A foreclosure cleaning business can be a rewarding venture that blends a knack for detailed cleaning with smart business sense. The barrier to entry might seem low given the steady stream of work from banks and real estate agents, but that accessibility does not guarantee success.
This guide will take you through the practical steps of obtaining licenses, acquiring equipment, and finding clients to help you launch a successful foreclosure cleaning business in the U.S.
Step 1: Validate your market and create a business plan
Start by researching local demand. Check real estate sites like Zillow or Realtor.com for "REO" or "bank-owned" listings in your area. A high number of these properties indicates a healthy market. You can also call your county clerk’s office to ask about recent foreclosure filings.
Analyze competitors and estimate costs
Search Google Maps for "foreclosure cleanup" or "property preservation" to find local competitors. Note their services and service areas. This research helps you find gaps in the market you can fill. Many new owners misjudge initial expenses, so a detailed budget is important.
Expect startup costs between $850 and $2,500. This covers business licensing ($100-$500), initial insurance payments ($50-$100/month for general liability), basic equipment ($500-$1,500), and a starting inventory of commercial-grade cleaning supplies ($200-$400).
Action checklist
Here are four immediate steps to take:
- Contact three local real estate agents who specialize in foreclosures to ask about their needs.
- List five local competitors and the specific services they offer.
- Create a detailed startup budget based on the cost estimates above.
- Draft a simple one-page business plan that outlines your target client and services.
Step 2: Set up your legal structure and get licensed
You should consider forming a Limited Liability Company (LLC). This structure protects your personal assets, like your home and car, if the business faces a lawsuit. It is a simpler setup than a corporation and offers tax flexibility.
Many new owners operate as a sole proprietorship to save on fees, but this leaves personal finances exposed. Registering an LLC with your Secretary of State costs between $50 and $500 and is a worthwhile protection.
Get your federal and local paperwork
Once your business is registered, get an Employer Identification Number (EIN) from the IRS. You will need this to open a business bank account and hire employees. You can apply for an EIN online for free, and it only takes a few minutes.
Next, secure a general business license from your city or county clerk. Also, ask about specific permits for waste hauling or disposal. Foreclosure cleanouts often involve junk removal, and operating without the right permit can result in fines.
You will also need General Liability insurance. Most real estate brokers and banks require proof of at least $1 million in coverage before they will hire you. This policy protects you from claims of property damage or injury.
Action checklist
Here are four immediate steps to take:
- Register your business as an LLC with your state's Secretary of State.
- Apply for a free Employer Identification Number (EIN) on the IRS website.
- Call your city clerk to inquire about a general business license and waste hauling permits.
- Get quotes for a $1 million General Liability insurance policy.
Step 3: Secure proper insurance and manage risk
Your $1 million General Liability policy is the foundation, but it is not enough. Most policies have exclusions for things you will encounter, like mold or unattended death cleanup. You must ask for specific endorsements to cover these risks. Expect to pay between $600 and $1,200 annually for a solid base policy.
Beyond general liability
If you use a vehicle for work, you need a Commercial Auto policy. Your personal auto insurance will not cover business-related accidents. Also, if you hire anyone, Workers' Compensation is a legal requirement in most states. It covers medical costs if an employee is injured on site.
A frequent oversight is failing to insure your equipment. An Inland Marine policy covers your tools and equipment against theft or damage, whether they are in your truck or at a job site. This is separate from your property insurance.
You might want to get quotes from providers like Hiscox, Next Insurance, or Thimble. They specialize in contractor insurance and understand the specific risks. A local independent agent who works with contractors can also find competitive rates and appropriate coverage for you.
Action checklist
Here are four immediate steps to take:
- Get quotes for a $1 million General Liability policy with endorsements for mold and biohazard cleanup.
- Contact an insurance agent to discuss Commercial Auto and Workers' Compensation policies.
- Ask about adding an Inland Marine policy to cover your equipment.
- Confirm with a real estate agent that your proposed coverage meets their requirements.
Step 4: Secure equipment and a workspace
You do not need a formal office. Most foreclosure cleaners start from a home garage or a small storage unit. A 50 to 100-square-foot space is often enough. If you lease a commercial spot, look for properties zoned for light industrial use and negotiate a short 6-month term to start.
Choose the right equipment
Many new owners make the mistake of buying consumer-grade equipment that cannot handle heavy-duty work. Invest in commercial-grade gear from the start. It costs more upfront but prevents costly replacements and downtime. Your reputation depends on reliable performance on the job site.
Here is a basic equipment list with estimated costs:
- Heavy-Duty Shop-Vac (16+ gallons): $150 - $300
- Pressure Washer (2000+ PSI): $200 - $400
- Basic Hand Tools (pry bar, drill, hammer): $100 - $200
- Safety Gear (N95 respirators, gloves, goggles): $50 - $100
For supplies, you can find commercial cleaning chemicals at suppliers like Uline or your local janitorial supply house. Buying chemicals in concentrate form and mixing them yourself will lower your costs significantly. Just make sure you have the space to store the containers safely.
Action checklist
Here are four immediate steps to take:
- Price a 10x10 storage unit with 24-hour access in your area.
- Research prices for a 16-gallon shop-vac and a 2000 PSI pressure washer.
- Locate a local janitorial supply store and request a price list for bulk chemicals.
- Create a detailed equipment and supply budget based on these numbers.
Step 5: Set up your payment system
Most of your clients, like banks and real estate firms, will pay on Net-30 terms, meaning 30 days after you invoice. For private homeowners or smaller jobs, you might want to require a 50% deposit upfront to cover your supply costs. This helps manage your cash flow.
Choose a payment solution
You need a way to accept payments that is fast, portable, and has low fees. Many new business owners get caught by high transaction rates or hardware costs. Look for a solution that lets you take payments directly on your phone without extra equipment.
For foreclosure cleaning businesses that need to accept payments on-site, JIM offers a streamlined solution. With JIM, you can accept debit, credit, and digital wallets directly through your smartphone. Just tap and done. Other providers often charge between 2.5% and 3.5% plus hardware fees.
At just 1.99% per transaction with no hidden costs or extra hardware needed, it is particularly useful for collecting the final balance from a client after a walkthrough. Here is how it works:
- Get Started: Download the JIM app for iOS.
- Make a Sale: Type the sales amount, hit sell, and ask your customer to tap their card or device on your phone.
- Access Funds: Your money is available right on your JIM card as soon as the sale is done. No waiting for bank transfers.
Action checklist
Here are three immediate steps to take:
- Decide on your payment terms for corporate versus private clients.
- Download the JIM app to see how it works on your phone.
- Draft a simple invoice template that clearly states your payment terms.
Step 6: Fund your business and manage finances
You will need enough working capital to cover at least 60 days of expenses. Most real estate and bank clients pay on Net-30 terms, so your cash flow will be tight initially. Plan to have $5,000 to $10,000 set aside for fuel, supplies, and insurance before payments arrive.
Explore funding options
The SBA Microloan program is a solid starting point. It offers loans up to $50,000, with interest rates typically between 8% and 13%. You will generally need a credit score above 640 and a detailed business plan to qualify for this.
A business line of credit from your bank is another flexible option for managing cash flow gaps. Some new owners use personal savings, but a credit line helps keep your business and personal finances separate from day one, which simplifies accounting and protects your assets.
Grants are rare for this type of service business, but it is worth checking with your local Small Business Development Center (SBDC) for regional programs. Many owners make the mistake of seeking funds only when cash is low. Secure your financing before you land your first big job.
Action checklist
Here are four immediate steps to take:
- Calculate your working capital needs for the first 90 days of operation.
- Review the SBA Microloan requirements on the official SBA website.
- Contact your local bank to inquire about a business line of credit.
- Locate your nearest Small Business Development Center (SBDC) for funding advice.
Step 7: Hire your team and set up operations
You will likely need help as you grow. Your first hire will probably be a Cleanup Technician. Plan to pay a competitive wage, typically between $18 and $25 per hour, to attract reliable workers. This role is physically demanding, so fair pay is important for retention.
Technicians handle debris removal, deep cleaning, and sometimes minor repairs. Many new owners skip formal safety training to save money, which is a risky mistake. At a minimum, have your team complete an OSHA 10-hour construction safety course to cover job site hazards.
Streamline your daily workflow
With a team, you need a system to manage jobs. Field service software like Jobber or Housecall Pro helps you schedule crews, track job progress, and communicate with clients. This prevents the double-bookings and missed appointments that can damage your reputation early on.
A solo operator can often handle up to $80,000 in annual revenue. To grow beyond that, you will need your first full-time employee. Be sure to classify them correctly as a W-2 employee, not a 1099 contractor, to avoid tax penalties from the IRS.
Action checklist
Here are four immediate steps to take:
- Draft a job description for a Cleanup Technician, including responsibilities and pay rate.
- Research local providers for the OSHA 10-hour construction safety course.
- Sign up for a free trial of a scheduling software like Jobber or Housecall Pro.
- Speak with an accountant about setting up payroll for a W-2 employee.
Step 8: Market your business and find clients
Your first clients will likely come from direct outreach. Create a list of local real estate agents who specialize in REO properties. You can find them by searching Zillow for "bank-owned" listings and noting the listing agents. A simple, direct email or phone call works best.
Build your marketing toolkit
A simple website and a Google Business Profile are your foundational marketing assets. Your most powerful tool, however, is a portfolio. Many new owners forget to take high-quality before-and-after photos. This visual proof is what convinces agents to hire you over a competitor.
Also, create a one-page price sheet that outlines your standard services. This might include pricing per square foot for cleaning or per cubic yard for trash removal. It shows professionalism and helps agents quickly estimate costs for their clients.
Once you have a few jobs completed, look into getting registered on REO vendor platforms like Res.net or Equator. National banks and asset management companies use these sites to assign work. The application process can take 30-60 days, but it provides a direct line to high-volume clients.
Action checklist
Here are four immediate steps to take:
- Create a target list of 10 local real estate agents who handle REO properties.
- Set up a free Google Business Profile for your company.
- Draft a simple price sheet for your core services.
- Research the vendor registration requirements for an REO platform like Res.net.
Step 9: Price your services and create proposals
You have a few ways to price jobs. You can charge per square foot, typically $0.25 to $0.75 for standard cleaning. Another option is an hourly rate of $40 to $60 per worker, which is useful for jobs with unknown variables.
Most corporate clients, however, prefer a flat-rate bid. This requires a thorough on-site inspection to estimate labor and disposal costs accurately. A common mistake is to forget overhead costs like insurance and fuel when you calculate your bid.
Calculate your profit
Aim for a gross profit margin between 40% and 60% on every job. If your total costs for labor, supplies, and disposal are $1,000, your bid should be between $1,400 and $1,600. This buffer covers your business overhead and ensures you make money.
Draft a professional proposal
Your proposal sells your service. It should clearly list every task, from trash removal to final wipe-down. Include your price, payment terms, and a copy of your insurance certificate. A professional template from Word or Google Docs helps build trust with agents.
Action checklist
Here are four immediate steps to take:
- Decide on your primary pricing model: per square foot, hourly, or flat rate.
- Calculate your target bid for a hypothetical 1,500 sq. ft. home using a 50% profit margin.
- Create a proposal template that includes a scope of work and your insurance details.
- Call two local junk removal companies to get their price per truckload for disposal cost research.
Step 10: Implement quality control and scale your operations
Your reputation depends on consistent results. Create a simple photo checklist for every job. This list should detail the final state for each room, from clean baseboards to streak-free windows. It becomes your standard and proof of completion for clients.
Set benchmarks for growth
Once you consistently generate over $7,000 in monthly revenue, it is time to hire your first technician. Many owners wait too long and burn out. This revenue level typically supports an employee's wage and associated costs while protecting your profit margin.
As you add a second or third crew, you will need better systems. This is when field service software like Jobber or Housecall Pro becomes a necessity. It helps you manage multiple schedules and job details without the errors that cost you clients.
For added credibility, you might look into certifications from the Institute of Inspection, Cleaning and Restoration Certification (IICRC). While not required, these credentials can help you win larger corporate contracts as you grow your business.
Action checklist
Here are four immediate steps to take:
- Create a photo-based quality control checklist for a standard three-bedroom house.
- Set a monthly revenue goal that will trigger your first hire.
- Review the features of a scheduling software like Jobber for managing a small team.
- Look up the requirements for an IICRC certification like House Cleaning Technician (HCT).
This guide lays out the path to launch your foreclosure cleaning business. Remember that your reputation with agents is your most valuable asset, built on consistent quality and clear communication. The plan is here, now it is your turn to execute it.
And when it is time to get paid, a simple solution helps. JIM lets you accept cards right on your smartphone for a flat 1.99% fee, no hardware needed. Your money is available instantly. Download JIM and you are ready for your first job.
