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Discussion Starter #1
A little background on me. I used to be a sales manager for a large window company and ran several offices salesman and crews. Then I took a job as a project manager for a large tank company that built water and oil tanks. While in the tank industry I moved to Chattanooga, TN then on to Birmingham, AL then back here to Evansville. I wasn't making crap for money and working almost as much. After a dispute with my boss at the tank company over him asking me to falsify documents I left. He later committed suicide while facing 18 federal indictments.

I was burnt out on life but my kids still had to eat. I hopped in a truck with a buddy and thought screw the corporate world I am going to go swing a hammer. After a few months in a truck with my buddy we figured out there may actually be money in this. We were working for a regional and they were keeping us buried in work. When they owed us $20,000.00 we said that is enough. We then worked for a series of smaller companies and my buddy decided to go a different direction. For the last 2 years we have been working for a couple of nationals and some regionals and not really content with most of them.

We finally got in with a big National and now I don't want to become a bottom feeding regional like you guys speak of.

Let's make a few things clear.

There is more work than anyone can do out of a truck with a crew.

The nationals will NOT do business with you if you can't cover the entire state.

I don't want to drive all over the world or run an office. I simply want the local work here in our city and not to have anyone owing me 20k.

So how do you take the whole state coverage without hiring contractors?

When we hire contractors we have to process their photo's and upload to the client. This means processors, computers, building, and overhead.

To pay for that over head I have to take a percentage of what the client pays me.

How would you guys fix this problem.

We don't want to be unfair we want our employees to be treated fairly. I also want to make a decent living without taking a thousand phone calls a day. I HATE having office people asking me questions all day.

I want to enjoy life raise my kids and make some money.

We will NOT work for realtors because they are pickier than home owners but pay less.

We already stay away from sales cleans and refresh type orders. We really don't care for REO work. It doesn't fit our business model well. We love P&P.
 

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My opinions:
- Try and get a decent amount of capital to avoid the "paid when we get paid" mentality. Example: US Best doesn't always pay the best prices, but always pay FAST. That's worth something to me, and I'm willing to accept slightly lower margins because of it.
- P&P model makes sense when you, or employees are going to do the work. Subbing it out scares the hell out of me. They didn't report that roof leak? YOU get charged back. REO, from my experience, if you do get any sort of chargeback they pale in comparison to P&P chargebacks.
- You will have contractors not like you, even if you do everything perfectly. If you get a non-preservation contractor, they are not used to the picture requirements, and will not understand why they can't get paid for not taking the right pictures. They will get pissed.


A little background on me. I used to be a sales manager for a large window company and ran several offices salesman and crews. Then I took a job as a project manager for a large tank company that built water and oil tanks. While in the tank industry I moved to Chattanooga, TN then on to Birmingham, AL then back here to Evansville. I wasn't making crap for money and working almost as much. After a dispute with my boss at the tank company over him asking me to falsify documents I left. He later committed suicide while facing 18 federal indictments.

I was burnt out on life but my kids still had to eat. I hopped in a truck with a buddy and thought screw the corporate world I am going to go swing a hammer. After a few months in a truck with my buddy we figured out there may actually be money in this. We were working for a regional and they were keeping us buried in work. When they owed us $20,000.00 we said that is enough. We then worked for a series of smaller companies and my buddy decided to go a different direction. For the last 2 years we have been working for a couple of nationals and some regionals and not really content with most of them.

We finally got in with a big National and now I don't want to become a bottom feeding regional like you guys speak of.

Let's make a few things clear.

There is more work than anyone can do out of a truck with a crew.

The nationals will NOT do business with you if you can't cover the entire state.

I don't want to drive all over the world or run an office. I simply want the local work here in our city and not to have anyone owing me 20k.

So how do you take the whole state coverage without hiring contractors?

When we hire contractors we have to process their photo's and upload to the client. This means processors, computers, building, and overhead.

To pay for that over head I have to take a percentage of what the client pays me.

How would you guys fix this problem.

We don't want to be unfair we want our employees to be treated fairly. I also want to make a decent living without taking a thousand phone calls a day. I HATE having office people asking me questions all day.

I want to enjoy life raise my kids and make some money.

We will NOT work for realtors because they are pickier than home owners but pay less.

We already stay away from sales cleans and refresh type orders. We really don't care for REO work. It doesn't fit our business model well. We love P&P.
 

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Low quality low cost
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2,340 Posts
Discussion Starter #3
My opinions:
- Try and get a decent amount of capital to avoid the "paid when we get paid" mentality. Example: US Best doesn't always pay the best prices, but always pay FAST. That's worth something to me, and I'm willing to accept slightly lower margins because of it.
- P&P model makes sense when you, or employees are going to do the work. Subbing it out scares the hell out of me. They didn't report that roof leak? YOU get charged back. REO, from my experience, if you do get any sort of chargeback they pale in comparison to P&P chargebacks.
- You will have contractors not like you, even if you do everything perfectly. If you get a non-preservation contractor, they are not used to the picture requirements, and will not understand why they can't get paid for not taking the right pictures. They will get pissed.
My attorney has advised me to keep the pay as paid agreement in place due to subcontractor agreement. I am not interested in paying ahead then absorbing the charge back all alone. We tried that model for over a year and it was a constant struggle with guys that turned in work late and we had paid them the full amount then the client charges us back etc. Pay as paid will be our only method of payment as long as I am still in the business.

I did manage to work out a pay plan that allows me to pay my crews every week. This helps them with cash flow.

We have to sub out work because we cover areas that are 7 or 8 hours from the office.

I try to go out in the field and work with new guys and train them the best I can. The problem is if I drive 3 hours from home then the guy washes up I not only lost a day or two of my life I am back at the beginning.

I am not trying to make excuses just pointing out some of the problems we face on this side of things.

I asked an open ended question because we truly are looking for an outside the box solution. We want to do things differently.
 

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As a supplier I am more of a neutral party. I try to help where I can for the most part. I started out in the REO field and have worked in P&P and for brokers and investors. The way this use to be an individual could work directly for HUD or a bank and handle a city or an area. It's not like that anymore. Now you have to work for either a national or regional and even that is starting to change since most national are starting to only deal with regional’s. I think it’s time that people started working together to meet a common goal and look forward towards helping each other rather than pointing fingers. Some people don't like regionals but they do carry a lot of burden. The way this industry is turning you are going to have to work for a regional if you only want to handle a small area because the big guys now only want to call one person versus 100 people. Their motto “it’s easier to catch up with one person with a late order versus trying to call 100 people with late orders”. The industry is changing.
 

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vendor1-Although true and poignant are the things you state, there is one thing that must be taken into account. Pretty much every "national" started as a regional in one form or fashion. They started covering a particular region of the country and saw an opportunity to grow that endeavor and expand the burden. Take AMS for example. They started out as a NE regional that got most all of it's work from a handful of various nationals that had longevity on their side, they quickly grew and outpaced the national they were getting their work from and decided to actively pursue contracts on their own.
Is this problematic? Nope, not in the least. What is problematic is the fact that pricing schedules have already detrimentally deteriorated to the point that even direct work from the national is barely a survivable income, add to that the work will now be coming from another tier down the totem pole and your reward gets even less. So, at some point somebody has to be willing to absorb the risk vs. reward. Should it be the lowest ranking officer? That is a good question, regardless a business decision has to be made by the business owners and determine if the relationship will be beneficial to EACH. The "banding together" for the greater good simply does NOT work.
For example (and no offense to you, as you are likely a good person), YOU do not have MY business' best interest in mind, and conversely I certainly do not have yours in mind. Does that mean I would not help/assist/aid you if the situation were to arise....I certainly would. But matter of factly, I have one priority....my own survival.
The true advantage is we all have the option of free will! Dobe is just looking for insight as to creating a smoother running operation, but unfortunately what may work wonderfully for one operation could be a complete disaster for another. There are too many variables at play, staff, resources, volume, workload, coverage area, and the list goes on.
 

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Low quality low cost
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Discussion Starter #6
vendor1-Although true and poignant are the things you state, there is one thing that must be taken into account. Pretty much every "national" started as a regional in one form or fashion. They started covering a particular region of the country and saw an opportunity to grow that endeavor and expand the burden. Take AMS for example. They started out as a NE regional that got most all of it's work from a handful of various nationals that had longevity on their side, they quickly grew and outpaced the national they were getting their work from and decided to actively pursue contracts on their own.
Is this problematic? Nope, not in the least. What is problematic is the fact that pricing schedules have already detrimentally deteriorated to the point that even direct work from the national is barely a survivable income, add to that the work will now be coming from another tier down the totem pole and your reward gets even less. So, at some point somebody has to be willing to absorb the risk vs. reward. Should it be the lowest ranking officer? That is a good question, regardless a business decision has to be made by the business owners and determine if the relationship will be beneficial to EACH. The "banding together" for the greater good simply does NOT work.
For example (and no offense to you, as you are likely a good person), YOU do not have MY business' best interest in mind, and conversely I certainly do not have yours in mind. Does that mean I would not help/assist/aid you if the situation were to arise....I certainly would. But matter of factly, I have one priority....my own survival.
The true advantage is we all have the option of free will! Dobe is just looking for insight as to creating a smoother running operation, but unfortunately what may work wonderfully for one operation could be a complete disaster for another. There are too many variables at play, staff, resources, volume, workload, coverage area, and the list goes on.
Great post!

Our issue as a company is we love the industry and we realized very quickly that we need to work direct for the national. NOT through a regional. It took 2 years to get a decent national and they wouldn't play ball with us until we agreed to take 3 states. They don't want to deal with small guys.

I would prefer to work in a 90 mile radius of our office and have a small operation. If you know of a decent national that would keep us consistently busy let me know. Until then I have some major headaches to contend with.

We currently have 190 open orders in Illinois, 60 in Indiana, and 56 in Kentucky. I am going to have to make some calls tomorrow and see if I can't get them to stop sending work and let us catch up?
 

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Is it purely a matter of your current crews simply not understanding the importance of deadlines?
If that is the case then I would start incorporating some harsh penalties or completely halt any further work that is being funneled to them until they get a grip on the importance of turning the work in on time.
Or is it a matter of not having enough crews to handle the current workload?
 

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Low quality low cost
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Discussion Starter #8
Is it purely a matter of your current crews simply not understanding the importance of deadlines?
If that is the case then I would start incorporating some harsh penalties or completely halt any further work that is being funneled to them until they get a grip on the importance of turning the work in on time.
Or is it a matter of not having enough crews to handle the current workload?
It's both really. I never wanted to have this many crews or pay people to babysit and upload for them. This is how guys get in over their head. We have a small office staff and we are getting it done but the nationals are burying us and they pay decent so it's not money.

My guys can only do so much. New guys require alot of babysitting. They are also hard to find.
 

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We have a small office staff and we are getting it done but the nationals are burying us and they pay decent so it's not money.
My guys can only do so much. New guys require alot of babysitting. They are also hard to find.
Lots of business.
Not a lot of help in the needed areas.
The owner is also the head cook and bottle washer.
Your spinning too many plates by yourself.
You need to be doing what will benefit your company the most.
Picture yourself in the same position 5 years from now.
It isn't a bad problem to have unless you let it go on.
 

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Lots of business.
Not a lot of help in the needed areas.
The owner is also the head cook and bottle washer.
Your spinning too many plates by yourself.
You need to be doing what will benefit your company the most.
Picture yourself in the same position 5 years from now.
It isn't a bad problem to have unless you let it go on.

Pick the BEST guy in each state and make them a foreman. They can then train and babysit for you. Let them work on a percentage basis but also make them responsible for chargebacks. For example, if you do 200 work orders a week in Illinois and the average ticket is $150, Pay them 8% with a 1% bonus at the end of the month for no late work orders or such. Bonus's are great incentives. With these figures and figuring you would normally collect a 20% discount you will still profit nicely, Your foreman will make a good wage and quality SHOULD go up. Use them to put out fires as well and pay them for those jobs like you would a regular sub. You could also hold back say, 5% from your subs (a 25% discount) and pay that back as a weekly bonus for being on time. (my guess is you'll keep that 5% for the 1st few months until you weed out the bad apples.) Do a weekly conference call with Go to meeting or similar to give the foreman updates ect. Hire office staff for uploads (processing companies charge about $3 for a grass cut and $10 for an initial secure from what i have been told) and you visit each area to meet with your foreman at least once a month and also do QC on the work being done. For under 10K you can get a program written that will do all of this automatically for you. May even be less if you use your local colleges computer programming class to write it and beta test it. My guess is as big as you are you could fork out $20K for a container of locks as well. Sell them to your contractors cheaper than the big 3 and you will still profit. Lots of ways to make out but you CANNOT do it and be in the field too. You'll have to devote at least half your time to the office. Good luck!
 

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Low quality low cost
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Discussion Starter #12
Pick the BEST guy in each state and make them a foreman. They can then train and babysit for you. Let them work on a percentage basis but also make them responsible for chargebacks. For example, if you do 200 work orders a week in Illinois and the average ticket is $150, Pay them 8% with a 1% bonus at the end of the month for no late work orders or such. Bonus's are great incentives. With these figures and figuring you would normally collect a 20% discount you will still profit nicely, Your foreman will make a good wage and quality SHOULD go up. Use them to put out fires as well and pay them for those jobs like you would a regular sub. You could also hold back say, 5% from your subs (a 25% discount) and pay that back as a weekly bonus for being on time. (my guess is you'll keep that 5% for the 1st few months until you weed out the bad apples.) Do a weekly conference call with Go to meeting or similar to give the foreman updates ect. Hire office staff for uploads (processing companies charge about $3 for a grass cut and $10 for an initial secure from what i have been told) and you visit each area to meet with your foreman at least once a month and also do QC on the work being done. For under 10K you can get a program written that will do all of this automatically for you. May even be less if you use your local colleges computer programming class to write it and beta test it. My guess is as big as you are you could fork out $20K for a container of locks as well. Sell them to your contractors cheaper than the big 3 and you will still profit. Lots of ways to make out but you CANNOT do it and be in the field too. You'll have to devote at least half your time to the office. Good luck!
Those are all good Ideas. Right now we are making major orders for locks and just sending them to our guys. This makes our regional pricing slightly more tolerable for them. We offer incentives for having no late orders in the field and we give away gas cards for most orders processed by office people. We have a few processors now and are starting to click in the office. I feel like having a program written specifically for us has always been a priority for me personally. I am crazy about technology anyway so this is alluring to me. It's been hard not to invest already but I keep waiting because it seems like every week I see my needs changing.
 

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I try to go out in the field and work with new guys and train them the best I can. The problem is if I drive 3 hours from home then the guy washes up I not only lost a day or two of my life I am back at the beginning.
Hello Doberman. New to the field, just getting started in it, in fact. Currently a real estate appraiser, quite familiar with the REO market, but here's my question pertaining to this particular comment of yours.
Why don't you foot the bill for a local hotel, bring their crew lead and one or two guys, if you feel warranted, up to your location, and oversee them on your local jobs, or promote one of your locals who is reliable and well skilled into a 'field supervisor' position, where he/she goes down and performs the training?
This way you're still free to be with your family and oversee the operation of the business as a whole. It may look like it costs a bit more to do this, but realistically, how much work do you lose when you're out of town, unable to put out the small fires that inevitably come up, as well as time lost being with your family?
 

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Discussion Starter #14
Hello Doberman. New to the field, just getting started in it, in fact. Currently a real estate appraiser, quite familiar with the REO market, but here's my question pertaining to this particular comment of yours.
Why don't you foot the bill for a local hotel, bring their crew lead and one or two guys, if you feel warranted, up to your location, and oversee them on your local jobs, or promote one of your locals who is reliable and well skilled into a 'field supervisor' position, where he/she goes down and performs the training?
This way you're still free to be with your family and oversee the operation of the business as a whole. It may look like it costs a bit more to do this, but realistically, how much work do you lose when you're out of town, unable to put out the small fires that inevitably come up, as well as time lost being with your family?
We are working on this i have been increasing my office staff and I have my brother doing the traveling and training.

It's still not going the best but we are trying. We are just overwhelmed with orders.
 

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We are working on this i have been increasing my office staff and I have my brother doing the traveling and training.

It's still not going the best but we are trying. We are just overwhelmed with orders.
I'd offer to help but I did my stint in Indiana, and am now a happy Georgia boy. Good luck!
 

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How I wanna be a PP Pro
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You will feel the serious PAIN when you "lower" a contractors pay or pass-on a chargeback and a crew leins a property. It happens.

Hire subs and the "wise" ones put fake info on tax info. 2 yrs later you get billed by IRS to pay 28% of that subs pay. It happens.

Sub gets hurt on job. Turns the claim into Work Comp. Contract or No Contract you go threw tons of fighting and audits. If found that your subs should be employees than you better keep a hideyhole out of the country. It happens.

Sub forgets or plain misses damages and not reported and you are held liable? It happens.

Your General Liability and E&O Policy skyrockets due to hiring of multiple subs. I know guys that had to finance $50k ++ just to pay their premiums OR worse yet you don't tell your Insurance carrier so you get wallopped on audit AND renewal premium.

Sometimes the risk doesn't outweigh the rewards.

If you want success than do it right. Make everyone employees.

HIRE a successful business coach. HIRE a attorney and keep them on retainer. HIRE a CPA to manage all your local, State and Fed Taxes. How many of you pay State Sales Tax on Grass Cuts? If you live in one of the 39 States that charge Sales Tax on Services such as Grass cuts, maid service or winterizes than you should be consulting your tax adviser asap. Those penalties will hurt.

Ahhh I could pester you more but hey.... Been there done that.

Good luck.
 

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Low quality low cost
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Discussion Starter #18
You will feel the serious PAIN when you "lower" a contractors pay or pass-on a chargeback and a crew leins a property. It happens.

Hire subs and the "wise" ones put fake info on tax info. 2 yrs later you get billed by IRS to pay 28% of that subs pay. It happens.

Sub gets hurt on job. Turns the claim into Work Comp. Contract or No Contract you go threw tons of fighting and audits. If found that your subs should be employees than you better keep a hideyhole out of the country. It happens.

Sub forgets or plain misses damages and not reported and you are held liable? It happens.

Your General Liability and E&O Policy skyrockets due to hiring of multiple subs. I know guys that had to finance $50k ++ just to pay their premiums OR worse yet you don't tell your Insurance carrier so you get wallopped on audit AND renewal premium.

Sometimes the risk doesn't outweigh the rewards.

If you want success than do it right. Make everyone employees.

HIRE a successful business coach. HIRE a attorney and keep them on retainer. HIRE a CPA to manage all your local, State and Fed Taxes. How many of you pay State Sales Tax on Grass Cuts? If you live in one of the 39 States that charge Sales Tax on Services such as Grass cuts, maid service or winterizes than you should be consulting your tax adviser asap. Those penalties will hurt.

Ahhh I could pester you more but hey.... Been there done that.

Good luck.
I have been through a couple of these scenario's and I have a good attorney and a great accountant. My accountant is a city councilmen and he helps me with some things since our county is extremely difficult.

Employees are more trouble than subs and i totally agree with you that subs are trouble.

This is part of what sucks about the whole thing. I would really rather just run a few guys locally and not worry with all the crap. I refuse to work for realtors, or home owners so that option is out.
 

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Low quality low cost
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Discussion Starter #20
Ah Savannah,

Spanish moss hanging from the trees and getting freakin stuck with a dump trailer on a roundabout.
Back in my Tank business days I lived in SC, TN, and AL. I love the South and we miss it bad. The weather here SUCKS! I hate the cold.
 
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