So you wanna break into the preservation industry..... - REO Property Preservation Forum
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post #1 of 21 (permalink) Old 03-08-2012, 09:03 PM Thread Starter
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So you wanna break into the preservation industry.....

After giving up all preservation work for the past couple months I can now truly reflect on the years it has stolen from my life.
The intent is in no way,shape, or form an attempt to try to disway anyone from making an attempt to break into the biz.

Just be aware of the TRUE costs of doing business in this field (which assimilates most other trades related businesses, with a few minor/major differences).
This is for the "lurkers" (I attest I was one for several years while I was employed by one of the Nats...a great wealth of information when you are on the "other" side of the fence). I learned my lesson very early in my employment by the nat that I am not "corporate" material.

I. With opportunity comes consequences
A. There are a plethora of companies, brokers, agents, middle men to acquire work from
1. It takes months if not years of experience to actually be able to ascertain which of these cash cows are actually worth providing the necessary services for to continue the relationship.
2. You WILL undoubtedly get burned along the road. Chalk it up to life lesson, growing pains, stupidity or what have you. Just know for certain it's not a matter of IF but merely a matter of WHEN.
3. As the larger national providers become more cutthroat in their attempts to secure these contracts from the big players, realize that you are indeed very low on the totem pole. Never expect to be treated professionally. Grow some thick skin as the badgering and belittlement will be forthcoming.
4. If you are the type to get easily offended, hire someone to handle negotiations and correspondences. You will quickly become irritated by someone sitting in a cubicle half the country away telling you how you need to do things, or how to operate your business.

B. Be prepared to put your personal life and goals on the side as a start up company in the PP world.
1. As a new recruit for these companies you will be expected to jump when they say jump (and don't think you are above this, because you are not). Keep in mind there are 100's in line behind you to take your chunk of the chocolate, protect your investment at all costs.
2. Know that your "family time" will suffer as you endure this business. Not that this is the only industry this happens in,but I can think of very few that can even compare with the tight timelines and strict guidelines.
3. Realize that you get NO days off. You are married to the work 24/7. You will be summoned to perform tasks beyond reason, and there will be frustration along the way. Not answering the phone or email will not serve you well in the long run (see B1).

II. The TRUE cost of doing business
A. Income vs. Expenses
1. Tracking your income is critical, but not nearly as critical as tracking your true costs to operate.
2. Tracking your expenses is exponentially more important than tracking your income (knowing you have a check coming in means nothing if you are already under water).
3. Dotting your I's and crossing your T's will protect you, but not insure you. Regardless how much insurance coverage you carry, or all the safeguards you have in place to prevent catastrophic financial eruption assume the worst and pray for the best.
4. Man up and carry the costs of the job. As you grow, so will your financial responsibilities. Protect those that are protecting you. Pay your subs on time and fairly.
5. Go into it with a plan! Don't create the plan on the fly. Create an employee handbook that is binding. Drug test your employees. Pay your subs as work is completed, not when you get paid (remember they are even further down the totem pole than you are...it's even tougher for them to provide for their families. Why should they have to carry YOUR costs of business if their scope of work is fulfilled).


.....running outta room. Did I mention how elated I am that I haven't taken a photo in over a month and haven't UPLOADED a stinking thing in even longer!!!!!!
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post #2 of 21 (permalink) Old 03-08-2012, 09:07 PM
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These sound like the challenges to starting any business. The market weeds out the weak.
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post #3 of 21 (permalink) Old 03-08-2012, 09:23 PM
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I agree to an extent. I don't think it is the market that drives out the weak as much as the spiral downward is the culprit. I've watched this industry evolve for the past 12 years (that I've been aware of it anyhow) and the writing has been on the wall so to speak.
I do agree that the strong survive...but at what cost? That's my input. I'm by no means a liberal or distribution of wealth type of guy (quite the opposite frankly), but within the last 3 weeks I have met old GC's and sub-contractors that used to do work for me while I was the Construction Director for a development company that have recently gotten into the PP world. I ask them how this came about and all 3 of them said it's good money . I know who they are working for....and I also know firsthand that it is NOT good money.


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These sound like the challenges to starting any business. The market weeds out the weak.
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post #4 of 21 (permalink) Old 03-08-2012, 09:38 PM
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Pardon my ignorance. Is preservation the same as restoration in the construction world?
post #5 of 21 (permalink) Old 03-08-2012, 11:57 PM
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Quote:
Originally Posted by BurdetteTrim
Pardon my ignorance. Is preservation the same as restoration in the construction world?
NO....I do restoration and am an EX preservationist.....

Restoration means to RESTORE the property.

Preservation means to "do only the minimum amount of work so the house won't fall down" so we can sell it for pennies on the dollar and we can sell it "as is" SO the RESTORATION guys or Investors can fix it later.
post #6 of 21 (permalink) Old 03-09-2012, 05:16 AM
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Quote:
Originally Posted by JenkinsHB
These sound like the challenges to starting any business. The market weeds out the weak.
Read the OP completely. He is neither new to the business or weak.
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post #7 of 21 (permalink) Old 03-09-2012, 08:58 AM
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Quote:
Originally Posted by GTX63
Read the OP completely. He is neither new to the business or weak.
I didn't say he was either of those things.
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post #8 of 21 (permalink) Old 03-09-2012, 09:19 AM
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Quote:
Originally Posted by GTX63
Read the OP completely. He is neither new to the business or weak.




You might want to read it again. Hes been doing P&P for 12 yrs.
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post #9 of 21 (permalink) Old 03-09-2012, 10:36 AM Thread Starter
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Dang...wrong login. I'll rewrite under proper name.
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post #10 of 21 (permalink) Old 03-09-2012, 10:56 AM
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I can't agree more. I shared a similar type of diatribe here:
http://www.contractortalk.com/f118/f...es-why-112743/

Maybe some contractors are winning with the P&P work, but I don't see how. Even if they think they are good near-term, the long-term looks awful.

Recent chargeback by a national: Vendor A installed a new sump pump per bid - photos were perfect - they demonstrated new pump next to old pump, new operational pump in the pit, etc.. One year later the national issues a chargeback stating that Vendor B found the sump pump was defective one month after Vendor A installed it. National didn't bother to ask Vendor A to check it out - they just paid Vendor B to replace it again and charged-back Vendor A. Really? Are you sure Vendor B was telling the truth? Was the electric on during the second visit? Is there a problem with the circuit breaker? If I have a concern about work somebody does for me, I contact them to seek a resolution - I don't cut off my nose to spite my face!

Another recent chargeback by a national: Vendor A was charged-back $1700 for replacement of a water heater that someone broke into the house and stole. A THIEF BROKE INTO THE HOUSE AND STOLE THE WATER HEATER - Vendor A is on the hook simply because they serviced the house. The national has no basis for the chargeback - they just throw whatever they want against the wall to see what sticks. Maybe they are on the hook to their client because THEY did something wrong... all we know is that you-know-what rolls downhill and the local vendors are at the bottom of the hill.

I, too, have extensive experience in the industry and made a good living from it for years. Those years are long-gone. I could go on and on but here's the bottom line: if you are reading this and you work for a national or regional service provider, you WILL find yourself in these situations. Have you factored this into your prices? Are you willing to accept this liability in exchange for your hard, dirty work?
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