'Trash-out' firms clean up in foreclosure biz

— -- Joe Cino used to buy and sell real estate. Two years ago, while he was looking for foreclosed properties, he came across an advertisement for foreclosure cleaning businesses.

He decided the timing was good, so he jumped in. Now, he says his company, Reliable REO (Real Estate Owned) Services in Rancho Mirage, Calif., cleans out 10 to 20 homes a day.

It also maintains about 500 vacant homes a month — doing everything from maid and pool service to mowing lawns. He says he has about 50 subcontractors working for him.

"It's an unfortunate business to be in, it's sad, but the reality is, someone has to do it," Cino says.

Foreclosures are creating an economic boon for entrepreneurs, as brokers and investors require services to clean or "trash-out" homes seized by lenders.

While banks typically hire a real estate agent to resell foreclosed homes, someone has to come in and clean it up from the previous residents. It costs about $2,000 to clean out each home, according to Todd Drake, who has operated Empire Real Estate Management in Latham, N.Y., since 2003. The price depends on how much trash there is to clear and how much damage to fix, he said.

With the 575,090 loans that entered into the foreclosure process nationwide in the third quarter of this year, according to the Mortgage Bankers Association, business is brisk. There are no national numbers on how many new trash-out businesses have developed during the current economic crisis, but an Internet engine search reveals hundreds of listings nationwide. Entrepreneur websites, including explorestart-ups.com, point to starting a foreclosure cleanup business as a potential moneymaker. Entrepreneur Magazine included a foreclosure cleanup business — Cyprexx Services of Brandon, Fla. — in its 2008 "Hot 100 Fastest Growing Businesses" list.

Cino says he's seen everything from moldy food and dead and living rats to copper wire ripped from walls. Sometimes he finds the residents still inside and unready to leave.