speak directly with your insurance agent to get a better idea of the extent of the coverage provided by their particular policy and one that is best suited for your individual needs
Workers’ Compensation Insurance is required in most states when you have W2 employees, and some states also require your insurance to cover your 1099 contractors also. Workers’ Compensation (“Workers’ Comp”) covers your employees’ medical and disability expenses related to work-related illness and on-the-job injuries.
In the states where you are not required to cover your 1099 contractors you would need them to provide proof that they carry their own Workers’ Compensation insurance. Although tempting to shift the financial burden of maintaining a policy onto your 1099 contractors, in all reality, you are probably better off to take on the cost of all staff Workers’ Compensation (all W2 employees and 1099 contractors). The reason is that it’s difficult to find only independent contractors that have their own policy. In addition, this industry has such high turnover that if you put this restriction on your independent contractors, you’ll waste valuable time and lost revenues trying to find replacements in a hurry.
Here’s a great tip: sometimes you can get “pay-as-you-go” insurance where your workers’ compensation insurance premiums are based on your actual payroll, rather than an estimated amount. This is great for companies that are just starting out or have a fluctuating workload. Type in “pay as you go workers comp” into a search engine for results in your area.
As a second tip, we’ve used Farmers Insurance for years and have always had excellent customer service and great rates. Just Google “Farmers Insurance” for an agent in your area.
Foreclosure Cleanup v.s. Property Preservation Services
As the name suggests as a Foreclosure Cleanup Company, you’ll be cleaning out all of the junk in the house (also called a “trashout or a “junk out”), as well as cleaning the interior of the home. You may also be required to remove vehicles on the property. Usually foreclosure cleanup companies are also responsible for doing a basic landscape cleanup which includes hauling out any junk from the front/back yards, cutting the grass and trimming trees/bushes.
Cleaning up the property is the extent of services offered by a Foreclosure Cleanup Company, whereas a Property Preservation Company is also involved in the “securing” of the property and the “preserving” of the property.
Here are some of the services that a preservation company may offer (note that a Property Preservation Company will generally also offer cleanup services):
Securing the Property
o Initial vacant property inspection
o Lock changes
o Boarding of windows and doors
o Temporary roof repair
o Securing swimming pools
Preserving the Property
o Exterior Debris removal
o Abandoned vehicle removal (cars, boats, etc.)
o Interior Debris removal (junk-out)
o Hazardous waste removal
o Interior cleaning services including carpet cleaning
o Window washing/graffiti removal
o Window replacement
o Pool services (draining, acid washing, maintaining, etc.)
o Pest control services
o Yard maintenance/landscaping
o Snow removal
o Winterization
o Gutter cleaning
o Pressure washing
o Carpet removal & replacement
o Tile/Floor repairs
o Painting
o Sheetrock/drywall repairs
o Carpentry repairs
o Plumbing fixtures repairs & replacements
o Fire & mold remediation
o Fence repair
Here are a few things to consider when determining the extent of the services you want to offer:
A Contractors’ License is generally not required for Foreclosure Cleanup Company but is likely required for preservation companies doing work over a certain dollar value (usually 0 – 00+). Sometimes this license can be obtained by attending a course and successfully passing a test whereas other states require previous, verifiable industry experience.
The insurance premiums tend to be higher on companies that offer preservation services as they are considered to be a “general contractor”. However, the revenue potential is much higher as preservation services tend to run from a few thousand dollars upwards instead of 0 – 00 for each cleanout.
Usually what people do is start out initially offering just the foreclosure cleanup services and then when things pick up, they’ll add preservation items to the list of services they offer. This let’s them get their foot in the door without having to spend a whole lot of money upfront when setting up their company.
Source the Right Equipment & Tools
The great thing about starting a foreclosure cleanup company is that the initial expenses are quite low as much of the
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