Franchises? ("We buy ugly houses")

21 Replies

Anybody have any info on starting out through a franchise. I was looking into the company we buy ugly houses and they have a franchise for real estate investing. Anybody ever work with them or know if a franchise is a good idea starting

I have not looked into franchising, I think you would be better off spending the money you would spend on franchise fees and use that for marketing. You could probably do a lot of direct mail and set up a killer lead generation website and PPC campaign with the money you would spend on franchising. The other option is to partner with someone to do deals.

I have looked at that franchise myself, and with any franchise there is costs involved. And I think you should at least talk to a representative and ask them what the initial seed money goes to. Once you have the break down I think you will start seeing a clearer picture of what is going to work for you. 

And I have to say that with any franchise business you buy into the support system and the initial network, then after that it is up to you to establish yourself. If you study franchisees in general there is a reason why folks buy into them - business in a box and brand recognition. Anyway I have seen their ads on criagslist in afew towns so the folks who do go with them are out there. Of course I think it really also depends on your niche you want to be in down the line. If you want to be in notes or turnkey deals I am not sure if they will work for you. 

My 2 cents- if it is aligns with your goals and such I don't see how it would not work in someway. 

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I would think that $18,000 would be better spent starting on your own. There is a ton of information here to get you started, plus, plenty of people in your local area to help. I'm sure Sacramento has an investor group or two and you can join up with them to get going. That $18,000 will likely just be going toward the owner of that franchise company so he can buy another boat. Use that money to get you on your own path to your own boat...

@Rob McGahen great advice to network with experience people in your area!

@Steven Bruce , Sacramento has several REI groups where you can meet other investors with varying levels of experience as well as industry experts. Look up Real Estate investing on Meetup. There is one in Roseville, next meeting is in September.

Also be sure to check out the real estate Summit in San Francisco next month. J Martin has the deets.

@Steven Bruce , I'd be careful with the idea - that amount of cash may definitely give you a lot more results if you start your own marketing campaign.  Make sure to do more research and network with locals here in Sacramento - the idea may not even work in our market.  And I'd definitely encourage you to attend the RE Summit in SF this August,  more info here: https://www.biggerpockets.com/forums/521/topics/309746-huge-re-networking-summit-sf-bay-8-27-and-8-28-16---20-bp-greats?page=1#p2004666

Hello @Steven Bruce I would ask you what are you looking to get out of the franchise relationship; why is this a consideration if it in fact is? Name recognition, avoiding the ramp up time, etc? There are plenty of folks willing to take your money and you can't always control how things turn out. I'm a newbie myself so I can't off much advice on real estate investing, but I offer simple advice on my life's experience. Just my opinion: I would invest the time and money in myself and interested family to build my own legacy, not someone else's. Best wishes.

The key to any successful business is systems and consistent and uniform ways of doing things.

In real estate investing the only benefit I see you get with your money is name recognition and maybe some advertising pool money. I'm sure they have a good training and support system but It's not like buying a McD franchise where the product is regulated, food cost is fixed, and systems in place to help you make money. There's a valid reason people pay over a million to do what they could do for a fraction of the cost. It's the ROI is there.

Personally I would save the money and take that money and do targeted marketing campaigns. With $20k you can have several awesome advertising campaigns to acquire properties to wholesale. Which is essentially what they are selling you, a wholesaling business. Make sure your contracts say you can assign them and just sell the contract for a profit.

Hey @Steven Bruce , you could contact @Zarak Sharwani on here and maybe get on the phone with him. He's a great guy and just started another Homevestors / WeBuyUglyHouses franchise in Milwaukee. He'd be happy (I'm assuming) to give you the pros and cons as he sees it.

But in a general way, the marketing budget is huge and you don't pay it or manage it directly. You do pay per contract and per lead, but there are certainly tradeoffs and restrictions with what you can do.

Best of luck,

JTM

@Steven Bruce  

imo, sound advice is already posted above! There are Pros & Cons.  Read as much as you can & talk to other wholesalers/flippers in your local market.  

My partner & I are both experienced and could have set up a business model w fraction of a cost however we felt the BRAND & SYSTEM was worth it. We also prefer for franchise to do marketing & bring in leads so we can focus our energy on other steps. 

Feel free to pm me & I can share my last few months of experience with you. good luck! 

Im also a HomeVestors Franchisee and have been active for the past 4 years in 2 different Markets, Chicago, IL and Cleveland, OH.  (not so active here in BP unfortunately, but looking to change that)

I can say HomeVestors is not for everyone and certainly pros and cons but from my opinion the value of the brand, their ability to target QUALITY leads, and also hard money lending arm make the costs very appropriate.  Ive seen someone throw away 7k on marketing that got them 0 calls...thats expensive.  With us, at least theres a track record for leads per ad spend, so not a shot in the dark.

The reality is we have franchises that come in at all stages of success in the industry and all different backgrounds.  We work together as a cohesive team in order to thrive in this difficult industry.  Some prevail, and some fail.

More than happy to discuss if anyone is interested.  I'd certainly tell you the good and bad and let you decided if its a fit for you.

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I would say 18k is a small price to pay for the proper systems on running your business. Yes you can always save your money and do it yourself by bumping your head and potentially losing your butt on deals until you get it right, but Why not accelerate your learning by being able to follow a proven system. Heck I may even be interested in getting one myself just for the proven systems...

@Jeremy Hazelwood

Your correct Jeremy!

You want to start your own burger business? Go ahead, but pretty sure you won't have cars lining up to buy them like if you paid into McDonalds. Same concept here.

I've paid in, and would gladly do it again to gain access to the leads we generate, financing that's available to franchisees, and the support and team mentality that's in place.

Again, happy to talk to anyone that wants my take on it.

Lot of people on here dismiss Homevestors.  I am considering a franchise because they do the marketing for you and generate the leads and have great brand awareness and great teams.  I am happy to pay for that.  I dont have the time nor desire to do all the marketing myself and I could easily spend 18k on marketing myself and easily do it the wrong way and get nowhere.  I think the people that say save the money and do it yourself are missing the point.  

Great thread.  I found this thread while contemplating a decision.

For those with Homevestors franchise, do you have the entire market/ territory or how is assigned?   Is it by household size? Countites?

Huge Team environment here and based on the fact that our territories aren’t franchise specific and entirely shared.   I’m in Columbus, OH with 4 other franchisees and our “territory” is the entirety of Columbus and all outlying counties.

Leads are divided by the amount of advertising you spend in a given month.  The more you spend, the larger the percentage of leads you get; pretty simple!

Let me know if that helped?  Happy to answer any additional questions you have.

Originally posted by @Samirian Hill :

Great thread.  I found this thread while contemplating a decision.

For those with Homevestors franchise, do you have the entire market/ territory or how is assigned?   Is it by household size? Countites?

 @Samirian - Our personal territory is divided up by counties. We have 7 counties and we currently share them with 12 other franchises. The limit to the number of franchises in each territory is decided by how much you spend on marketing as a group based on number of households. Every group pools their marketing dollars which is fabulous because, for example in our area, we're able to afford tons of marketing including TV advertising every week and we have up over 20 billboards. My husband and I could never afford that kind of marketing or name recognition on our own. And we have this amazing team of peers who share leads, buy and sell from each other, and support one another. It's a powerful network.

I hope this helps and thanks for asking!

$18k is just to join the franchise, am I correct? They provide a name and system, but you still have to do the work and pay for the expenses. Some people here talked like for $18k, the company would just do all the work for you, and the $18k would cover everything.  

@Jessie Niu correct 18k is the initial franchise fee and then you would be responsible for monthly advertising costs as well.

I’m right here in Columbus with you! For Columbus, your going to want to have 50k available somehow so you can pay the Franchisee fee and have cash on hand for other expenses and at least 6 months advertising.  Other markets are higher, but that’s about the norm for most.

And certainly Just because you buy into a franchise doesn’t mean you can sit back and relax!  You get out of it what you put in!!

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