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  • Writer's pictureZayed Ahmed

How To Start A Property Preservation Company?

Updated: Oct 3, 2022

How To Start A Property Preservation Company? | ASL BPO

How do you start your own property preservation business and run it successfully?

If you ask anyone who is in the business, the short answer would be to get the appropriate license in order to be a contractor, get the needed insurances, and start applying for work to national companies.

But there is more to this if you want to run your property preservation business successfully, and this blog is a detailed overview of how you can successfully start your property preservation business.

Below is the table of contents for this blog post, click on the title to get directly to the section that you want most interested to read:

Table Of Contents:

What Is A Property Preservation Company?

Before you start your own property preservation business, you should first know what the industry is about.

Property preservation means maintaining properties, that are owned by banks after they evict the previous owners due to them defaulting on a mortgage loan. These properties now lie vacant, and the job of the contractor/preservation company is to maintain them regularly on behalf of the bank.

What property preservation companies do is hire contractors from different areas to work for them and then provide coverage in these areas through their contractors. They will let their client know of their coverage areas and the banks will then assign them properties to maintain and repair.

What Are Property Preservation Services?

There is a wide range of services that a preservation company provides to its clients. The scope of the services are:

  • Evicting previous owners once the court order is finalized

  • Securing vacant properties

  • Debris removal and cleanup services

  • Landscape maintenance

  • Recurring services such as grass cut and maid service

  • Repair and maintenance work

  • Inspections

  • Allowing access to the property on request of the bank

  • Hazard claim repairs

As you can see the scope of work is vast, and not all contractors will have the expertise to complete all types of work and repairs.

How To Start Property Preservation Business?

Being part of the Property Preservation Industry since 2014, where I have been helping out with processing services, has prompted me to write a few things. I have often come across people in different forums who have asked for advice on how to start their own REO or a Property Preservation Company. Over the years, I have read a lot on these topics and worked with the preservation companies myself, some of the things that I have learned are:

1) Start by talking with people who are already in the business. There are different companies that provide work in your coverage area and not all of them will pay well or in a timely manner. You need to have good knowledge about the industry as well as know the regulations that you need to follow. These are all things you need to be advised about before starting work. There are forums like Preservation Talk which you can join and learn a lot as well as get help from others in the community.

2) Being a subcontractor can be a good way of starting the business, the pay may be less but you get experience in running the business. Very few Nationals will hire contractors with zero experience.

3) It is much easier to get work from low-paying nationals such as Cyprexx and A2Z Field Services than from those that pay higher such as MCS, Service link, or Safeguard. The latter is also very stringent in their regulation, which means it may cost you if you can't work properly for them.

4) Start with REO work rather than PnP. REO stands for Real Estate Owned and is basically homes that went to foreclosure sale but didn't sell, so now the bank owns the property. The pay is less and follows fixed allowable pricing but there is little to no risk for the contractor. In contrast, PnP work is on Pre-Sale properties. The pay is more, but contractors have a lot of liability risk when working on these properties.

5) Do not go into the business thinking it's part-time. This is a demanding job and whether you are working as a subcontractor or for a national there are real-world business problems that you will have to face such as deadlines and collections. If you are a subcontractor and cannot meet deadlines you will most probably be dropped. Worst case scenario: they will report you in the community preventing you from getting further work.

6) Jobs should in fact be completed ahead of deadlines because there is always a chance that the nationals find a mistake and ask you to go back for additional information. If the rejection is not submitted within the original deadline, deductions in payment may occur.

7) General Liability and E&O Insurance are a must-have as well as having the needed license for work. From the last year or so, background checks have started to become mandatory as well and most contractors now need an Aspen Grove number to work with the nationals.

8) You need a truck and a trailer if you are starting out as a one or two-man crew. Tools such as a chainsaw, lawnmower, drills, generator, etc are also necessary. You will also need a laptop, camera with power backup, and mobile broadband connection.

9) A good cash flow is also needed, most nationals have a 30 to 45-day pay cycle and thus you need to be able to bear the everyday expenses to run the business.

10) Make sure you understand what they demand on each work order, once you start getting work. If you get an initial secure work order, and it asks for winterization to be completed if it's within the time frame and you do not complete it, your work will be rejected and they will ask you to return to complete work. Likewise, if you complete a job that was not asked in the work order instruction, you essentially will have done it for free as you will not get paid for it.

11) If you go on to hire subcontractors, it is essential that you sign a subcontractor agreement as well as a W-9 and pay them checks for their business. Like the above-mentioned example many a time, a subcontractor may have ended up completing work that was not asked and then demand to get paid for it. When you reply by saying you can't pay them for something they weren't asked to do, they can run to the labor board and ask to be paid as an employee.

How To Handle Work Orders

Once your work volume starts to pick up and you are getting about 20 to 50 orders a month, you should hire a processing company such as us that provides work order processing services.

One of the best things about hiring a property preservation processing company is that you get trained dedicated assistants who will be working on your account. Not only will they process and submit your work orders but also take care of your rejections, provide accurate bids and damage reports and be available for you 24/7!

How Much Do Property Preservation Companies Make?

Contractors, before going into the property preservation business will often want to know how much does a property preservation company makes and if property preservation is still profitable.

How much revenue you can make as a preservation company depends upon the volume of work orders you get. If you do repair and maintenance work on the PnP side, even getting just 50 orders a month can equal $8000 to $1000 in revenue provided that you are getting good bid approvals. If you retain 20% profit that's about $2000 that you are earning every month.

But to sustain continuous profit in the business depends upon a few factors, one is who you work for and two whether you can handle your business effectively.

There are certain nationals and regionals that don't pay well or withhold their payments, working for them can cause harm to your business in the long run. So it's important to research who to work for before you sign up with them. On my blog on national property preservation companies, I give you details on who to work for and who not to.

What Is The Best Property Preservation Company To Work For?

As unfortunate as it may seem, there is no absolute "best" company to work for. Although MCS and Assetshield are relatively better, all contractors have had their fair share of grievance with every national that is out there. What is important though is that you know which nationals pay in a timely manner, and to work for them. And as long as you can complete your job properly and in a timely manner, your business will be doing good.

How Much Do Property Preservation Companies Charge?

The amount a preservation company bills for work they have completed can be divided into two categories: some work has fixed allowable rates determined by the national you will work for, and for others, you will use a cost estimator such as Repairbase or XactPRM to justify the price.

To get to know, the allowable rates of different nationals, you can read my blog on the property preservation price list.

This covers most of the basics that I got to understand on how to get into the business, you can of course learn much more from those who are running preservation companies themselves.

If you need to know how you can apply to become a vendor here is a list with links for vendor applications from a property preservation website.

Additionally, once your work increases to a sufficient volume you will want to use web-based software to manage your work orders.

In this regard, one of the best software for the Work Order Management system is Property Pres Wizard (PPW) and Pruvan.

Lastly, if you are looking for help in setting up your preservation business by building your company website to have an online presence, setting up your PPW and Pruvan accounts, or anything else, you may want to know more about the business solutions that we offer.

Hope this blog helps people who are just getting into the business make better decisions. Please feel free to comment if you think I have missed anything and share if you think the blog was great!


Zayed Ahmed, Founder, and CEO of ASL BPO.

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