Real Estate Owned Properties - "REO"

Discussion in 'Lawn Mowing' started by MowHouston, Mar 7, 2008.

  1. MowHouston

    MowHouston LawnSite Bronze Member
    Posts: 1,012

    Have any of you ever dealt with REO companies? Even if you havent, give your opinion on this deal.

    I have dealt with one of these companies before but this one is a bit different.

    First, REO companies are companies that specialize in maintaining homes, mostly that are going through the foreclosure process. Many times, these homes are overgrown and need to be cleaned up before regular service.

    So, yes, there will be some PITAs every so often that I will need a brush hog to cleanup, yes the lawns will come and go, but a lot of them stay around for months at a time before they are sold.

    REO companies also specialize in trash outs (a potential winter money maker for us LCOs)

    So, here's the deal: And REO company contacted me yesterday and said he has a few LCOs taking care of his properties but wants to consolidate them into one company, understandable. He has 20 lawns to offer me right off the bat.

    Now, the main reason he wants to consolidate is because the company is growing. He said he expects to have 70-100 properties at any given time by the end of the year.

    He also approached me about doing trashouts during the winter season, which would be a nice income to have while lawns are monthly.

    The way I see it, his growth is a potential growth for myself.

    If any of you had this opportunity, would you go for it or pass?
     
  2. kleankutslawn

    kleankutslawn LawnSite Bronze Member
    Posts: 1,185

    kind or similar two a situation i was in a few years back.the only problem i had was after October there was no more cutting and i was doing 60 properties.that hurt my income.but i did do well in the hauling end.another thing is don't just think the hauling will be in the winter time,there will be hauling year round.so make sure you have the time and man power for both.good luck
     
  3. ashs inc

    ashs inc LawnSite Senior Member
    from alabama
    Posts: 599

    I own a lawn maintenance company. I have one crew that goes out and maintains lawns. About 5 years ago i was real slow during the winter but the real estate market was booming. So i got my real estate liscence. Well I got more landscaping work because of meeting new people realtors. I was having realtors calling me to mow there clients yards and cleaning them up when they were getting ready to sell. Well I have gotten more busy with real estate and have gotten into REO work. The only problem with reo work is the reo company takes for ever to pay. I would hate to pay a lawn company every two weeks for 70 yards then wait on the bank to pay me back. thats the only problem with reo companies.
     
  4. Tom Tom

    Tom Tom LawnSite Bronze Member
    Posts: 1,278

    He's probably got 6 other LCO's on the hook too.

    Don't bid anything with the promise of more work down the road it usually never works out.
     
  5. MowHouston

    MowHouston LawnSite Bronze Member
    Posts: 1,012

    These typs of deals are about consolidation. He already has 6 or more LCOs, I'm sure. Thats who I'm replacing.

    I've already been given the addresses for the properties, bid on them and meeting him next monday to meet and do a little paperwork.

    Promise of more work or not, its 20 properties at once all in my service area.
     
  6. MowHouston

    MowHouston LawnSite Bronze Member
    Posts: 1,012

    I'm doing a monthly schedule for billing and I think this REO company has their stuff together. They are a regional company covering all of the major cities in Texas.

    But, yeah, I wouldnt want to have to wait for my money to come in either. :)
     
  7. jstonemo

    jstonemo LawnSite Member
    Posts: 18

    This is exactly what I do. The worse part is waiting for the money to come in. I actually got checks from banks in December for properties I mowed in July. You MUST have cash reserves to survive REO mowing. The other problem is coverage area. In KC, MO area, I mow all parts of the metro area. It isn't uncommon to drive 80 miles a day for only 7 properties that day.

    What I am going to find out this year is whether the banks are willing to increase the amount they pay per property. Gas is 50% higher now than it was 2 years ago and they are still paying the same rates. It is a fine line to walk because there is always someone else who will mow for nothing and then go broke doing it.
     
  8. MowHouston

    MowHouston LawnSite Bronze Member
    Posts: 1,012

    I think this is a bit different. I'm not working directly with the banks for the REO work. This is a company that manages the REO work, hires subcontractors, etc.

    The other REO guy I've worked for pretty much always pays on time. If they didnt, they would be out of our Terms of Service. I'm not waiting months for payment. They pay just the same as any other customer or they can go elsewhere. lol
     
  9. RickR1818

    RickR1818 LawnSite Senior Member
    Posts: 342

    That is worse because they have to wait to get paid by the banks before they pay you! I am still waiting to get paid from a company that was the same situation. Ask how he plans on paying you. I am working with another company this year that pays weekly. If they do net 60 or longer I would stay away. Even a net 30 is dangerous. There are a lot of banks actually going under right now that are involved in REO.
     
  10. jtoman

    jtoman LawnSite Member
    Posts: 31

    You wouldnt happen to be talking about Field Asset Services (FAS) would you?
     

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