When you end up with an REO there will usually be trash and household items left behind that need to removed. In some cases there can be an extreme amount of debris. There are a few different ways you can handle this, and the costs can vary widely. I’ll provide some of the actual numbers from my deals so you have an idea of what to expect.
What does it cost to do a cleanout?
Cleanouts are typically quoted by the cubic yard. The official HUD fee schedule is $50 per cubic yard, but I would never pay that. I’ll get a couple of quotes and I’ve seen them range from $25-$50 per cubic yard. The volume for the cleanouts I have had to do on REOs have ranged from 45 to 160 cubic yards. The 160 cubic yard cleanout was an absolutely insane amount of trash, that is four 40-yard dumpsters, which is the largest one you can order!
Managing the cleanout
In a perfect world you have a realtor on the ground who has experience with REOs, and has go-to vendors they can coordinate with. There are also a number of national companies you can hire, but those tend to get very expensive and the communication with them can be poor. The problem is they are usually just coordinating with a local company and you don’t know who that is. So coordinating the work and getting information on what’s going on becomes an inefficient game of ‘telephone’. Working directly with a realtor is much cleaner and less expensive.
Receiving an extreme quote
For my 160 cubic yard trash out I received a quote from a large company. They quoted 250 cubic yards plus a lot of extras for things that were left in the yard like a boat and a camper. The total quote was just over $17,000. Obviously I didn’t plan on that expense and it wasn’t going to work. I got another quote from a similar company and it came back ~$13,000….. That wasn’t going to work either so I took things into my own hands.
Craigslist is your friend
I ended up ordering the dumpsters myself and then hired a local crew from Craiglist. The 40 yard dumpsters were $500 each, so the total cost of the dumpsters was $2000. I found a team consisting of a father and 2 sons who had experience with cleanouts and took care of the entire cleanout for $1500. They kicked butt and did a great job. So I ended up getting the cleanout done for $3500, which was just a bit less than the $17,000 I was originally quoted. It required some legwork and coordination on my part, but it was well work my time.
Conclusions
When you are estimating your costs on a note deal, have a couple thousand dollars in the budget for a cleanout in your foreclosure scenario. It seems like the surprises with an REO are never good, and you will be amazed at how much crap borrowers will leave behind. Don’t just depend on an outside company to take care of everything for you. Have someone on the ground you can trust, and don’t be afraid to take things into your own hands if you need to.