JF1719: Working With Commercial Real Estate Cleaning Companies #SituationSaturday with Edgar Aguilar
Edgar took over a struggling janitorial company at the age of 23 in 2008. He took that struggling business and grew it into a successful commercial and construction cleaning company, helping investors clean up their properties after construction. It wasn’t always easy, Edgar worked two jobs for some time. He’s had success, but some of the business slowed for a while, Edgar did not given up, he’s working harder than ever to get his business to levels it has never reached. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
Best Ever Tweet:
“I didn’t know how I would pay the bills, but I knew that if I kept learning, and putting myself out there, I would make it” – Edgar Aguilar
Edgar Aguilar Real Estate Background:
- Owner of Legacy Construction Cleaning
- Has been working with investors and construction crews, cleaning facilities for over 20 years
- Based in Denver, CO
- Say hi to him at https://www.legacyconstructioncleaning.com/
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Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast, where we only talk about the best advice ever, we don’t get into any of that fluffy stuff.
First off, I hope you’re having a best ever weekend. Because today is Saturday, we’ve got a special segment for you called Situation Saturday. Here’s the situation – you want to learn about the different aspects of investing in real estate, and what are those aspects that you probably don’t know or probably haven’t studied a whole lot is the commercial cleaning aspect of the business. Working with companies that come in and actually do the cleaning.
We’re gonna be talking to a Best Ever guest who is the owner of Legacy Construction Cleaning, and has been working with investors and construction crews, cleaning facilities for over 20 years. First off, how are you doing, Edgar Aguilar?
Edgar Aguilar: I am great, Joe! Thank you for having me on.
Joe Fairless: Yeah, my pleasure. Looking forward to our conversation. I guess what would be helpful is if you wouldn’t mind just telling us a little bit more about your background and your company’s current focus.
Edgar Aguilar: Yeah, I would love to, Joe. Thank you. Well, initially we took over the company about ten years ago. In 2008, in the best market ever, we took over a struggling janitorial company. I say that lightly, because 2008 was crazy… Well, little did I know at that point that we were going through one of the hardest recessions ever.
Joe Fairless: Sure.
Edgar Aguilar: So here I am, 23 years old, and my [unintelligible [00:02:32].16] had just passed away from lung cancer; I had just graduated from business management school, with the passion of one day owning my own business of something. Well, after he passed away, nobody really wanted to take over the company… So I put my hand up and I said “I’ll take it over”, thinking that I knew everything about business because I had just graduated business school. Well, that’s a joke, because as we all know, that’s not the way it goes.
At that point I was also working for corporate America, and I was running the job part-time; I continued doing that for the next four years. Going to corporate America, having an 8-to-5 job, and then going to go clean afterwards (or before), and doing that year after year… Well, at 25 I made the most money I had ever made, doing both gigs… And at that point I thought I was on top of the world.
Joe Fairless: How much were you making?
Edgar Aguilar: I made six figures. Woo-hoo! With my corporate job and the business. And at 25 I believed that I was pretty unstoppable, making more money than I had ever made, more money than my parents had ever made.
Joe Fairless: That’s a ton of money for anyone, but a 25-year-old, six figures – yes, please.
Edgar Aguilar: [laughs] That’s the way I felt, and nobody could tell me anything. Well, we fast-forward three years; now I’m 28 and the income kind of dropped, and we’re not really gaining no momentum on the business, and corporate America was — it was a very stressful situation, just going in to a job that you don’t like, doing something that you don’t wanna do, just for a pay check week to week. And I’m sure a lot of listeners can relate to this, when you’re stuck at a job just for a pay check, and you’re not happy about what you’re doing.
Luckily for me, I happened to put “personal development” one day on YouTube, and a course of Napoleon Hill came up. He was talking about personal development, about your goals, about a mastermind group… And that completely revolutionized the way I started thinking from that point going forward. I was like, “Man, who is this guy?! What is this whole thing about personal development? The more you learn, the more you earn… What is this about personal development?” It really intrigued me, so I started taking notes. I filled up a whole notebook of what Napoleon Hill was talking about.
Then at 29 I said “This is it with corporate America. I can no longer do this.” Fast-forward to when I was 30, actually that same year at 30 I put in my [unintelligible [00:05:40].12] and I jumped full-time into business ownership. Scariest thing I’ve ever done. It was the scariest thing, and the happiest feeling I had ever felt.
At this point I have three kids, I don’t know how I’m gonna be paying for health insurance, I don’t know how I’m gonna be paying the bills, but I knew that if I kept learning and just putting myself out there, I would make it. Well, six months after I made that transition, I landed a huge janitorial account, where I was bringing in $2,500/month. At that point it was enough money to pay all my bills and to just continue with the business. I knew that was the guiding light, because at that point it was the same amount of income that my corporate job was paying.
So I just had to work my butt off every day, for the next few years. I worked, I cleaned… Our focus was construction cleaning, so we would go in the morning, clean a custom-built home, and then at night I would go do my janitorial gig. That happened now for the next two years. I did that every day, worked from 7 AM to midnight, go home sleep for a few hours, get up and do it again.
I started getting a little bit of momentum, so I got one employee, two employees, three employees, I started putting them in teams, putting them in different offices… Now we have a team of 12, we have 30 different office buildings that we clean, and we have about 20 different builders that we work with… Anywhere from custom-built homes, remodels, pop-ups, apartment buildings, restaurants… We’ve pretty much done every type of construction cleaning that you could imagine. But I really put a lot of the emphasis on my personal development, because those two years that I was out there cleaning from 7 AM to 12 midnight, I had audiobooks just playing. While I was cleaning toilets, I was learning. While I was sweeping and mopping and vacuuming, I was learning. I put over 50 different books, from John Maxwell, Darren Hardy, Napoleon Hill, into my inner circle. Once I started doing that, I really saw my income jump. In the last three years we have been able to double the business each year, year-over-year.
Joe Fairless: Wow. That’s impressive, especially that you took a company and have grown it to this extent, and have scaled it… And clearly, the focus on personal development is at the forefront and is the foundation of everything, plus you actually acting on the personal development tips that these individuals give you. You need to actually do things that people suggest you do (first is just listening to them) and you clearly have done them…
Let’s get into some details about the business, because the audience is real estate investors, and it’d be good to hear from the perspective of someone who we would hire, how you price your jobs, things to consider as a real estate investor, knowing what you know, when we’re hiring a company like yours… So what can you tell us about some of your business specifics?
Edgar Aguilar: Great question. Our pricing is normally on a per square basis, and I’m sure that a lot of real estate investors, flippers like to know solid prices on it; what will happen, in my experience, is when I go in to give a bid for a new builder, I am normally competing with the smaller mom and pop shops. That means if we do it right, there’s gonna be three separate bids, or four different bids from different companies.
Normally, you have your lowest two, and then your higher two. Normally, your lower two cleaning estimates are gonna come from people who not only own the business, but are actually gonna be on-site, cleaning the job site… Which is a double-edged sword. It’s good on one hand, because you’re gonna get the lowest price, but on the other hand, you have the actual owner in there cleaning, and they’re paying themselves a very minimal hourly fee. And that’s normally how you could get to the lower price.
Joe Fairless: Why is that a bad thing, if you hire someone who is the owner of the company and they’re paying themselves a lower fee?
Edgar Aguilar: It’s bad because you will never see any growth with that company. It was like what I was doing five years ago, and I had a very small mindset.
Joe Fairless: I’m thinking about it from a real estate investor standpoint, not your perspective. So if I’m looking at bids and one of the lower bids is with a group where the owner is gonna be cleaning, I don’t care what they pay themselves, as long as I’m getting the lower bid and a good service.
Edgar Aguilar: Very good, and a lot of people like that. A lot of people like to see the owner actually out there cleaning. The only problem with that is how long can they do that for? If we’re looking at the long-term game and you’re doing multiple flips, they will be good for one season. But if you’re doing multiple projects throughout the years, they might not be able to sustain that type of job for a long period of growth.
Joe Fairless: Okay.
Edgar Aguilar: For example, for me – I have all employees, I’ve got them under insurance, workmen’s comp, paying my taxes… So we are a total legitimate company, and sometimes when we deal with the smaller companies, especially the owners and the lower estimates, they’re not insured, they’re not bonded, they don’t have workmen’s comp, they don’t have standards, and they don’t have any long-term growth. So if you are in the game long-term, it’s better to just hook up with a cleaning company that has been around for a while and that is doing everything right by the books. Unfortunately, you’re gonna pay a little bit more with that.
So it’s a double-edged sword. You could go on one side with that lower fee person; the owner is doing it… But how long can they sustain that? Let’s say you have three flips, or four flips, or multiple projects, or you have a 27-unit apartment building – they could only do so much. And if you have an apartment building, 27 units or 30 units, and then you have two other houses, and then you have a commercial space that all need to be cleaned within the same week, a one-man crew normally can’t handle something like that. You need to have multiple teams. Because of that, you pay a little bit of a premium price.
Joe Fairless: Okay, it makes sense.
Edgar Aguilar: Yeah. So that would be the biggest thing.
Joe Fairless: And you said you charge on a per square foot basis – is that typical for the industry?
Edgar Aguilar: Yes. Or some people do T&M.
Joe Fairless: T&M… What’s that?
Edgar Aguilar: Time and material.
Joe Fairless: Oh, got it. Okay. So per square foot basis – what’s the range that price will be from a per square foot basis?
Edgar Aguilar: Now, I am in the Denver market area, so that means that there’s a lot of construction going on around here. People are flocking into our state and into the Denver Metro Area, so the competition is pretty high. We are about 40 cents/square foot, up to 60 cents/square foot for residential. That’s kind of average. You can find that throughout our industry when it comes to construction cleaning.
Joe Fairless: Okay.
Edgar Aguilar: So if you’re gonna do a flip, 1,000 square feet, at 40 cents/square foot you’re looking at $400. Pretty typical.
Joe Fairless: Cool.
Edgar Aguilar: Now, if you’re building a restaurant, because it’s a lot more detailed work, they’re gonna be putting in a lot more elbow grease; they’re gonna have to clean the walls, the stainless steel – now our pricing changes closer to $1/square foot. If it’s a 5,000 square foot Chick-fil-A, or just any type of restaurant, it’s normally closer to $1/square foot. Now, that normally does also include all the window paints with that $1/square foot, and it also normally includes two cleanings. One, the pre-construction cleaning, just to kind of get it up to the CO standards, right before they have the health inspection, and then the final clean right before they open.
Joe Fairless: Got it. And the 40 to 60 cents/square foot for residential construction cleaning – you’re talking a fix and flip house, anyone who does ground-up development… Those are the two primary residential construction cleanings, right?
Edgar Aguilar: Right.
Joe Fairless: Okay. 40 to 60 cents. What would influence it being 40 cents, versus 60 cents?
Edgar Aguilar: Normally, anything over 5,000 square feet would be on the 60 cent mark, because you’re gonna be there a lot longer; there’s a lot more detail-oriented work, and it’s just a bigger space, more to cover. Normally, the bigger the project is (over 5,000 square feet) that’s when you’ll see a 50 or 60 cents charge for that project. It’s just a lot more detail work.
Joe Fairless: So I would think that the bigger the project, the cheaper it would be, because then you’re in one place longer, and you don’t have to travel from job to job, therefore there would be economies of scale. So if someone has mentioned that to you, what’s your response to that?
Edgar Aguilar: Because the bigger it is, the longer it’s gonna take, and we’re gonna have to do multiple trips. Normally, for something over 5,000 square feet I always like to tell our customers, our builders, our homeowners, our flippers – it’s gonna take 2-3 days to be on the safe side. On anything smaller than 5,000 square feet, if we take a big team, we are normally able to be in and out in a day. The problem with that is that no matter what we do, there’s always gonna be dust particles that are gonna settle on flat surfaces. So to cover yourself, especially on a 5k, 6k, 7k square feet project, you wanna be in there two days. You could probably do it in a day, but it’s gonna kill your people, so you wanna be there two to three days in order to cover all those flat surfaces… Because once you start dusting the walls and the ceilings and the ceiling fans, that dust doesn’t settle right away. It normally takes 24 hours for it to settle down.
Then one thing that I came across – sometimes homeowners, flippers, builders will go the next day and rub their hands on flat surfaces and dust will come up on their hands… And it’s not that it didn’t get cleaned, it’s just that those dust particles now are settling down, and it needs to be recleaned. So the bigger the project, the longer it’s gonna take us to clean it. And to keep it on the safe side, we wanna ensure our customer’s satisfaction, so we wanna say it’s gonna take 2-3 days, so that way we’re always coming back to clean those flat surfaces after the dust particles have settled down.
Joe Fairless: I didn’t realize it would be a 2-3 day job, so it makes more sense… Thanks for clarifying that. Put yourself in our shoes for a moment, if you would, please – a real estate investor who is considering different cleaning options, or just being educated on the cleaning process… What else should we know that we probably don’t know?
Edgar Aguilar: First you wanna meet with them. Normally, just meeting someone face-to-face will tell you a lot. As we all know, the first five seconds that you meet anybody, the first five seconds tell a lot; your first impression. If someone’s getting there and they have pads down to their needs, and they have a shirt that’s tore up, do you really want someone like that in your house or in your project, cleaning it? Even though they might be the cheapest and they are the owner of the company, do you really want that to represent your project? I would say no. You want somebody that is clean-cut, looking clean, just because that is a representation of who you’re hiring.
So I would say the first impression is meeting them. The second would be getting on their website and looking at their reviews. Google their website, Facebook, LinkedIn, just making sure that they have solid reviews on there. That’s one thing that we pride ourselves in a lot – just having great reviews. Customer service is a must for us, but other companies don’t have that as their philosophy.
So I’d say meeting them and looking at their proposal, seeing how their proposal is structured… Is it just something on a Word document, that anybody could do? Or is it a really nice, professionally-done estimate that was done on a nice software, that they have to pay? Just because all those little things have a lot to do with the way you feel about somebody. Then at that point you can make an educated decision. They have great reviews, they have a great website, they have a great online presence. When I met them, they were clean-cut, they knew what they were talking about… I guess those few items would be able to tell you a lot from a person.
Joe Fairless: Sure. Yeah, it’s the little things that add up to a big thing, and it’s how they approach those items that is a likely indicator for how they’ll approach working with whenever you have selected them.
Edgar Aguilar: Exactly.
Joe Fairless: Edgar, thank you so much for being on the show. How can the Best Ever listeners learn more about your company?
Edgar Aguilar: Yeah, thank you. They could just go to our website, it’s legacyconstructioncleaning.com. Or I’m on LinkedIn under Edgar Aguilar, or we have a Facebook page, Legacy Construction Cleaning. Any of those ways.
Joe Fairless: Excellent. In this conversation I learned a lot of things. One is the two common ways to price out; one is on a per square foot basis, which is typical, or the other is time and material (T&M). Where you are, in Denver, 40 to 60 cents/square foot for a residential construction cleaning – that’s the fix and flippers and anyone doing ground-up development for residential – and then it increases for restaurants, because of the higher level of cleaning and more detailed level of cleaning.
Then also when we’re selecting a cleaning company, looking at online reviews, looking at the website, meeting them in person, and looking at the proposal, how it’s structured and how professional it is, because it’s likely an indicator of how professional they’ll be and how good of a quality of job they’ll do whenever you select them, or if you don’t select them.
Edgar, thanks for being on the show. I hope you have a Best Ever weekend, and we’ll talk to you again soon.
Edgar Aguilar: Likewise. Thank you so much for having me on. Have a great day.