Opinions on franchises

[Shane Smith]

Hello All,

I am new to the REI world and have applied to be a franchisee for a house flipping company. The costs are not trivial, but they are less than you would pay for a nice used truck.

One of the main reasons I am considering this route is the leads that are provided. Without going into great detail, you are provided 50 motivated leads per month for 1/5th of the cost I have found from “retail” lead companies. 

Another reason is I would like to hit the ground running. This franchise provides training and a CRM to get you generating revenue. The royalties are graduated, and the more deals you do, the more royalties fall. I don’t mind paying those fees if I can build a solid, long lasting business quickly.

I know I can piece together all these things by attending my local REI meetings and making connections there. My concern is the time it would take to grow these connections since I ain't getting any younger! I would love to hear from current franchise owners, be it HomeVestors, Red Barn, New Again Homes, Flip Cheap Homes, or any other flipping/wholesaling franchises out there. Thanks in advance!

Shane

[Nathan Gesner]

It would be wise to post the name of the franchise you are considering. Others may have personal experience to share. You can also search BiggerPockets and Google for reviews from actual members. Trusting what the franchise tells you is foolish.

I can tell you this: there are companies selling leads to real estate agents all the time. It always sounds attractive. $300 a month for leads? If I sell one house per year, it will pay for itself. How can I lose???

The truth is, people are suckered by this all the time. You lose because there are many other suckers out there falling for the same line and sharing the same low-quality leads that don't translate into sales.

Do the math. There were 16,000 homes sold in Memphis in 2024. If this company gives you 50 solid leads per month, that's 600 properties suitable for a flip that aren't already listed with an agent. Does that sound right?

And do you think you're the only game in town? If this franchise has half a brain, they are going to sell the same package to at least ten other people in Memphis. That means they are (a) sharing the same 50 leads per month with all ten members, or (b) generating 6,000 unique flip leads per year. Neither of those pencil out.

I think you'd be wise to save the money and find your own leads.