The term property preservation is new to many who aren’t in the real estate and property management industry. However, a layman can understand what it means but might not know what it entails. This post will provide a clear definition of property preservation, and give more insight into its subtopics. Continue reading to learn more about property preservation.
What is property preservation?
Property preservation is the process of taking care of the inner and outer part of foreclosed property, which is either occupied or vacant.
Property preservation vendors or contractors work with asset management companies or commercial banks to essential services like property inspection, repairs, maintenance, and insurance claim management.
Who is a property preservation contractor?
Property preservation contractors are those who take care of the interior or outer parts of a foreclosed property. They are charged with the responsibility of property maintenance, repairs, and inspection. The goal of the property preservation vendor or contractor is to keep the property in good shape and maintain its resale value.
Property preservation contractor is also known as property preservation vendor.
What is a property preservation contract?
Property preservation contract is a document that binds the bank or property management company with an individual or business that is charged with the responsibility of maintaining a foreclosed property. The individual or business sign the document as an agreement to take care of the foreclosed property.
Types of property preservation contractor
There are three main types of income source for property preservation contractors or businesses. A property preservation vendor or business can specialize in any of three. The areas are the maintenance of the property as a maintenance contractor, repair of large or minor damages as a repair contractor, and inspection of foreclosure properties for bank clients. A property preservation business or contractor can also take responsibility for the three branches. The three areas will be explicitly explained below:
The repair contractor makes a checklist of all the parts that need repairs, and submit an estimate to the bank or property management company. The bank will verify the estimate and either accept or reject the bid. If your bid is accepted, you will need to complete the repairs yourself or award the contract to another company that will take care of all the repairs at the property. The repairs may be a total refurbishment of the property, roof replacement or repair, water ingress, vandalism, or other disasters.
Nowadays, many banks and property management companies are trying to lessen how long a house is for sale by focusing on properties in good neighbourhoods. Property preservation repair contractors need to know how to use primary estimating software. You should be able to give an accurate start and finish date, select the best workers, have access to quality pieces of equipment, and subcontractors needed to complete the repairs as fast as possible. A good repair contractor should have good construction knowledge.
The job of an inspector contractor is to continually inspect the bank foreclosure properties. The inspection can be weekly, bi-weekly, monthly or as stated in the agreement. This is done to check the current physical conditions of the properties, to see if there are new damages to report and to check the level of progress made by the repair contractor hired by the bank. One can be an inspector contractor without construction background, however, such experience will be an added advantage.
A maintenance contractor is charged with the responsibility of taking care of the foreclosed property. The work of a maintenance contractor is to complete smaller jobs that do not require specialised construction background. The responsibility of a maintenance contractor includes and not limited to: winterizing properties, boarding up broken windows, basic cleaning, removal of debris, trash out, grass cutting and weed control. The maintenance contractor will inspect the property and prepare an estimate for minor maintenance listed above.
The property preservation maintenance contractor does not require construction knowledge to carry out his duties, however, such knowledge is necessary if he intends to combine larger repairs to his job.
How to become a property preservation contractor
Property preservation can be a lucrative business for those who are ready to do the hard work. Property preservation business works with banks or asset management companies or run firms that contract with reactors, investors, or lenders. Below is a step by step guide on how to start a successful property preservation business.
1. Check the local license requirements to start the property preservation business in your area.
Property preservation doesn’t require a license but the job you do might require it. Here are some of the license you may require: plumbing licenses, general contractor licenses, electrical licenses, roofing licenses, e.t.c. In some countries and cities, you are required to provide a local contractor license instead of the general contractor license. Besides, some states want certain certifications, so be sure to meet the requirements before starting the business.
2. Understand the industry competitiveness in your area.
Check the competition level in your area, so that you wouldn’t be covering an oversaturated area where you get just a handful of orders monthly. Ensure that you have a good competition opportunity in that locality.
3. Apply for property preservation jobs near you.
Sign up on local directories to get a notification when property preservation contractor is required. As a new business, you should find out the regional preservation firms in your area, or find smaller property preservation firms in your area and inquire about open opportunities or positions.
4. Go for the hiring interviews.
After applying for the property preservation job, you will likely undergo an interview process before you sign the contract. Many hiring companies will require that you apply for certain licenses and hold specific types of insurance, but most of them won’t ask for these things prior to interviewing you, therefore you don’t necessarily need to buy anything before the interviews.
5. It is recommended that you apply for all insurance types, certifications, and relevant licenses.
This is the time to take action on step 1! Do necessary research into insurance, licenses, and relevant certifications. Find out how much each will cost you and the best way to go about attaining all you need.
6. Purchase necessary property preservation supplies.
It is important to get some personal protective equipment and other supplies as property preservation professional. That is because you will be exposed to run-down houses, abandoned properties, and hazardous trash. So, you and your team members need to be protected.
Even minor things like mowing the lawn can be very dangerous, and you should be covered. Your insurance firm and the people are working with you will most likely appreciate it. This is a crucial point, and you might be exposed to legal liability if you ignoring it.
7. Go through training to acquire complete knowledge.
It’s good news that many hiring firms, most especially larger regional, state-wide or national preservation companies have standardized training programs and detailed onboarding procedures for contractors where you will be taught how to carry out different field services and what is expected from you. Most of them use personalized software or computer systems where they manage work orders and you will be asked to submit proof of your work through these. The training involves getting to know and operate this software and systems.
Conclusion on how to be a property preservation contractor
Educational background isn’t an important criterion to become a property preservation contractor. You do not require formal education beyond a high school diploma to be a property preservation contractor that fixes and maintains foreclosed assets and other properties. All that is required is some research and outreach to people that are in the business and to top property preservation companies that are actively hiring vendors.