In today’s soft economy, work for contractors has slowed almost to a halt, or so it seems. Due to this weak economy, many are turning to property preservation for a living. When the average contractor thinks of property preservation, only one aspect comes to mind and that is trash. This thinking is due to all the hype on the internet with people offering e-books or training so that “anyone can make more than $ 2,000.00 a day” just doing trash for the banks. The sad truth is, property preservation is much more than the average contractor can imagine.
There are lock changes, winterization, window installation, hazard removal, and lawn maintenance that also need to be completed. All of these types of work orders must be in accordance with HUD guidelines and cannot be avoided.
Asset management companies will not give the contractor a garbage work order on their own unless the contractor is willing to work very cheap. Dirt cheap only gets paid $ 250.00 for sometimes removing more than 50 cubic yards of debris. This is what is wrong with that situation. HUD guidelines state that you should pay $ 35.00 per cubic yard and the contractor would only be lining the pockets of the asset management company. This is not in the best interest of the contractor.
That’s just one of the dirty little secrets property preservation contractors need to know.
Another very important secret is that asset management companies DO NOT pay immediately. Yes, they work with your money. Let me explain how this works. Obtains an order to insure, winterize, and do initial lawn maintenance on a property. That would be a work order of $ 65.00 for initial insurance, $ 100.00 to $ 125.00 for winter preparation, and another $ 110.00 to $ 150.00 for initial lawn maintenance. This is a total of $ 275.00 to $ 340.00 that you should receive, minus 20%, of course. However, you won’t see this money for up to three months if you’re lucky. Asset management companies are famous for meeting payments for months and months. After about three months when you ask for your payment, only then will they tell you that they do not have all the photos or that they were not billed correctly or whatever reason they can think of. Then go to your database and re-upload the photos or send an invoice or whatever you need to do to get paid and the waiting cycle starts all over again. That’s correct, it will wait up to another three months.
The system is designed to deprive contractors of business while continuing to repair properties. What can a contractor do? The option to put leins on those properties is always there. However, I have found that simply calling the bank directly and letting them know your intention to place a lein gets much faster results. Why? They cannot transmit a property with a lein on it. They want to move these properties, so the threat of a lein will get results quickly.
Asset management companies exist for only one reason and one reason only. To make money. Contractors should keep that thought in mind and follow it as well. If not, they will be ruined and their losses could be devastating. If you are contemplating entering this industry, be sure to do your research and speak with other contractors already in the industry. There is much more to know before risking your livelihood.
