Is a We Buy Ugly Houses franchise Worth It?

[Lane Ewert]

My wife and I have gone around and around on different approaches to get into real estate investing. So today she shows me the We Buy Ugly Houses franchise. It's 50k to get a franchise and what you get is 2weeks training course, their proprietary software that help you evaluate cost/profit on a property and marketing. But my first thought was to come and ask bigger pockets if anyone has either had experience with them or had their own franchise. I think one of the key points of their model is you have more access to hard money lenders. Any and all advice would be greatly appreciated.

[Mike Hambright]

I'm a HomeVestors franchisee, and many of the short sighted comments to this original post explain why 90%+ of those that try to invest on their own fail. Yes, HomeVestors is a franchise system. Yes, they charge fees...that's what franchisors do. It's the same for McDonalds and Subway. Could you create your own burger shop? Yes? Could you ever compete against McDonalds....it's unlikely.

I started my first HomeVestors franchise (Yes, $50K franchise fee...but there is now a cheaper option), nearly 5 years ago. My wife and I had zero residential real estate experience...had never bought a single house. By working hard, leaning into the HomeVestors system and brand, and working hard (yep...twice as hard as everyone else), we bought 65 houses in our first year. BTW - this was 2008 when the market was "crashing".

The primary things that benefit HomeVestors franchisees are:
1. The Brand - over $200 million has been spend advertising and building the brand. It's known from coast to coast. It's a well known fact that people generally trust national brands, and would prefer to work with national companies that have a reputation to uphold. We're professional, and that allows us to..all else equal...be much more successful in getting contracts than the 'next guy'. It generally also allows us to buy houses at deeper prices, because we're more trustworthy.

2. Lead Generation - nobody can compete with us. I won't dwell on this. This is the single most important thing in real estate investing. As an investor...you have to decide...do you want to be a "Real Estate Investor", and focus on what makes you money (i.e. buying and selling houses), or trying to become an advertising professional? It's hard to do both well. Most that do it well are doing something illegal...like bandit signs (sloppy, and illegal about everywhere), or stealing the We Buy Ugly Houses terms for online advertising (which HomeVestors protects like a hawk - and has won every lawsuit protecting).

3. Ongoing mentoring and support - The franchise model has evolved over the last few years to include a 'Development Agent', or coach and mentor. I've purchased over 250 houses at super deep prices over the last 4 1/2 years. I'm now a Development agent, and coach and mentor a large and rapidly growing group of franchisees from coast to coast. Most real estate investors are on an island. They don't have anyone to learn and grow with. Others in their markets don't talk to them, as everyone is afraid of 'arming' their competition. HomeVestors team based approach allows us to surround ourselves with hundreds of other people doing the exact same thing as us, and generally willing to share all we know with each other. This is completely invaluable in an ever-changing industry like ours. Also - for most investors across the country, there's very little focus on what that individuals GOALS are. To be frank, this is such a feast of famine industry that most investors goal is "More". As a mentor and coach, I spend a lot of time working with people on what their goals are....and a lot of focus on treating this as a BUSINESS, when most others treat it like a HOBBY. BTW - some of the folks I coach now buy more houses than I do!

4. The Network - what else can I say. Over 300 franchisees. Purchased over 50,000 houses in the last 16 years (who else can even say they've been around for that long...in good and bad markets). I'm proud to be associated with the best group in real estate investing. For me...very truthfully, If I wasn't able to join HomeVestors nearly 5 years ago...I would not have made it as a real estate investor. Truth is...I wouldn't have been willing to work as hard to climb the learning curve, as I would have had to figure our every component of this business on my own.

For the record, about 18 months into my franchise, my wife and I purchased a 2nd franchise in the market next to us. Franchise agreements last 5 years. If in good standing....there's no cost to extend. Despite the fact that my wife and I are smart people....could go do this on our own and escape paying fees that we pay now...we're in the process of renewing our franchise as we speak. To be frank, we never even spoke the words "should we renew". I'm part of a world class team, and always will be.

For the haters - yep....we're not for everyone. Despite the fact that most fail in real estate investing, heck, even real estate investing isn't for everyone. If you don't understand that generally speaking, franchise models, are significantly more successful than non-franchise businesses...than you don't 'get it'. If you're hung up on the fees...consider that those things that you're being charged for, in many ways, are simply paying for things that you'd have to pay to create on your own (that's what good franchise systems do).

Mike Hambright
HomeVestors Franchisee (We Buy Ugly Houses)
Coach and Mentor