What is Property Preservation?
Property preservation is the perfect choice for you if you’re looking to start a business within the real estate industry. But what is property preservation? Well, property preservation means to maintain and safeguard properties.
Essentially, property preservation is the process of protecting and maintaining vacant, foreclosed, or abandoned properties to prevent them from deteriorating, vandalizing, or violating local codes and regulations.
Property preservation is vital for lenders, asset managers, real estate agents, and homeowners who want to maintain their properties’ value and marketability. It is also a lucrative business opportunity for entrepreneurs with the skills, tools, and networks to provide various services to clients in the real estate industry.
This article will explore the different aspects of property preservation, such as the income streams, services, requirements, and steps to starting a property preservation business.
What's Inside
Three Main Streams of Property Preservation Income
There are three main ways to earn money from property preservation. Specializing in these three areas can effectively get you property preservation work and generate income. Let’s have a look at them.
Direct Contracts With Banks And Asset Management Companies
One way to get property preservation work is to contract directly with banks and asset management companies that own or manage foreclosed or REO (Real Estate Owned) properties.
These clients usually have many properties that need regular maintenance and repair. They are willing to pay well for reliable, quality service providers, but you must meet their strict quality standards and deadlines.
To get direct contracts, you must have a solid reputation, experience, and credentials in the property preservation industry. You also need to be able to handle multiple projects and locations at once. Moreover, you need a strong marketing and social media strategy to reach potential clients and showcase your portfolio and testimonials.
If you are serious about scaling your business and protecting the income it generates, consider setting up proper legal and financial structures to safeguard your earnings, such as forming an LLC or using international asset protection tools. For example, some entrepreneurs establish Nevis trusts to shield business profits and manage long-term wealth securely.
Working As A Subcontractor For National Property Preservation Companies
National property preservation companies act as intermediaries between the clients and the local vendors who perform the work. They usually have a large network of subcontractors across the country to handle different regions and markets.
Working as a subcontractor can be easier and faster than getting direct contracts, as one does not need to bid for the projects or deal directly with the clients.
However, you also need to be aware of the drawbacks, such as lower pay rates, stricter deadlines, more competition, and less control over the quality and scope of the work. Also, you must follow the guidelines and policies of the national company you work for.
Offering Specialized Services
Offering specialized services in high demand or with less competition in your area is another great way to get property preservation work. For example, you can offer winterization, mold remediation, locksmithing, roofing, plumbing, electrical, or landscaping services.
These services require specific skills, tools, and licenses that not all property preservation vendors have. You can also offer real estate administrative support services to keep a business running smoothly. By offering specialized services, you can differentiate yourself from other vendors and charge higher rates for your work.
Key services provided by Property Preservation Business
Regardless of your income stream, there are some key services you need to provide as a property preservation business. These services are essential for keeping the properties in good condition and complying with the client’s requirements and expectations. Now, let’s learn about some of the key services.
Repair
Repair is fixing any damages or defects in the property that affect its safety, functionality, or appearance. These services can include replacing broken windows, doors, locks, appliances, fixtures, flooring, drywall, and paint, among other things.
Repair is crucial for restoring the property’s value and marketability and preventing further destruction. It also helps the property pass the inspection and appraisal processes required for selling or refinancing.
Inspection
Inspection involves checking the property’s condition and status and reporting any issues or violations to the client. These services include verifying the occupancy, securing the property, taking photos, measuring rooms, documenting damages, identifying hazards, etc.
Inspection is important for keeping the client informed and updated about the property. Further, it identifies and resolves any problems or risks that may arise. Inspection services are usually performed before, during, or after the repair or maintenance of the property.
Insurance Claim Management
Insurance claim management handles communication and documentation between the client and the insurance company in case of any damages or losses caused by natural disasters, accidents, vandalism, theft, etc.
You can perform insurance claim management services for clients after they experience damage or loss events. These services are valuable because they save the client time, money, and hassle and maximize the recovery and compensation for the property.
Maintenance
Maintenance keeps the property clean, functional, and attractive to potential buyers or tenants. Maintenance services include mowing the lawn, trimming the bushes, removing debris, cleaning the interior, changing filters, testing systems, etc.
You need to perform these services regularly or seasonally. If you or your employees lack time, you can hire a virtual assistant (VA) to help with maintenance. Having a VA rather than an employee can ensure regular maintenance.
How to Become a Property Preservation Repair Vendor
A property preservation repair vendor is a person or a company that provides repair services to property preservation clients. If you are interested in becoming a property preservation repair vendor or if you want to be a virtual assistant for property management, you need to follow some steps to enter the industry and succeed in it. Here are the steps to becoming a repair vendor in the property preservation industry.
Steps To Become A Repair Vendor In The Property Preservation Industry
Becoming a repair vendor in the property preservation industry involves several steps to ensure you can handle the responsibilities and meet the job requirements. Here are some steps to becoming a repair vendor.
- Understand what property preservation means
- Check the legal requirements for operating as a repair vendor in your area
- Assess your skills and experience in property repair and maintenance
- Establish a business entity
- Obtain liability insurance and surety bonds
- Build relationships with industry professionals
- Develop a marketing strategy to promote your services
- Invest in the equipment and tools needed to perform property preservation tasks
- Familiarize yourself with the expectations and standards of property preservation clients
Required Qualifications, Certifications, And Experience
To become a property preservation repair vendor, you need qualifications, certifications, and experience demonstrating your industry credibility. You must possess some basic yet important skills: communication, listening, problem-solving, and customer service.
Additionally, you need to have some certifications that prove your knowledge and skills in property preservation repair. Certifications in home inspection, construction, carpentry, or plumbing will reflect your vital knowledge within the industry.
Moreover, you must have some experience in property preservation repair, either as an employee, a subcontractor, or a business owner. Also, you must have a portfolio of your previous work, including photos, invoices, reports, and client feedback.
How to Start a Property Preservation Business
More and more property owners are consulting property preservation businesses to supervise their properties. Less than 50% of property owners manage their own properties. A property preservation business provides a range of property preservation services to clients in the real estate industry. To start a property preservation business, you need to follow these steps:
Market Research And Understanding Industry Requirements
Before you launch your property preservation business, you must do some market research and understand the industry requirements and expectations. Find out the demand and supply of property preservation services in your area. Identify your target clients and their expectations. Analyze your competitors and their strengths and weaknesses. Also, determine your unique selling proposition and competitive advantage.
Furthermore, you have to understand the industry requirements and standards. Learn about the rules and regulations that govern the property preservation industry, such as the HUD guidelines, the FHA guidelines, the VA guidelines, etc. Familiarize yourself with the common terms and acronyms used in the industry, such as REO, BPO, P&P, etc. Lastly, stay updated with the industry trends and best practices.
Business Registration And Obtaining Necessary Licenses
Once you have a clear idea of the market and the industry, you must register your business and obtain the necessary legal and professional licenses. You must choose a business name and structure, register with the state and local authorities, obtain a tax ID number, open a business bank account, and get the required permits and licenses for your specialty and location.
Additionally, you have to obtain insurance and bonding. Protect your business from any liabilities, damages, or losses that may occur during your property preservation work by getting general liability insurance, professional liability insurance, workers’ compensation insurance, commercial auto insurance, etc.
Acquiring The Right Tools, Equipment, And Software
Once you have registered your business and obtained the licenses, you must acquire the right tools, equipment, and software to perform the property preservation work efficiently and effectively.
Purchase or rent the tools and equipment you need to perform property preservation services. Then, you must invest in a reliable vehicle to transport your tools and equipment. Also, buy or subscribe to the software you need to manage your business.
Moreover, depending on the size and scope of your property preservation business, you may need to hire and train staff to help you with your work. Hire qualified, experienced, and reliable people to perform various property preservation services. You must train your staff on the industry standards, client expectations, and safety procedures.
Marketing And Networking Strategies To Attract Clients
You must promote your property preservation repair business to potential clients. Use various marketing and social media platforms to reach and attract clients worldwide. Also, build relationships and trust with your clients and deliver quality work. You can also outsource marketing and networking help by hiring a VA or knowing how to become one.
Suppose you are considering starting a property preservation business by renting your properties short-term. But you lack time to promote your business and attract clients. For this, you can hire a short-term rental virtual assistant to handle all the rental-related tasks and the marketing and promotion-related work.
Also, if you need to communicate with a diverse demographic of clients, consider hiring an Airbnb virtual assistant. Their role is quite similar to that of a short-term rental VA. An Airbnb VA must know about rental properties and act like a virtual real estate assistant to effectively attract clients.
What is REO?
REO stands for real estate owned, a term used to describe properties owned by a lender, such as a bank, after a foreclosure or a failed auction. This could also be considered on vacant properties such as houses that have been abandoned or left empty for a lengthy period of time. REO properties are usually vacant, neglected, and in need of repair or maintenance. REO properties are also known as bank-owned properties or foreclosure properties.
REO properties are different from other types of properties in the real estate market. The lender does not make any repairs or improvements to the property before selling it. The lender also provides no warranties or disclosures about the property’s condition or history. Therefore, REO properties may have hidden defects, liens, or legal issues that can affect their value and marketability.
Lenders usually sell these properties at a lower price than comparable properties in the same area because they want to recover their losses. Also, to avoid paying taxes, insurance, and maintenance costs. However, REO properties may require significant investment and renovation to make them habitable and attractive to buyers or tenants.
Therefore, REO properties are more suitable for experienced investors, contractors, or buyers with the cash, time, and skills to handle the risks and challenges of buying and rehabilitating REO properties.
Conclusion
Property preservation is a process, a service, and a business that involves protecting and maintaining properties. It is a profitable business in the real estate industry. Smaller property preservation businesses generate an average annual income of around $50,000 to $100,000, while larger ones earn up to $500,000 annually.
To succeed in the property preservation industry, you must have the skills, tools, and network to provide various services to your clients. You must also have the knowledge, experience, and credentials to comply with the industry standards and regulations.
Property preservation is a dynamic and rewarding industry that offers many opportunities and challenges for anyone wanting to get involved. Whether you are a client, a vendor, or a buyer, property preservation can help you achieve your goals and objectives in the real estate industry.
