Asset management contractors are responsible for maintaining foreclosed properties for banks and property preservation companies. Contractors may work independently or for a property asset management firm.
The Department of Housing and Urban Development (HUD), Federal Housing Administration (FHA), and Veteran’s Administration (VA) have stipulated guidelines for contractors. The responsibilities of asset management contractors include performing repairs, securing entrances, cleaning interiors and landscaping. The purpose of managing properties is to maintain their resale value. Most banks look for contractors with asset management experience, insurance, a vehicle and their own tools. Contractors should register with banks and asset management companies to be eligible for work since these entities only hire contractors who are registered. The following are the requirements for becoming an approved vendor:
Education and Experience
Asset management are expected to have a high school diploma and have completed several certification courses and programs in asset management. Asset management courses can help those who are unfamiliar with residential maintenance work and have no experience in asset management. These courses are also useful to expand your knowledge of government guidelines. Experience is crucial in asset management, especially for real estate owned (REO) properties. Necessary skills include changing locks, boarding up windows, landscaping, trash removal and other maintenance duties.
The Institute of Asset Management (the IAM), an international professional body for asset management professionals, for example, offers its own IAM Qualification, which “enables you to be the best you can be as an asset manager: you’ll gain professional recognition, increased insight and improved job prospects. The IAM Qualifications are designed to promote good asset management concepts and practices, establish career paths and make recruitment and appointment to asset management roles more efficient and effective. Whether you are new to asset management or have initial, specialist or management experience, our Qualifications will help you to develop as an individual and a professional, giving you formal recognition for your asset management knowledge and understanding.”
It is important to become familiar with government guidelines for banks that own FHA-insured homes in order to be an asset management contractor. The Property Preservation Contractors Network and HUD provides a detailed list of guidelines, which specify how much a bank can designate to manager a property. The maximum amount per property is determined by state and the number of units on the property. Government regulations also specify that REOs must be subject to regular inspections in order to prevent vandalism and weather-related damage. Inspections include reports, photographs and damage assessments.
“The more services you offer, the more jobs you can take. Depending on your skill set, broadening your scope may require hiring employees or contractors, not to mention buying more equipment. When you’re just starting out, you can keep costs low by only taking jobs you can handle in-house with minimal equipment. Market research may tell you which services are most needed in your community. If you plan to expand your services over time, incorporate that information into your business plan,” says Fraser Sherman, a real estate expert.
A successful asset management contractor will be prepared to handle most maintenance tasks, such as changing locks, boarding up windows, repairing damaged walls, repairing plumbing and fences, trimming lawns and performing inspections. You should also be skilled at photography top document the state of the property and be able to write detailed reports in order to explain the condition of the property to the bank.
Once you’ve acquired the necessary skills, Sherman recommends the following:
“If you impress the decision makers, they may invite you to submit a bid for a preservation job. Check out the property before submitting. Take photographs. The on-site visit will give you a clear idea what needs doing and how much it will cost. Use that information to craft your bid. Depending on your company’s experience and the contractors on your team, you may want to prioritize skill, speed or simply lower prices than anyone else around.”