make improvements to procedures as needed. Maintain consistent communication with property owners and stakeholders.

Keep detailed records of all services provided at each property to minimize liability. Obtain proper insurance coverage including commercial auto, general liability, and workers compensation.

Recruit, hire and train qualified employees to help oversee day-to-day operations. Provide mentorship and opportunities for career growth to build an effective team. Develop a company culture focused on quality, reliability, and customer service.

Continually evaluate new technologies, equipment, and best practices to improve operational efficiency. Make upgrades when possible to streamline processes and gain a competitive advantage. Focus on building a sustainable business model based on high-quality work, customer satisfaction, and fair pricing.

Legal Requirements and Regulations

Before starting a property preservation business, research all legal requirements and regulations in your city or state. Meet with an attorney to ensure you understand and comply with relevant laws regarding insurance, licensing, and hiring employees or contractors. Failure to operate legally can result in hefty fines or even cause your business to be shut down.

Build Your Property Preservation Business

The property preservation industry provides an opportunity to build a sustainable business helping communities by securing and maintaining defaulted properties. With hard work and persistence, you can gain clients, develop your services, and establish a profitable company. Focus on efficiency, high quality standards, and building close relationships with clients based on trust and reliability. Keep up with industry trends and best practices to continually improve operations. Over time, satisfied clients and referrals will drive the growth of your business.