Starting a foreclosed property management business is filling a large niche market. With the number of foreclosure still on the rise, many mortgage companies and banks have properties that need to be cleaned and maintained for potential buyers. Starting such a company, like starting any company, requires some planning and preparation. However, if you are passionate about the endeavour, then a successful business can be launched.
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Write a business plan. A business plan is a business operating road map. The business plan includes the business vision (also referred to as a mission statement), short-term and long-term financial projections, marketing and advertising ideas, a list of local competitors and their share of the local market, and the background of all principal owners of the business. A business plan will be required as part of the application process if you decide to seek outside financing.
Apply for all required state and local licenses and permits and choose a business entity status. Permits are required for any business to operate legally. Choose a business entity that matches the number of owners and the protection an owner wants. Two of the most popular entities are limited liability company (LLC) and sole proprietorship.
Join local business organisations and participate. Networking is important for any business, but especially so for a start-up. Join local networking organisations and attend the meetings and mixers. Offer your business card and introduce your business. Networking should be considered free advertising, and the connections made can result in customers.
Contact potential customers and introduce your business. You will have to be careful about who you approach with your services. Contact banks and mortgage companies with vacant houses on their books. Study the real estate ads in your local paper. Some towns list houses that are about to go to sheriff sale. Contact real estate agents who specialise in short sales. They will know which houses are about to go through the foreclosure process.
Tips and warnings
- Make sure you are clear about the types of services you plan to offer. Cleaning the interiors of homes, outside maintenance services such as painting or mowing lawns and caring for flowers and plants, winterising a home, and cleaning out personal belongings are options.
- If you discover a property that is in foreclosure, it is best to not approach the property itself, but any agency or bank that will be handling the property. Going to the property and offering your services is not a good idea. Many of these properties have not been vacated by the owners losing their homes and your visit might not be welcomed.
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