Property Preservation Company Cash Flow: Failure Is Certain If You Are Guilty Of This

Never spend the material money from one of your property preservation company jobs on your personal expenses before the job is finished.

Some call this the "robbing Peter to pay Paul" syndrome. Property preservation business owners are sure to fail when they start their foreclosure business without adequate operating capital and are forced to make decisions based on how much money they don't have. When the choice is made to start a property preservation company, you are officially giving up your right to receive a weekly paycheck for at least the first year. You will increase your chances of success if you start your property preservation company with at least 3-6 months worth of cash reserves or you have a decent sized line of credit to fall back on and also if you have educated yourself about managing cash flow.

Experience has proven that most technicians who make the decision to start their own property preservation company don't realize that their "cut" or the profit from a typical property preservation job will be whatever is left at the very end, after everyone else is paid. And they always seem to overlook the fact that sometimes there is nothing left because occasionally a property preservation job actually loses money. Do not operate your property preservation company with the mindset of an employee.


In my own experiences of operating a property preservation company we have lost money on approximately 15% of all jobs over the past 5 years. These losses occur when we make a mistake such as under estimating a job type that we are not familiar with or by not keeping a close enough eye on each job's outgoing expenses. The banks and asset management companies that supply our property preservation company with all of the work do not pay for our mistakes. They hold us accountable for our own decisions and actions. BTW, even with these losses our property preservation company still produces a net profit of around 10%-20% of the gross. Educate yourself about cash flow and useful technology so you can start your property preservation company the right way.

Do not fool yourself into thinking that you can "borrow" some of the upfront draw payments for personal use only to later find that you don't have enough money to complete the job. REO asset managers are constantly on the lookout for this type of behavior and they will never willingly hire a local property preservation company who is not financially stable enough to complete a job. 

We have all heard stories about construction company owners (not just property preservation companies) who started a job only to later simply just walk away. Over time I have learned that this is most often caused when the contractor has spent more of his or her customer's money on personal items instead of spending it on getting the job done and then there always comes the time when the remaining work exceeds the amount still owed the contractor so they just walk away. If you fall into this trap you no better than a thief who's out robbing elderly people.