Why are you still in Property Preservation? - REO Property Preservation Forum
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post #1 of 22 (permalink) Old 05-13-2015, 10:01 AM Thread Starter
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Why are you still in Property Preservation?

After 7 years of Property Preservation work, and getting out due to growing compliance laws, increasing entry costs, decreasing compensation, increased competition, and increasing payment timelines, I was curious to know what reasons people may have for staying in the industry?

There are certainly market cycles in every industry, this industry in particular has a market cycle that is opposite to the standard Macro-Market Cycle. As the economy improves, this industry will destabilize. We are currently in a destabilized period, and if people can make it through this cycle, they may certainly profit from it.

Though, for those that are not diversified companies, and have their meat and potatoes in property preservation, out of curiosity, what has kept you primarily focused on this industry?
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post #2 of 22 (permalink) Old 05-13-2015, 10:29 AM
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We only do preservation work direct with the client or thru the broker. That is the most effective way to run your own company, using your own structure and guidelines and determining for yourself what you need to bill in order to make a profit and live comfortably.
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post #3 of 22 (permalink) Old 05-13-2015, 11:14 AM
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Quote:
Originally Posted by GTX63 View Post
We only do preservation work direct with the client or thru the broker. That is the most effective way to run your own company, using your own structure and guidelines and determining for yourself what you need to bill in order to make a profit and live comfortably.
I thought I had something to add but this sums it up. We are focused on inspection repairs and handy man work. This works for private customers, realtors, and direct bank work.
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post #4 of 22 (permalink) Old 05-13-2015, 11:46 AM
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so question

i been trying to deal directly with the banks, but it seems you have to be huge to be able for the bank to even considered you to work directly with them, how come some of you work directly with the bank, i would love to cut the 25% the middle company keeps. we have an normal office 10 employees, about 8 (3 men crew) is it too small for the banks? and we have been in business for 15 years, i mean what else do we need?? thank you.
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post #5 of 22 (permalink) Old 05-13-2015, 12:38 PM
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Industry Explanation

If banks had the model to deal with you, they would then have to deal with and manage 10,000 local contractors.

What I find most interesting, is the most people fail to understand that this industry operates just like most industries. The supply chain is as follows:

Manufacturer - Bank
Distributor - National
Wholesaler - Regional
Retailer - Local Contractor (BOTG)

This is how the vast majority of American industry works whether you're selling shoes, cabinets, hot dogs, or widgets.

If you want in with a large bank, then cover all 50 states (incl. Alaska & Hawaii) and Porto Rico. Best of luck with that one. Small local banks or credit unions might be an option, but they are going to want a one stop shop just like the larger banks, not just a guy that only covers 20 miles from his shop.

Know who you are, crunch the numbers to see if it works with your business model, and establish good healthy long term relationships.

The banks want at most a half dozen distributors and the nationals want a few dozen regional wholesalers (and will accept local retailers when no regionals are available).
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post #6 of 22 (permalink) Old 05-13-2015, 04:55 PM
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I'll explain why the above description of the preservation industry is flawed.

Property preservation is not similar to the vast portion of American business and the tier analogy above does not apply in this situation. Why?
Because in the real world, even a wholesaler/distributor create and/or supply something. There is a need for what they do, and in most cases they are legally tied in some way to the parent company.
A "national" was designed to be an indepentent entity, in the beginning, that processed bank owned property. They quickly morphed into a distorted and twisted version that neither serves its clients intended purpose not improves the product before it is passed along.
The regional, moreso, is not even close to a wholesaler. Rather, they are little more than a parasite; they create nothing, they produce nothing, they improve nothing and yet they bill for their service and bleed those above and below them in the chain. A regional exists for no other reason than to drink at the trough.
The BOTG, are forced in many ways to run their companies by the dictates of these "middle man" clients and are little more than puppets for hire.
In a capitalistic system, each rung of the ladder is there to succeed. If they cannot then they disappear. Here, the endless supply of contractors continue to sign up to be chewed up and spit out.
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post #7 of 22 (permalink) Old 05-13-2015, 05:06 PM
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A contractor doesn't need to have contacts with Chase or BOA to do direct work. Gaining work thru local brokers and lenders, insurance agents, property managers is no different than any other contractor trying to build up his base.
Nationals and regionals are NOT the industry; they are little more than carpet baggers.

We do work in 4 states. We don't advertise any coverage areas. We determine the jobs we accept the same as if you called a plumber who had an office 75 miles from you. We make no promises and never agree to take "the bad work to get the good". We have either family, subs that relocated but still do work for us, or satellite offices. It isn't rocket science, but for contractors that have only known the world of safeguard and MCS, it might be hard to grasp. Those that already were contractors before getting into preservation probably know what I am trying to say.
My experience is, based on small towns, that 3 or 4 brokers, a couple lenders, an apartment complex or two and a dribble of private customers should be enough to keep the average four man crew in the black and out of the claws of the scammers/paper contractors working in Ohio, Fl, and their office suites.
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post #8 of 22 (permalink) Old 05-13-2015, 08:00 PM
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Quote:
Originally Posted by NLPPS View Post
The banks want at most a half dozen distributors and the nationals want a few dozen regional wholesalers (and will accept local retailers when no regionals are available).
You haven't worked direct have you? The small local banks want the work done, done correctly and most importantly when they need it done. Like the large national chains, they don't have the resources to manage the few properties that they end up with. Find out who they list with and let them know how you will deliver excellence and then follow through.



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post #9 of 22 (permalink) Old 05-13-2015, 09:17 PM
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Gtx and Brad hit it spot on. My brother-in-law is a bank VP for a small 7 branch bank and he asked 2 weeks ago if I still did cleanouts since they needed help on a few properties. I referred him to a local BROKE P&P guy who he called and did hire.

I would have done if I still had my CASE skid "helper"..... Hmm
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post #10 of 22 (permalink) Old 05-13-2015, 09:38 PM
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Quote:
Originally Posted by Wannabe View Post
I would have done if I still had my CASE skid "helper"..... Hmm
I'll be thinking of you next week when your CASE skid "helper" removes two concrete patios for me



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