Boom times for ‘trash-outs,’ in Oregon and elsewhere Portland Oregonian
Safeguard Properties was mentioned in an article in the Portland Oregonian about the expanding sales of “trash-outs” and property preservation services.
Boom times for ‘trash-outs,’ in Oregon and elsewhere
by Richard Read, The Oregonian
Friday February 27, 2009, 10:40 PM
Federico “Fred” Caprotta breaks into houses for a living, removes the contents and fixes up the homes for sale.
He marvels that neighbors hardly ever call the cops. In fact, what Caprotta does — on behalf of big-name banks — is quite legal.
Caprotta is a former real estate broker who bailed out of property sales when the market and profits collapsed. For nine months, seven days a week, he has supervised “trash-outs” in a trade more delicately known as property preservation.
Business is booming in the low-profile industry as millions of U.S. homeowners enter foreclosure. One of the biggest players, Safeguard Properties, services 1 million properties a month, checking on them, repairing them, mowing lawns and cleaning them for Realtors to show. The Cleveland company’s sales, which it won’t disclose, have jumped more than 30 percent in a year.
Caprotta, 50, invested $70,000 with a partner in his Portland venture, Global Property Preservation. He thought it could be lucrative. But trucks break down. Pay comes late or not at all. Expenses rise. For all his effort, he’s not making money.
Still, Caprotta prides himself on compassion for people losing their homes. After all, he’s losing his own.
“My property that I bought and remodeled is going up in auction … due to foreclosure,” Caprotta says. “I could get all bummed out and cry.
“But whether I have property or no property, or money or no money, I’m still me.”
Foreclosures have reached epidemic proportions in the United States. They accounted for 45 percent of all residential real estate transactions during the fourth quarter of 2008, according to the National Association of Realtors.
Florida and Southern California were the hot spots. But in January, Oregon had the fifth-highest foreclosure rate in the country.
When lenders seize houses, people suffer, whether they were living beyond their means, lost their jobs or suffered some other calamity.
Trash-out contractors defend their work. They say that rather than profiting off misfortune, they fix up properties and preserve values of neighboring homes.
Banks — or, more likely, middlemen — pay anywhere from $1,200 to $1,600 for a trash-out, yet amounts vary widely depending on conditions of a house.
Windol Cador, of Duke Development in Portland, once did new construction but got into property preservation seven years ago. He has 10 guys in two crews.
Sometimes they spend five days working on one house. “We want the neighbors to be happy,” Cador says.
Cador’s crews put aside items of value for previous owners. “You find cool things,” he says. “We recently found a whole printing press in a garage. One guy had a comic-book collection that he probably spent years collecting.”
Some trash-out guys say they make real money.
Frank Patrick is a broker who began offering services for real estate-owned, or REO, properties five years ago. Patrick, a Kansas City, Mo., native, founded REO ResQ, specializing in bank-owned foreclosed properties. He built the company into a franchise now moving into 36 states.
Patrick, 41, moved to Phoenix when he saw Arizona foreclosures explode, leaving his brother, Scott, to run things in Missouri. “If I’d had another brother,” Patrick says, “I would have sent him to California and Florida.”
REO ResQ has trained more than 100 contractors nationwide. “The average preservation job is around $1,350, and there’s going to be a couple million of ’em this year,” Patrick says.
He expects a backlog of foreclosures left from moratoriums and slow-moving bank mergers to hit the market this summer.
“All at once the yards won’t be mowed and the pools will be green,” Patrick says. “In Kansas City in the summer, we mow 370 yards. This year we’ll probably go to 700.”
Everything is documented. “An average job would take us about four hours and result in about 250 photographs,” he says, “so we have proof.”
As unemployment climbs, Patrick gets more applications. In Phoenix last September he ran a Craigslist ad for a $10-an-hour job outside in the heat and got 1,170 applicants. “I had people offering to work for free for a week, just to prove themselves,” Patrick says.
Patrick heads the American Society of REO Specialists, which has grown to about 700 members since starting last June. He says the industry is too fractured to estimate total revenues. He expects business to continue apace for five or six years as subprime loans, adjustable-rate mortgages and rising unemployment unleash successive waves of foreclosures.
“We wish we were all back in the heyday of the new-construction boom,” Patrick says, “but that’s not the reality.”
Those who walk into foreclosed homes describe entering a “Twilight Zone.”
Portland-area appraiser Sara Goodwin recalls walking through an abandoned house. “It was as if the occupants were abducted rather than left of their own volition.
“I walked into a fully furnished house … dishes in the sink, pictures on the walls, everything. The only thing that would make me suspect abandonment was the foul smell of stale water in the plumbing.”
Sometimes it’s just the opposite. A house is missing fixtures and appliances. Walls, banisters, counters and cabinets are bashed and scarred.
The culprit could be an angry former owner or an unpaid subcontractor who backed a truck into the garage and took the appliances, says Don McCredie, a Portland-area Realtor specializing in foreclosed properties.
“The subs say, ‘I’m going to go get my stuff,'” McCredie says. “They’re mad at the builder and they take it out on the property.”
Jeff Andrade, owner of Beaverton’s Frontline Resources, will never forget a trash-out job where he walked into an upstairs bedroom and found a vagrant sleeping. “I don’t know who was more scared,” Andrade says, “him or me.”
Airika Waible, a West One Properties broker, hates stepping into short-sale houses — those where a house is sold for less than the bank is owed.
“They have, like, little kids’ rooms, and the kids’ rooms are decorated,” Waible says. “They have a real life there, living there until it sells. Their little shoes are there, and their backpacks and their clothes.”
Waible, who lives in a Wilsonville neighborhood, knows how it feels. She and her husband and two children lived in a Street of Dreams house with acreage.
“It got foreclosed on,” she says. “And, by the way, we left everything in it.”
Fred Caprotta, the trash-out entrepreneur facing his own foreclosure, sees the smashed-up houses, too, along with some in showroom condition. He finds fleas, garbage and mummified pets, abandoned by owners to die.
“It’s really sick how some people live,” Caprotta says.
Departing owners don’t realize, he says, that when they shatter marble counters and break every oak spindle on a staircase, the carnage comes back to haunt them. When a bank writes off a loss on a loan, part of the loss may count as income for the borrower. The greater the loss, the more taxes the borrower must pay on that income.
Caprotta, an Argentine who moved to California as a youngster, has worked on Canadian oil rigs and pipelines, hitchhiked twice to Alaska and ridden his motorcycle there in the dead of winter.
He served in the Argentine military during the Falklands war. He addresses his crews in Spanish and his clients in English.
Caprotta says his business partner has quit. The father of three plugs away at a computer in a tired-looking office dotted with space heaters and overflowing trash containers.
Crew members botch jobs. Bank agents find ways not to pay. House occupants yell at him. “I feel for them,” he says.
Caprotta sees the foreclosure crisis as a giant game of musical chairs in which some people got caught without chairs. No one cried when the housing market soared, he says. Yet when excesses bring tragedy, he says, everyone blames someone else.
Caprotta says neither the government nor trillions of dollars will fix the situation. Instead, he says, it will take a “shift in consciousness … where we put the hopes and safety of all of us ahead of the individual.”
“Sometimes,” he says, “that involves some personal sacrifice for the greater good of all.”