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Review of the We Buy Ugly Houses Franchise Opp and Startup Costs

The We Buy Ugly Houses franchise, run by HomeVestors, has purchased over 50,000 homes across the United States since they began to franchise in 1996. The core concept is rather simple: invest in homes that owners need to get out of for some reason, repair the home so that the value of the home is increased, and then sell the home later for a profit. Thanks to the 2008 recession, homeowners are still struggling to get out from underwater and they’re looking at all options to get out of what has turned into a bad investment.

Their loss could be your gain with a We Buy Ugly Houses franchise from HomeVestors. You can partner with an investor to flip houses and pocket a percentage of the profits for your work or make the investment yourself and pocket all of the profits! What you’ll receive when you become a franchisee in this model is the training needed to repair a property that may have been severely run-down. Whether you need to update the plumbing or just need to replace a cracked tile floor, the job here is simple: to turn an ugly home into a beautiful one.

How Much Is the Initial Investment In This Opportunity?

The We Buy Ugly Houses franchise by HomeVestors offers two different types of investment opportunities for potential franchisees. You can choose to become an associate franchisee or you can throw all your chips into the pot and become a full franchisee.

As an associate franchisee, your initial buy-in to the We Buy Ugly Houses brand will be $15k. Associate franchisees have the same rights as full franchisee, but have the option to work only part-time and can do so from a home office. Because real estate can be a difficult business in some communities, many investors try this investment first so they can see how profitable the venture will be with little risk. Exclusive territories and development mentors are part of the associate franchisee package.

If you want to become a full franchisee, then the initial investment jumps up to $50k. You’ll be required to have a commercial office location for your We Buy Ugly Homes franchise and most full franchisees have a small staff that works to flip homes as rapidly as possible. This franchise opportunity is often picked up by real estate professionals or general contractors who are looking for a way to improve their revenue streams.

Once you become a franchisee of HomeVestors, you’ll get involved with their direct selling program. This puts franchisees in touch with real estate investors who are targeted specific homes in neighborhoods for maximum profitability. When the home can be purchased with a cash discount, renovated, and then resold or converted into a rental for ongoing revenues, the profits will begin to roll in.

Both franchise models require monthly marketing fees to be paid to the We Buy Ugly Homes franchise concept. You’ll be responsible for paying a fee every month that you are unable to purchase a home. These monthly “No Purchase Fees” are lower in the full franchise model because of the higher upfront fees that were paid, but are still part of the ongoing responsibility. There may also be specific community requirements in your specific franchise opportunity as well that are negotiated on a one-on-one basis.

Is the We Buy Ugly Homes Concept Even Legal?

Many investors tend to shy away from the We Buy Ugly Homes franchise opportunity for one of three reasons:

1. The ongoing monthly maintenance fees if a home could not be purchased.
2. Because of personal ethics in the purchase a home for a sharp discount over going market prices.
3. The risks of holding an improved property that has been flipped, but won’t sell.

No one really wants to put a 100% investment into a home that may not sell after being improved for 12 months or more. That’s why the We Buy Ugly Homes franchise model is based off the the premise of a short sale. In short, what this means is that a home’s ownership must negotiate with their lienholders to have a sale approved that is less than the amount they owe on their mortgage. If the lienholder doesn’t approve the sale, then you don’t get to purchase their ugly home.

One of the advantages of the We Buy Ugly Homes franchise model is that HomeVestors will take care of an owner’s closing costs so they can walk away from their home free and clear.

Where this becomes a profitable franchising venture is through a thorough inspection of the home before the sale is completed. When you know everything that a home may need beforehand to get fixed up, you’ll be able to offer a fair price for the property based on the repairs that need to be made. Once you make the offer, the home’s ownership will need to take your offer to their lienholders in order to have it approved.

Another place of hesitation for some potential franchisees is the amount of money required to get into the first homes that need to be flipped. That’s where HomeVestors will take their We Buy Ugly Homes concept to real estate investors who may be willing to back the investment for you. The investors pay for the property that you’ve located and your job will be to turn the property into a viable rental or improve home for sale. The investors then take the profits and you’ll receive a percentage of those profits from the work you completed.

Then you just keep repeating this process over and over again, flipping homes to turn them into rentals or selling them for profit. With two weeks of training in this method after you sign your franchise agreement, use of their proprietary software, and extensive branding materials, you can achieve a high brand saturation in your community in no time at all.

If you have a talent for repairing a home or can spot a good real estate deal from afar, then this could be the right franchising opportunity for you. The We Buy Ugly Homes franchise is all about making ugly homes beautiful once again and helping you make a profit while doing so. If that sounds like a great chance to earn money, then take a look today.

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