# FHA Preservation work is toxic - here's why...



## Guest (Feb 9, 2012)

If you work for a National Service Provider (NSP) and you complete work on FHA properties, your business will go down the proverbial tubes. Please disagree with me if you can share any insight or alternate view. I'll begin by asking you to read an EXCELLENT article on MortgageOrb.com entitled: "Is FHA Claim Processing The Next Servicing Monster?"

Here is the link:
http://www.mortgageorb.com/e107_plugins/content/content.php?content.10897 

Here is the link to the referenced analyst note in the article (FHA Claim Denials: The Next Shoe To Drop?):
http://www.thestreet.com/story/11265399/1/mortgage-mess-next-shoe-to-drop-is-fha-analyst.html

The article is long and a little beyond the scope of property preservation however it demonstrates exactly why *FHA work is toxic to preservation contractors. * To quickly recap some of the finer points:



* The Federal Housing Authority is insuring more loans than ever
* The FHA is auditing 100% of the claims - a drastic change from years past
* The FHA is in financial distress and may cut their losses by denying servicing claims, including claims for preservation work

*Here's insight based my observations over the past few years and these articles:*


* The model on which the property preservation industry was built is broken (effectively free lock changes and winterizations? free damage/renovation bids? preservation contractors being accountable for what amounts to a full-out home inspection on nearly every visit?)
* HUD is actively working to reduce their costs by auditing every claim that is filed and by using inappropriate cost-estimating techniques to determine the amount they will reimburse the banks, NSP's, and ultimately the local preservation contractors
* HUD has no regard for the discount that NSP's must charge to render their services - they want to pay "fair market value" for preservation services ($250 for a dehumidifier, anyone?) however they fail to consider the enormous expense of managing the services which was traditionally covered by the discount.
* The NSP's probably locked themselves into contracts where they assure the banks they will incur no preservation-related losses (please correct me if I'm wrong).
* You-know-what rolls downhill and you, the preservation contractor, is left standing in it

When you think about all of this, it starts to become clear why there are so many bid-cuts. More importantly, this is why you have a *huge potential liability for chargebacks.* Have you ever seen a HUD chargeback on a property you haven't been to in a year that made no sense? That's because it may have nothing to do with you - it may have something to do with a mistake made by another vendor (who is no longer with the NSP) or by the NSP themselves and an "analyst" or "loss mitigation coordinator" needs to make up for the shortfall somehow.

Have you seen where several NSP's recently limited the liability / E&O insurance carriers they will accept? The NSP's know there will be many more claims and they need to make sure the carriers will cover it. What they don't tell you is how much your premium will jump on the first claim (hint: it's probably a lot).

So, if FHA is insuring an increasing percentage of mortgages while actively working to minimize their losses, where does that leave you? Be very careful with the NSP's and FHA work - I believe it's only going to get worse.

About me
I've been a preservation contractor for a long time and I'm outta-here. I've worked for the siblings, the "safe" company, and several other companies who have acronyms for names. I've been trolling this terrific forum to make sure I have made the right choice and that I'm not missing anything. There are many great contributors on here (mtmtnman, BPWY, and FremontREO to name a few) and I have learned a lot since I discovered this site a short while ago. This is my opportunity to share my observations. Although it's unfortunate I can't point you in a positive direction, hopefully I can at least shine some light on your current direction. Good luck!


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## Guest (Feb 10, 2012)

MFSORACLE,

Nice post...actually one of the best I have seen on any forum.

I hope this is fully understood by the P&P Contractors. As has been wrote many many times "the P&P Contractor IS NOT IMMUNE and we had better take the blinders off". The savvy businessman/woman will understand the flow-down liability that is coming. Its only a matter of time and that time is close. 

As all of us with any longevity if the P&P field can attest: we have seen contractors devastated from doing P&P, normally from not understanding the pecularities of this business AND now the servicers will devastate the remaining contractors THUS the reason for trying to recruit EVERYONE that can afford to purchase insurance so they have a place to collect from. 

A quote I used to love for P&P but no MORE:
*"Only those who will risk going too far can possibly find out how far one can go."* 
~*T. S. Eliot *


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## Guest (Feb 10, 2012)

Thanks Fremont!

Something I wanted to highlight about the FHA preservation work - even if it seems like things are rolling relatively smooth now with an NSP, I think the floodgates will open down the line with lots of chargebacks and big problems. HUD is under pressure to cut their losses and the banks and NSP's don't have the cushion they once had to soften the blow for the local guys.

I'm generally an optimistic person and I don't generally say "the sky is falling." However, with regard to FHA preservation work and the NSP's in general, the writing is on the wall - you just need to know how to read it.


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## Guest (Feb 10, 2012)

MFSOracle,
I read both articles you linked to and it reminded me of why I don't read or watch the news. I decided a long time ago that there is absolutely nothing good that I can gain by polluting my mind with all the negative news stories or how bad the economy is or how evil the banks are. In my opinion, those articles were stating the obvious that HUD needs to be less wasteful and more vigilant in holding the lenders accountable. Forget about the fact that in both articles each author was "speculating" about what could potentially happen and how HUD could potentially deal with it. Hell, I thought that HUD was already challenging 100% of the claims. 


On a more serious note, I've got to be honest with you. I have a few questions for you that popped into my head right after I read your post and those 2 articles. Please don't think that I am attacking you, because I'm not. I just think it might be helpful to you to think about this from a different perspective. So here is my immediate "knee jerk" reaction to your post:


1) Why is he surfing the internet on a Thursday and Friday afternoon? Shouldn't he be out in the field or doing something to build his business?


2) What is the "real reason" he is publicly "predicting" the collapse of the entire Property Preservation industry? Wait a minute. Why do I get the feeling that he is enjoying talking about all the bad stuff that might happen to an industry where he says he has worked in for" a long time."


3) He can't really be quitting the business because of an article where someone was "speculating" about HUD's financials. What is the real reason? 


4) How ironic it is that as he spreads this gloom and doom of a story he proclaims that he is generally optimistic. 


I have to pick my son up from school right now but I will continue this if you want.


P.S. I'm sure some of this forum's neighborhood smart as$es will be here soon to cause trouble. So to answer their question (before they even know they are thinking it). about why am I surfing the internet instead of working on this beautiful Friday afternoon. It's because I spent the last few years focusing on building my business so that it mostly runs itself.


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## Guest (Feb 10, 2012)

I know some simple ways they could save money. 
1. When someone reports that a roof is in poor condition, shingles cracking and breaking off. Fix it, don't wait for it to leak, the ceiling fall in and mold form (I'm seeing this a lot! 
2. When the basement is reported being soaking wet and bid to dry, don't wait 2 months to issue the dry work order. It's pointless at this point and mold is already growing. 
That's 2 things I'm seeing happen way too much. It's such a waste of money and really hurts the property value.


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## Guest (Feb 10, 2012)

SWOH REO said:


> I know some simple ways they could save money.
> 1. When someone reports that a roof is in poor condition, shingles cracking and breaking off. Fix it, don't wait for it to leak, the ceiling fall in and mold form (I'm seeing this a lot!
> 2. When the basement is reported being soaking wet and bid to dry, don't wait 2 months to issue the dry work order. It's pointless at this point and mold is already growing.
> That's 2 things I'm seeing happen way too much. It's such a waste of money and really hurts the property value.


Amen to that, was just at one yesterday , completely molded, everything! House sat 14 months wet. Bank asks WHY everything has to be gutted> ? ? ?


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## Guest (Feb 10, 2012)

MakeItEz2GetPd said:


> MFSOracle,
> I read both articles you linked to and it reminded me of why I don't read or watch the news. I decided a long time ago that there is absolutely nothing good that I can gain by polluting my mind with all the negative news stories or how bad the economy is or how evil the banks are. In my opinion, those articles were stating the obvious that HUD needs to be less wasteful and more vigilant in holding the lenders accountable. Forget about the fact that in both articles each author was "speculating" about what could potentially happen and how HUD could potentially deal with it. Hell, I thought that HUD was already challenging 100% of the claims.
> 
> 
> ...



Ez,
Thanks for calling me out - I appreciate your skepticism.

I try to stay away from the news as well however I've been keeping a close watch on what's going on in the preservation industry. You're welcome to take the articles as you wish - I would love for someone to share some positive news - however I see the articles as valuable clues in this puzzle. We all "should have" seen the housing bust coming (some did); we all "should have" seen the dot-com bubble getting ready to burst (some did); we all "should have" seen the preservation industry in a free-fall (some do). My intention is not to be a harbinger of doom and gloom - it's to share my struggle to come to grips with the future of this industry, particularly the dangers of touching FHA properties.

Here's some answers to your questions:
1) As I stated - I'm outta here - not building any preservation business - I'm moving in a totally different direction
2) The real reason is altruism - some may find this dialog helpful - everyone is invited to share their own insight
3) I'm not quitting because of the article - I committed to leave this industry a while ago however I can't stop following it - it's like watching a train wreck in slow motion - that's just how I feel.
4) I *am* optimistic, which is how I survived some really difficult times.

One question for you (and its rhetorical): if you take your gross preservation revenue from last year, subtract your expenses and taxes, and divide that by the number of hours you worked (including time spent thinking about your business), are you thrilled by that hourly rate? Now factor in the potential for ridiculous FHA back-charges. And factor in one (or more) of your clients going belly-up while they owe you too much money.

When I asked myself that question, and answered it honestly, I concluded that I needed to move in a different direction.


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## Sir Mixalot (Sep 17, 2012)

SWOH REO said:


> I know some simple ways they could save money.
> 1. When someone reports that a roof is in poor condition, shingles cracking and breaking off. Fix it, don't wait for it to leak, the ceiling fall in and mold form (I'm seeing this a lot!
> 2. When the basement is reported being soaking wet and bid to dry, don't wait 2 months to issue the dry work order. It's pointless at this point and mold is already growing.
> That's 2 things I'm seeing happen way too much. It's such a waste of money and really hurts the property value.





GPI said:


> Amen to that, was just at one yesterday , completely molded, everything! House sat 14 months wet. Bank asks WHY everything has to be gutted> ? ? ?


Yep, seeing a lot of this here in Florida as well. 
Heck, I'm seeing mold even if there isn't any water intrusion at all. The humidity is so bad here beachside, that If the power has been cutoff, mold starts to grow within a week without any air conditioning.


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## BPWY (Apr 12, 2012)

SWOH REO said:


> 2. When the basement is reported being soaking wet and bid to dry, don't wait 2 months to issue the dry work order. It's pointless at this point and mold is already growing.
> That's 2 things I'm seeing happen way too much. It's such a waste of money and really hurts the property value.





GPI said:


> Amen to that, was just at one yesterday , completely molded, everything! House sat 14 months wet. Bank asks WHY everything has to be gutted> ? ? ?






Hell two months is nothing.


Recently I had one that had water running, active busted pipe.....
I found w/o notes that mentioned the water had been running for 7 to 8 months.
And plenty of others that were left to sit empty and wet.


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## BPWY (Apr 12, 2012)

MFSOracle said:


> Thanks Fremont!
> 
> Something I wanted to highlight about the FHA preservation work - even if it seems like things are rolling relatively smooth now with an NSP, I think the floodgates will open down the line with lots of chargebacks and big problems. HUD is under pressure to cut their losses and the banks and NSP's don't have the cushion they once had to soften the blow for the local guys.
> 
> I'm generally an optimistic person and I don't generally say "the sky is falling." However, with regard to FHA preservation work and the NSP's in general, the writing is on the wall - you just need to know how to read it.






I feel protected from frivolous charge backs because last fall I changed business policies and have not issued a single additional insured on the new one!
From what my agent tells me they don't mess around with frivolous claims, the underwriter will investigate to protect me and their pocket book.


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## Guest (Feb 11, 2012)

MakeItEz2GetPd said:


> MFSOracle,
> I read both articles you linked to and it reminded me of why I don't read or watch the news. I decided a long time ago that there is absolutely nothing good that I can gain by polluting my mind with all the negative news stories or how bad the economy is or how evil the banks are. In my opinion, those articles were stating the obvious that HUD needs to be less wasteful and more vigilant in holding the lenders accountable. Forget about the fact that in both articles each author was "speculating" about what could potentially happen and how HUD could potentially deal with it. Hell, I thought that HUD was already challenging 100% of the claims.
> 
> 
> ...


 
First, you did attack the OP in a very public and real way.

Second, I don't recall seeing the OP state that he/she was getting out of the PP industry solely because the articles he/she posted about.

Third, the local smartas$es as you so eloquently referred to, have many years in the P&P / REO business and are not delusional about its current status, nor are they optimistic about the direction in which it is heading.

This is based on REAL WORLD EXPERIENCE.

A good businessman or woman is constantly monitoring their industry for trends, regulatory changes, litigous and potential loss situations, other avenues of revenue, the cost of doing business, etc.... I could go on and on.

If not, well then, they're just another potential "Titanic Captain". 

Based on the links at the bottom of your post it appears that you represent a REO company that's a regional of some sort.

So I ask, could you please post NCRS' current Fee Schedule, its Submitted Bid to Approved bid ratio ( Please take out bids that are cut.), what percentage does NCRS take out on work performed and what mark-up does NCRS apply to submitted vendor bids that are then submitted up the chain?

I look forward to hearing these positive answers as I know that many will find this info useful overall and in the decision process regarding applying to NCRS.


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## Gypsos (Apr 30, 2012)

DreamWeaver said:


> Third, the local smartas$es as you so eloquently referred to, have many years in the P&P / REO business and are not delusional about its current status, nor are they optimistic about the direction in which it is heading.
> 
> This is based on REAL WORLD EXPERIENCE.


Having many years of "REAL WORLD EXPERIENCE" does not give license for uncouth behavior.

I have noticed a trend towards unprovoked sarcasm and insults. To me it rings of a lack of professional decorum.

Regardless of the feelings of some people the industry will not completely collapse. There will always be a need for someone to do this type of work. The trick is to still be standing after the P&P and REO industry finishes reinventing itself.


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## BPWY (Apr 12, 2012)

Gypsos said:


> Regardless of the feelings of some people the industry will not completely collapse. There will always be a need for someone to do this type of work. The trick is to still be standing after the P&P and REO industry finishes reinventing itself.






I didn't take from the original post that he thinks the industry is going away.

Just that there is a potential for A LOT of problems to come down the pike for the contractors. Some real, others not so legit.


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## Guest (Feb 12, 2012)

Gypsos said:


> Having many years of "REAL WORLD EXPERIENCE" does not give license for uncouth behavior.
> 
> I have noticed a trend towards unprovoked sarcasm and insults. To me it rings of a lack of professional decorum.
> 
> Regardless of the feelings of some people the industry will not completely collapse. There will always be a need for someone to do this type of work. The trick is to still be standing after the P&P and REO industry finishes reinventing itself.


I agree, MakeItEz2GetPd's post was uncouth and lacked professional decorum.

The OP did not target anyone specifically as MakeItEz2GetPd did. 

Your response directed at me quite frankly surprises me considering your recent lengthy post in another thread regarding this industry.

It is true that there will always be a need for the P&P / REO industry.

Thus, there's a sucker born every minute to fill those $12 grass cuts, $45 winterizations, $12 per cubic yard (regardless of weight or material) orders etc. etc. etc...

I had a major National tell me that they had been in business for many, many years and in the same breath that they are always looking for new vendors. RED FLAG, RED FLAG, RED FLAG....

My question to them was why if you have been in business for several decades are you still in search of good vendors? The silence was deafening. They burn'em and churn'em... Many have commented about this very company on this forum.

For the record, your other post about the industry was spot on.:thumbup:


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## HollandPPC (Sep 22, 2012)

Every industry has its problems. This industry seems to be particularly sour. Whether it be the con artist nation, regional, or disgusting puke who calls himself a contractor. This forum all too often is the sounding board for hacks complaining about being screwed by hacks. Its amazing the crap that finds its way on this board sometimes.


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## Guest (Feb 12, 2012)

I think people in our industry don't having anyone in their lives who can even begin to understand how things work. So I think this forum is used a lot for venting, venting to people who know exactly what you are talking about and understand. I think there are many frustrated contractors and this forum is their only outlet. That's my view on it anyways. 
Maybe we should have a new thread just for venting because I know there are contractors who don't want to hear it. Just a thought.


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## HollandPPC (Sep 22, 2012)

SWOH REO said:


> I think people in our industry don't having anyone in their lives who can even begin to understand how things work. So I think this forum is used a lot for venting, venting to people who know exactly what you are talking about and understand. I think there are many frustrated contractors and this forum is their only outlet. That's my view on it anyways.
> Maybe we should have a new thread just for venting because I know there are contractors who don't want to hear it. Just a thought.


I do agree you on that one.


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## Guest (Feb 12, 2012)

It's not only the PP/REO contractors that are getting the screws put to them, it's also affecting the bottom line of the Brokers. I do alot of work (and get a % of there commission) for one of the bigger brokers in my area and they are getting squeezed on their commissions. A couple of their accounts went from a min. of $1000.00 per listing to $500.00 (these are for the toads that sell for less than $25000.00). It seems that there is no end to who and how the banks and Gov. insured morgage institutions will cut to the bone. I do see that things aren't getting better for us in the field, and the pressure is in the office as well.


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## GTX63 (Apr 12, 2012)

GaryArf said:


> It's not only the PP/REO contractors that are getting the screws put to them, it's also affecting the bottom line of the Brokers.


You can add the appraissers to that list as well. 
They have had their rates gashed for the work they do on the REO side.
In the private sector, the Dodd Frank bill put a whole lot more work on their backs and who pays for it? Why, you will, at your closing.


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## Gypsos (Apr 30, 2012)

DreamWeaver said:


> I agree, MakeItEz2GetPd's post was uncouth and lacked professional decorum.
> 
> The OP did not target anyone specifically as MakeItEz2GetPd did.
> 
> ...


I was not trying to direct an attack at you personally. Sorry if it seemed that way. I just have a cold right now and am a bit grumpy. I find it a bit disconcerting that when someone asks a question, especially new guys, they get sarcasm instead of an honest helpful reply.

I have ignored it so far, but it does get a bit annoying to hear everyone working for what is considered a cheap price called a hack or some other such derogatory comment. 

And if you mention that you work for a national and are subcontracting work for $25 a cut... OMG let the flaming begin. 

Really? It is called capitalism. I sub yards for $25 per cut and I do not advertise for the help. People who know I do this for a living want to feed their kids and they have asked me if they could sub work from me. I am honest and explain that all I can pay is $25 a yard. 

One guy is thrilled to get that. He already has a lawn business and has saturated his market area and has not been able to grow significantly in that last couple of years. I showed him what I get and offered to help him sign up as a vendor with my customer and show him the ropes. He has all the correct insurances. 

His standard price is $25 per yard so he is happy to work for me. So does that make me a hack? Am I now part of the problem? Or did I make it possible for someone to earn more than a subsistence income for his family by providing him work at a rate that he is happy to recieve?


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## brm1109 (Sep 17, 2012)

*Grass cut*

You mentioned the $25.00 grass cuts and I have to agree with you. This is my way of looking at it.
Here most of the yards are 5k. We charge our regular customers 25-30 per cut which is what 90% of the landscapers charge (sure some are more depending on circumstances). With that said if that is what we charge our regular customers, then why am I going to try to charge $50 or $60.00 because it is owned by the bank.
Am I a hack? no, I have all of the insurances and licenses and know that with overhead I still make a profit with that. Now will I charge $30.00 for over 10k property or one that is overgrown? Of course not. But in this as in any other business you need to know where the profit is and work within it.
The issues I have are with the ones that have no insurance. I know 1 guy that charges my neighbor $25.00 to cut their 75x 150 lot. He usually takes about 2 hours to do plus travels. He has no insurance and not even a truck. Those are the ones I can't deal with.


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## Guest (Feb 12, 2012)

What you can work for depends on what you have invested. For example it would take 560 $25 cuts just to pay for one of our commercial lawn mowers, not to mention maintenance and repairs. Sure you can cut the lawns with a $500 lawn mower purchased on Craigslist but that's not going to hold up long with over grown properties. That's just one expense I personally have to factor. 
Then there are vehicles, they must be reliable because a vehicle down will really put a dent in completing work on time. 
This leaves you with covering workers comp, liability and business auto insurance and the high taxes of working for yourself. Is there anything left for my time?


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## BPWY (Apr 12, 2012)

$25 for 5k or less isn't so bad, especially if you have whole blocks of them lined up to where you can knock out 4 an hr with 2 guys. $100 an hr isn't shabby money.


How ever not all of us live where thats possible to happen, and frankly I do not want to make that my business model! Good for the guys that do. Keeps those types of customers out of my hair. Oh wait, I don't have any.

My goal and niche is to maintain the demanding high end residential property.
Where they give out $25 to $100 tips on occasion.


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## brm1109 (Sep 17, 2012)

I am not saying that that is my whole business model. We also do trashouts for private customers and realtors and some construction. Right now though P&P is about 50% of our business but I am trying to focus more on the private sector.
Also I guess it depends on the part of the country you live in. The county I live in has 70 towns and the furthest is no more than 20 minutes away and as a whole we cover over 175 zip codes with the furthest being about 1 hour.
Of course I want to make the biggest profit possible just as I next guy but there are limitations.
The one thing I refuse to do is work for lowball customers, either private or some of these new p&p companies with the lowest fees.


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## Guest (Feb 12, 2012)

brm1109 said:


> You mentioned the $25.00 grass cuts and I have to agree with you. This is my way of looking at it.
> Here most of the yards are 5k. We charge our regular customers 25-30 per cut which is what 90% of the landscapers charge (sure some are more depending on circumstances). With that said if that is what we charge our regular customers, then why am I going to try to charge $50 or $60.00 because it is owned by the bank.
> Am I a hack? no, I have all of the insurances and licenses and know that with overhead I still make a profit with that. Now will I charge $30.00 for over 10k property or one that is overgrown? Of course not. But in this as in any other business you need to know where the profit is and work within it.
> The issues I have are with the ones that have no insurance. I know 1 guy that charges my neighbor $25.00 to cut their 75x 150 lot. He usually takes about 2 hours to do plus travels. He has no insurance and not even a truck. Those are the ones I can't deal with.


The reason I charge more for bank owned properties is follows:

Having to wait up to 90 days to get paid, if ever....
Photoing everything like it's a crime scene.
E&O insurance requirements.
Wanting a whole lot more then just a cut and weed whack.
Back charges for no real, logical reason.
Ridiculous timelines.
LIABILITY
Constant request to resubmit paperwork / photos that have already been submitted.
Hauling away clippings and associated cost to dispose of.

NONE of these things do I have to do for my homeowner clients.:no:

SWOH REO hit the nail on the head. 

Just one of my mowers new is over 6 grand and it's only a 34" cut to get into small gates.

Every business owner knows or should know their cost to operate and make a profit. 

Though as I've said before, I'd bet most on here have never sat down and actually calculated out what they need to make hourly just to cover costs, let alone make a profit.

JMHO


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## Guest (Feb 12, 2012)

Gypsos said:


> I was not trying to direct an attack at you personally. Sorry if it seemed that way. I just have a cold right now and am a bit grumpy. I find it a bit disconcerting that when someone asks a question, especially new guys, they get sarcasm instead of an honest helpful reply.
> 
> I have ignored it so far, but it does get a bit annoying to hear everyone working for what is considered a cheap price called a hack or some other such derogatory comment.
> 
> ...


No problem, just got over a pretty bad cold myself.

You quoted me so it appeared it was directed at me.

A perfect example of a hack is one that arrived at a site I was doing home improvement work on recently. He, His wife / girlfriend / mistress / servant / whatever and a small child, not more than 4 or 5 years old arrived to cut the lawn. They took the lawn mower out of the trunk of the vehicle, cut half the grass, weed wacked very little, blew nothing down, nor did they collect any clippings, snapped a few photos and I'm sure they were off to the next. 

This does way more harm to this industry than anything else. Why because it perpetuates the greed of these Nationals and Regionals.


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## Gypsos (Apr 30, 2012)

DreamWeaver said:


> No problem, just got over a pretty bad cold myself.
> 
> You quoted me so it appeared it was directed at me.
> 
> ...


I am with you on that one. The mower in a trunk, eh? Seen that one too. I run into this type of work on properties when they are first assigned to me. I hammer them on my initial inspections.


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## Guest (Feb 13, 2012)

DreamWeaver said:


> No problem, just got over a pretty bad cold myself.
> 
> You quoted me so it appeared it was directed at me.
> 
> ...


I can't be mad over this.. its not the guy with the mower in his trunks fault. And at least he may have found a way to feed his family. This is America , you should still be able to pick yourself up and get on your feet(at least he's willing to work).It's our faults, its the scumbag companies peddling low wages fault. If we band together and not except low/no pay orders things will change.


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## BPWY (Apr 12, 2012)

mbobbish734 said:


> I can't be mad over this.. its not the guy with the mower in his trunks fault. And at least he may have found a way to feed his family. This is America , you should still be able to pick yourself up and get on your feet(at least he's willing to work).It's our faults, its the scumbag companies peddling low wages fault. If we band together and not except low/no pay orders things will change.








> If we band together and not except low/no pay orders things will change.



Actually it won't....... because of the guy you talked about in the first part of your post.


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## Guest (Feb 14, 2012)

SWOH REO said:


> What you can work for depends on what you have invested. For example it would take 560 $25 cuts just to pay for one of our commercial lawn mowers, not to mention maintenance and repairs. Sure you can cut the lawns with a $500 lawn mower purchased on Craigslist but that's not going to hold up long with over grown properties. That's just one expense I personally have to factor.
> Then there are vehicles, they must be reliable because a vehicle down will really put a dent in completing work on time.
> This leaves you with covering workers comp, liability and business auto insurance and the high taxes of working for yourself. Is there anything left for my time?


I agree . I love it when these company try to tell me I should do the lawn cut for the as local lawn buss. The problem with this is there local. I donot get many property in the same town. Most I have a 30 minut drive between them. If could mow 30 or 40 lawns in the same area I could mow them for $25 or $30. P&P and landscape are not the same animal!


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## BPWY (Apr 12, 2012)

STARBABY said:


> I agree . I love it when these company try to tell me I should do the lawn cut for the as local lawn buss. The problem with this is there local. I donot get many property in the same town. Most I have a 30 minut drive between them. If could mow 30 or 40 lawns in the same area I could mow them for $25 or $30. P&P and landscape are not the same animal!








I'd tell em ..... look if you want to pay local prices then we'll cut out the pics, all of them and you guys send me a check EVERY week like clock work. Then we'll discuss local pricing!

Better yet send me a money order so that its the same as getting paid cash. :clap:
Not that I'd ever hide cash sales. :no: :no:
But I hear that its done. 




:laughing:


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## Guest (Feb 14, 2012)

BPWY said:


> I'd tell em ..... look if you want to pay local prices then we'll cut out the pics, all of them and you guys send me a check EVERY week like clock work. Then we'll discuss local pricing!
> 
> Better yet send me a money order so that its the same as getting paid cash. :clap:
> Not that I'd ever hide cash sales. :no: :no:
> ...


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## BPWY (Apr 12, 2012)

In 2011 Safeguard wanted me to cover the entire county I live in. I told em $50 no less for every one no matter how small it was, and up to 15k on the big ones.

They thought about it but came back with a big N O.
Oh well. Their loss. I seriously doubt they got the whole county covered for their rate.


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## Guest (Feb 14, 2012)

BPWY said:


> In 2011 Safeguard wanted me to cover the entire county I live in. I told em $50 no less for every one no matter how small it was, and up to 15k on the big ones.
> 
> They thought about it but came back with a big N O.
> Oh well. Their loss. I seriously doubt they got the whole county covered for their rate.


I tryied to get sign up with safeguard,never have heard from them. After reading all the stuff on here glad I didn`t . Don`t need another problem company to deal with


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## GTX63 (Apr 12, 2012)

Safeguard is no longer worth the hassle.


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## Gypsos (Apr 30, 2012)

Knock on wood...

So far I have been blessed. I rarely buy new equipment. I look for used with low hours and an issue that allows me to scoop it up cheap and repair it. There always seems to be some guy on CL who wants to sell the equipment he bought last year real cheap.


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## Guest (Feb 14, 2012)

Gypsos said:


> Knock on wood...
> 
> So far I have been blessed. I rarely buy new equipment. I look for used with low hours and an issue that allows me to scoop it up cheap and repair it. There always seems to be some guy on CL who wants to sell the equipment he bought last year real cheap.


I buy most my equipment used as well.My CPA tryied to get me two buy new instead of repairing old ones. I donot see it,paying $10,000 for a new.I just bought a 2006 john deere757 for $3000 (1100hrs).I do all my own maintains on them.My guy are rough on them and its hard enought to find people willing to work.


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## GTX63 (Apr 12, 2012)

The depreciation is why your CPA wants you to do it.
We don't buy much for our subs anymore. The guys we use for landscaping take much better care of their own equipment.


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## BPWY (Apr 12, 2012)

STARBABY said:


> I buy most my equipment used as well.My CPA tryied to get me two buy new instead of repairing old ones. I donot see it,paying $10,000 for a new.I just bought a 2006 john deere757 for $3000 (1100hrs).I do all my own maintains on them.My guy are rough on them and its hard enought to find people willing to work.








Watch out for that engine. The 700 series except for the 777 and 797 (they are liquid cooled) didn't have good enough cooling and burn up a lot of engines.

I got a better deal. :whistling 04 777 with 636 hrs for $3000. 
Just messin with ya. I hope you get many many hours of happy mowing.
Employees will never treat equipment the same as the owner. I keep after my guys, they do pretty good but I'm always watching.


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## Guest (Feb 14, 2012)

BPWY said:


> Employees will never treat equipment the same as the owner. I keep after my guys, they do pretty good but I'm always watching.



Ain't that the truth.


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## Guest (Feb 14, 2012)

DreamWeaver said:


> The reason I charge more for bank owned properties is follows:
> 
> Having to wait up to 90 days to get paid, if ever....
> Photoing everything like it's a crime scene.
> ...


...and the dominant factor in this observation is the fact that most people don't take into account the amount of time it actually takes to upload the photos and close the work orders. As a business owner you MUST factor every facet that goes into each individual job. Regardless if you have 1 or 100 to upload per day. That time must be physically tracked to justify the outcome. If you can still make it a profitable venture beyond the obvious + not so obvious costs involved then KUDOS to you. Personally I simply can't find any way to justify a $25 cut, given the recent requirements. 
appropriate business license/registration+general liability (to include landscaping is much costlier than say just "remodeling coverage")+E&O+Equipment cost+Equipment Maintenance/Fuel+Trailer Fees/Maintenance+Digital Camera (that is capable of time/date stamping)+Appropriate Safety Equipment+String/Trimmer Line+Lawn Bags/Space on Trailer for debris (ALWAYS residual debris on these properties)+Assuming the liability of previous contractor+constant badgering from coordinator + fear of charge back + high speed internet connection + 2 or so hours to close out w.o's =  that!


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## HollandPPC (Sep 22, 2012)

P3+ said:


> ...and the dominant factor in this observation is the fact that most people don't take into account the amount of time it actually takes to upload the photos and close the work orders. As a business owner you MUST factor every facet that goes into each individual job. Regardless if you have 1 or 100 to upload per day. That time must be physically tracked to justify the outcome. If you can still make it a profitable venture beyond the obvious + not so obvious costs involved then KUDOS to you. Personally I simply can't find any way to justify a $25 cut, given the recent requirements.
> appropriate business license/registration+general liability (to include landscaping is much costlier than say just "remodeling coverage")+E&O+Equipment cost+Equipment Maintenance/Fuel+Trailer Fees/Maintenance+Digital Camera (that is capable of time/date stamping)+Appropriate Safety Equipment+String/Trimmer Line+Lawn Bags/Space on Trailer for debris (ALWAYS residual debris on these properties)+Assuming the liability of previous contractor+constant badgering from coordinator + fear of charge back + high speed internet connection + 2 or so hours to close out w.o's =  that!


It is rare I agree with anyone on here but you are exactly right.


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## Gypsos (Apr 30, 2012)

So far my big equipment scores are:

A 36" snapper walk behind ztr, trailer, stihl trimmer & edger and an old green machine blower for $550.

A Kubota ZG23 with a blown moter and 1228 hours for $2,000. I rebuilt the motor and serviced it for about $1,000. Total cost about $3,000. For the record a Kohler 23HP motor will mow approximately 200 feet before the motor explodes if it has no oil in it. 

A few weeks ago I helped my dad get an X-Mark Laser 52" with 428 hours on it for $2,950. 

I almost had a brand new stihl trimmer for $100. Someone beat me to it.


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## Guest (Feb 15, 2012)

BPWY said:


> Watch out for that engine. The 700 series except for the 777 and 797 (they are liquid cooled) didn't have good enough cooling and burn up a lot of engines.
> 
> I got a better deal. :whistling 04 777 with 636 hrs for $3000.
> Just messin with ya. I hope you get many many hours of happy mowing.
> Employees will never treat equipment the same as the owner. I keep after my guys, they do pretty good but I'm always watching.


Just a little on the air cooled 25 hp. You have to keep grass cleaned out from between the head and heat sheild. If you don`t will overheat and cause you burn a valve. I myself have had good luck with the air cooled motor. It there *amn hydro pump that give me a fit($700 ea for pump)


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## JFMURFY (Sep 16, 2012)

In light of what I read in the links of MFSOracle's starting thread, it is clear that shortfalls need to be made up in Governmental claims. I for one will not put myself or my company in a positon for a claim I work on to be denied. Simple reoccuring P&P work won't be denied. For out of HUD/FHA Scope Requested Services... I provide a written Bid or Proposal that has the legal jargon required in AIA type contracts. If my clients accept the Bid, the work gets completed, if they change it or attemt to apply their in-famous Marshall-Swift estimating tool to it...simple I turn it down as they are rejecting "my" proposal. Let'em find someone else. 
For some reason this industry operates outside the norms of the normal contracting realm...having been in the public and private enviro/site contracting world. If I'm not low bid or my qualifyers aren't acceptable to my client I don't get or accept the work ...they can move... It's simple don't let others dictate to you what your time, materials, and energy are worth. or what your profits ought to be, and trust your gut it won't steer you wrong.


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## Guest (Feb 15, 2012)

JFMURFY said:


> I for one will not put myself or my company in a positon for a claim I work on to be denied.


JFMURFY,
I wish it was that simple however once you touch an FHA property, whether it's the initial rekey / winterizeration, or a simple bid, you have exposure - even if you didn't do any work. I've seen some really off-the-wall attempts at chargebacks that are related to the *information* we provided - the chargebacks had nothing to do with any work performed. Once you visit the property, you are now liable for *anything* the national needs you to be liable for, at their discretion. You may never complete any work on that property but that doesn't change your level of exposure.

Here is a realistic example of your exposure: You are Contractor B and you arrive at a house with a flat roof at 8:00 AM after it snowed the night prior - there are several inches of snow on the roof. This is your first visit to the property and you are there on a request to bid for debris removal. Of course, you are now liable for a full home inspection / damage report / renovation bid so you spend an hour or more at the property documenting the debris/damages/preservation bids. Because the house is so full of trash and feces on the floor, you fail to get photos of the ceiling in the back bedroom. That shouldn't matter because it was not damaged at the time of your visit (but it does matter). Later that day, say 4:00 PM, after the sun was blasting the roof and melting the snow all day, Contractor C shows up to bid the debris removal - it is also his first visit to the property. He finds water stains on the back bedroom ceiling and reports roof / water damage however because there is still snow/ice on the roof, he can't get access to determine the extent of the damage or to find the proper resolution. He submits a bid to remove the snow from the roof to inspect it. The national now has what it was primarily after - 2 more bids for the debris which they can use to shop for the best deal. Here's the problem - the national mishandled the new report of water / roof damage because they were really only worried about the debris - they had already provided the most critical damage report when Contractor A performed the initial rekey. Two weeks pass (or a month, or six months) and Contractor A, B, or C gets approval to remove the debris; at that time they find the ceiling in the back bedroom collapsed and there is water damage all over the walls and hardwood floors. The Contractor reports the leak and damage. The National says, oh $h1t, we never reported a roof leak here, we need to research this to see who is responsible for the damage. Guess what? Mr. Contractor B, you don't have a leg to stand on. You cannot *prove* the ceiling was undamaged at the time of your visit because you did not provide a photo of the ceiling. But you were only there to give a bid for the debris, right? No, you touched the house, you are responsible for reporting *any and all* damages / conditions. But what about the report from Contractor C later that day? You don't know about that report, do you? Why can't you just bid to repair the roof and the water damage? Because Mr. National did not report a roof leak to HUD on the initial visit (because there wasn't one) however, per HUD's perspective, the leak was missed somewhere along the way and it is now mortgagee neglect. Can you blame HUD? It really was mortgagee neglect; perhaps it was a simple oversight or a comedy of errors, but that's irrelevant. You are on the hook.

As ridiculous as that sounds, it's the absolute truth - check with your regional coordinator at any national - if they tell you otherwise then they don't know how their "loss mitigation" or "resolution analyst" department works; or they're fibbing.

The sky is not falling - but the window of opportunity is shutting on FHA preservation work and, in my opinion, threatens the viability of the Nationals who engage in it. Please prove me wrong!


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## GTX63 (Apr 12, 2012)

Your story is proven true every day.


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## JFMURFY (Sep 16, 2012)

MFSOracle said:


> JFMURFY,
> I wish it was that simple however once you touch an FHA property, whether it's the initial rekey / winterizeration, or a simple bid, you have exposure - even if you didn't do any work. I've seen some really off-the-wall attempts at chargebacks that are related to the *information* we provided - the chargebacks had nothing to do with any work performed. Once you visit the property, you are now liable for *anything* the national needs you to be liable for, at their discretion. You may never complete any work on that property but that doesn't change your level of exposure.
> 
> Here is a realistic example of your exposure: You are Contractor B and you arrive at a house with a flat roof at 8:00 AM after it snowed the night prior - there are several inches of snow on the roof. This is your first visit to the property and you are there on a request to bid for debris removal. Of course, you are now liable for a full home inspection / damage report / renovation bid so you spend an hour or more at the property documenting the debris/damages/preservation bids. Because the house is so full of trash and feces on the floor, you fail to get photos of the ceiling in the back bedroom. That shouldn't matter because it was not damaged at the time of your visit (but it does matter). Later that day, say 4:00 PM, after the sun was blasting the roof and melting the snow all day, Contractor C shows up to bid the debris removal - it is also his first visit to the property. He finds water stains on the back bedroom ceiling and reports roof / water damage however because there is still snow/ice on the roof, he can't get access to determine the extent of the damage or to find the proper resolution. He submits a bid to remove the snow from the roof to inspect it. The national now has what it was primarily after - 2 more bids for the debris which they can use to shop for the best deal. Here's the problem - the national mishandled the new report of water / roof damage because they were really only worried about the debris - they had already provided the most critical damage report when Contractor A performed the initial rekey. Two weeks pass (or a month, or six months) and Contractor A, B, or C gets approval to remove the debris; at that time they find the ceiling in the back bedroom collapsed and there is water damage all over the walls and hardwood floors. The Contractor reports the leak and damage. The National says, oh $h1t, we never reported a roof leak here, we need to research this to see who is responsible for the damage. Guess what? Mr. Contractor B, you don't have a leg to stand on. You cannot *prove* the ceiling was undamaged at the time of your visit because you did not provide a photo of the ceiling. But you were only there to give a bid for the debris, right? No, you touched the house, you are responsible for reporting *any and all* damages / conditions. But what about the report from Contractor C later that day? You don't know about that report, do you? Why can't you just bid to repair the roof and the water damage? Because Mr. National did not report a roof leak to HUD on the initial visit (because there wasn't one) however, per HUD's perspective, the leak was missed somewhere along the way and it is now mortgagee neglect. Can you blame HUD? It really was mortgagee neglect; perhaps it was a simple oversight or a comedy of errors, but that's irrelevant. You are on the hook.
> ...


I don't think you are wrong... so I can't prove you wrong. It happens every day... Whether I as a contracor am liable is a matter for the courts and attorney's. My protection is in the fact of documenting what I am requested to review and document. My notes always include this is what you sent me me for , this is waht was looked at... in the future though, and thank you for the tip... NO OTHER ISSUES were observed at the property at this time and place... Christ... I was thinking the other day...I need an attorney to follow me around... 
Thanks again...


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## thanohano44 (Aug 5, 2012)

JFMURFY said:


> I don't think you are wrong... so I can't prove you wrong. It happens every day... Whether I as a contracor am liable is a matter for the courts and attorney's. My protection is in the fact of documenting what I am requested to review and document. My notes always include this is what you sent me me for , this is waht was looked at... in the future though, and thank you for the tip... NO OTHER ISSUES were observed at the property at this time and place... Christ... I was thinking the other day...I need an attorney to follow me around...
> Thanks again...


You might also want to double check your contract and all subsequent memos that are covered per what you signed on your contract. Most national and servicing contracts include a clause about them making any changes being a part of your contract. (addendum's)


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## JFMURFY (Sep 16, 2012)

thanohano44 said:


> You might also want to double check your contract and all subsequent memos that are covered per what you signed on your contract. Most national and servicing contracts include a clause about them making any changes being a part of your contract. (addendum's)


In my experience...addendums in a contract must be acknowledged in writing by both parties... However as the show is run by idiots hiring idiots nothing suprises me.... the attorney's and courts figure it out in the end.


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## thanohano44 (Aug 5, 2012)

JFMURFY said:


> In my experience...addendums in a contract must be acknowledged in writing by both parties... However as the show is run by idiots hiring idiots nothing suprises me.... the attorney's and courts figure it out in the end.


Trust me. Your "read email" receipt is all that they need. Or an email from stating that you received it.


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## GTX63 (Apr 12, 2012)

You can have a trailer full of lawyers and video your every action from dawn to dusk, the fact is if you do reoccurring work for a client, they can bite you at any time. We were issued a chargeback for work completed 14 months earlier because the National was audited, and found that they didn't complete their end of a Fannie Mae in the alloted time. The chargeback came to them and they bounced it over to us. Had nothing to do with anything we did. They pull your money out, now you just try and go get it. If you are stupid enough to list someone like Safeguard or FAS as additional insured, they will use your policy as a "get out of jail" free card. They contact their arbitration attorney, who mediates a settlement, and they in their own good time get around to notifying you.


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## JFMURFY (Sep 16, 2012)

GTX63 said:


> You can have a trailer full of lawyers and video your every action from dawn to dusk, the fact is if you do reoccurring work for a client, they can bite you at any time. We were issued a chargeback for work completed 14 months earlier because the National was audited, and found that they didn't complete their end of a Fannie Mae in the alloted time. The chargeback came to them and they bounced it over to us. Had nothing to do with anything we did. They pull your money out, now you just try and go get it. If you are stupid enough to list someone like Safeguard or FAS as additional insured, they will use your policy as a "get out of jail" free card. They contact their arbitration attorney, who mediates a settlement, and they in their own good time get around to notifying you.


All right so may I ask "why we all do it"... do we enjoy the abuse in a sick way, or is the reward worth the risk. For me...I hate arguments, I hate pointing out reality to "clerks of the work" when you're trying to explain to someone who would rather be playing the latest and greatest video game.
I thought this blog was to bring experienced minds together to share and overcome S--t like this. Call me Alice...but I for one document, phone calls with follow-up emails so its in writing, computer's and emails are backed up. If charge-backs and claims are made against me or my firm, they have a fight on their hands. If it means losing the business then so be it...I was looking for a job when I started this one.
So enough of my rant... let's here about how others protect themselves rather than how big big brother is beating is up all the time.


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## Guest (Feb 16, 2012)

P3+ said:


> ...and the dominant factor in this observation is the fact that most people don't take into account the amount of time it actually takes to upload the photos and close the work orders. As a business owner you MUST factor every facet that goes into each individual job. Regardless if you have 1 or 100 to upload per day. That time must be physically tracked to justify the outcome. If you can still make it a profitable venture beyond the obvious + not so obvious costs involved then KUDOS to you. Personally I simply can't find any way to justify a $25 cut, given the recent requirements.
> appropriate business license/registration+general liability (to include landscaping is much costlier than say just "remodeling coverage")+E&O+Equipment cost+Equipment Maintenance/Fuel+Trailer Fees/Maintenance+Digital Camera (that is capable of time/date stamping)+Appropriate Safety Equipment+String/Trimmer Line+Lawn Bags/Space on Trailer for debris (ALWAYS residual debris on these properties)+Assuming the liability of previous contractor+constant badgering from coordinator + fear of charge back + high speed internet connection + 2 or so hours to close out w.o's =  that!


Exactly the point that I was making.


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## brm1109 (Sep 17, 2012)

*Grass cuts*

I don't want people to misunderstand when I mentioned $25.00 grass cuts.
Yes I have some customers that I charge $25.00 to and some more, it is based upon the distance and conditions. Also around my area the majority of landscapers charge $25-30.00. Like I mentioned most properties is 5k.
The only ones that I charge $25.00 for a national is because there are a few within a couple of blocks of where we are and there are 2 that happen to be on the same street as my regular customers.
Those are the ones I do it for. The rest of them is not full HUD rates but I do charge more.
I just wanted to clear of any misunderstanding.


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