The Pros and Cons of Starting a Foreclosure Cleanup Business

There is a lot of information out there about starting a foreclosure cleanup or REO trash out business, but what about the not-so-pretty side of the foreclosure cleanup industry?

This article will give you an insight into the real deal before you dive in, so you are fully informed. Here are some pros and cons to consider from someone who’s already out there:


1. One con is waiting to get paid. Many banks can take up to 90, or 120-plus days to pay a simple invoice. If you don’t have the cash flow to bankroll a job, and you’ve decided not to factor (sell) your invoices, this wait can be crippling for a small business.

2. Your business depends on the efforts of others. As your business grows, you will need to outsource, but if people don’t show up on time or do a bad job, it’s your business image that will suffer. If someone gets injured on a job, it’s your insurance that will be paying for it.

3. You won’t get rich quick. The foreclosure cleanup business is one that grows over time with repeat customers. It is important to position your business well from the outset so it can thrive after a foreclosure crisis. You don’t want clients to only associate you with foreclosure – you want to be doing repairs for them at new listings as well.

4. You need to be organized. Foreclosure cleanup is heavy on paperwork. If you’re doing things right, you’ll have all kinds of paperwork to deal with such as contracts, receipts, property stat printouts, invoice sheets, and more. You need to stay on top of this paperwork if you want to retain control of your business.

5. It is hard work. Foreclosure cleanup is manual labor, and the work can be back breaking. This is especially true in the beginning when you will be doing most of the hard work yourself.


1. Easy, low-cost startup. Foreclosure cleanup is an easy business to start. At first, all you will need to do is a little initial research; get your license, tax ID, and insurance; and order some business cards.

You can start small, offering services such as lawn maintenance and interior cleaning. These will only require minor equipment that you may already have in the garage or at home. Once you are established, you can go ahead and buy more and more equipment as necessary. The foreclosure cleanup or REO trash-out business is an easy startup with minimal cash outlay, but be prepared for some hard physical work along the way.

2. You are your own boss. This is a business, not a job, and it’s up to you how much and how fast you grow it. You are the one in charge. The foreclosure business is constantly changing, and it’s up to you to adjust your business accordingly. You can grow slowly and handle everything yourself – with help from family and friends – or you can outsource to other companies and grow quickly.

3. You can “factor” your invoices. This means that instead of waiting to get paid, you can sell your invoices to a company who will do the waiting for you. They will pay you the value of the invoice within 24 to 48 hours, minus a certain percentage that they will keep as their fee until they are paid themselves. Be aware, however, that approval for factoring is based on the credit of the company who owes you the money, not your credit.

4. You don’t need any office space. It is easy to start a foreclosure cleanup or REO trash-out business from home, and as your work is mainly in the field, this can be a relatively small area that will have very little impact on your home space.

5. You can remain profitable even after the 2008 foreclosure crisis is over. Choose your business name carefully, and don’t restrict yourself to only foreclosure business. When foreclosure work is slow, your existing client base will use you for property preservation and maintenance type services for their regular, non-foreclosure properties. Real estate is dependable. Yard maintenance, minor repairs, cleaning, and debris removal services will always be in demand while houses are being bought and sold.

As you can see, there are many pros and cons to owning a foreclosure cleanup or REO trash-out business. Do your research and become an entrepreneur!

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3 thoughts on “The Pros and Cons of Starting a Foreclosure Cleanup Business”

  1. Thank you for the valuable information. I’ve been working or somebody else doing this type of work and was wondering how I could get started doing it myself.

  2. I’ve been for couple years trying to collect info but i dont know where to go or start after i have all my permits insurance. Can someone put me in the right path


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