HomeVestors Franchise Costs $109K – $461K (+ 2024 Profits)
HomeVestors of America, commonly known for its “We Buy Ugly Houses®” slogan, is a well-established player in the real estate investment franchise industry. Founded in 1996 and headquartered in Dallas, Texas, HomeVestors has carved a niche in the market by specializing in buying, rehabilitating, and selling distressed properties.
HomeVestors of America began franchising the same year it was founded. The franchise is unique in its provision of extensive support systems to its franchisees, including comprehensive training in real estate investment, access to proprietary software tools, and robust marketing initiatives that help generate leads.
HomeVestors offers two types of franchise models: a full franchise option for those looking to operate on a full scale and an associate franchise model, which is more suitable for those looking to start on a smaller scale or part-time basis.
Initial investment
Here’s what you can expect to spend to start a HomeVestors franchise.
Type of Expenditure | Amount (for a Full Franchise) |
---|---|
Initial Franchise Fee | $85,000 |
Leasehold Improvements | $0 – $5,000 |
Furniture, Fixtures and Equipment | $0 – $10,200 |
Signage | $0 – $4,200 |
First Month’s Rent | $0 – $2,000 |
Security Deposit | $0 – $2,000 |
Opening Supplies | $200 – $1,950 |
Advertising | $50,000 – $140,000 |
Training Expense | $1,800 – $6,000 |
iPad and Computer Equipment | $2,000 – $10,000 |
Insurance | $2,000 – $8,000 |
Miscellaneous Opening Costs | $1,000 – $7,900 |
Purchase and Repair of Properties | $13,000 – $129,000 |
Additional Funds for 6 Months | $0 – $50,000 |
Total Estimated Initial Investment | $155,000 – $461,000 |
Note: The table above provides a snapshot of the main costs associated with starting the most common franchise format (as disclosed in the Item 7 of the Franchise Disclosure Document). For a complete overview of all the expenses involved with the various formats offered by the franchisor, please consult the Franchise Disclosure Document.
Franchise fees & Royalties
Here are the main ongoing fees the franchisor will ask you to pay going forward to run the franchise.
Initial Franchise Fee
The initial franchise fee for HomeVestors depends on the type of franchise you choose:
- Associate Franchise: The initial franchise fee is $39,000, which is payable in a lump sum when you sign the Franchise Agreement and is non-refundable.
- Full Franchise: The initial franchise fee is $85,000, payable in a lump sum at the signing of the Franchise Agreement and is non-refundable.
Royalty Fee
Royalties are calculated as a percentage of the gross profits with two components:
- Advertising Royalty Fee: 5% of gross profits.
- Service Royalty Fee: 2% of gross profits.
Marketing/Advertising Fee
Marketing fees include a National Advertising Fund contribution of $250 monthly and a local advertising requirement of $1,000 per month.
Technology Fee
A technology fee of $140 per month is applicable for system software usage and support.
Transfer Fees
The transfer fee for the franchise is $5,000, which is due at the time of the franchise transfer.
Renewal Fees
The renewal fee is equal to 50% of the then-current initial franchise fee and is due upon renewal of the franchise agreement.
Franchise pros and cons
The Pros:
- Pre-opening training and support: The franchisor provides its franchisees with a comprehensive training program on real estate investment to help them run their franchises smoothly. Also, it offers them help with the grand opening as well as ongoing support on growth strategies, field operations, and handling staff.
- Marketing and lead generation: HomeVestors offers its franchisees tested lead generation and promotional campaign strategies to reach a wider customer base and increase sales. It also provides them access to qualified real estate investment leads, referrals to homeowners, and advertising through national media, social media, and local office campaign programs.
- Financial assistance: The franchisor offers in-house financing to its franchisees to cover their inventory. Franchisees also get financing for the qualifying purchase and repair of houses.
- Flexible ownership styles: The franchise has two ownership systems for franchisees to choose from, allowing them to be full-time or part-time real estate investors.
- Real estate investing technology: HomeVestors provides its franchise owners with the tools and technology to give them industry-specific solutions to help them get more leads, increase their investing know-how, and run their businesses smoothly.
- Home-based opportunity: The franchise can be run from a mobile facility, which reduces development costs.
- Simple operations: The franchise can be run by one staff member, which lowers operating costs.
The Cons:
- No exclusive territory protection: HomeVestors does not grant its franchisees the right to operate in a protected territory. Franchisees may face competition from other HomeVestors franchises or brands affiliated with the parent company.
- Not passive investment: The franchise does not allow for absentee ownership. Franchisees must participate in the operations and management of their franchises.
- No site selection: The franchisor does not provide its franchisees with site selection assistance.
- No international presence: The franchise has no international locations currently.
How to open a HomeVestors franchise
Opening a HomeVestors franchise involves several steps, designed to ensure you are a good fit for the franchise. Here are the main steps to follow to open a HomeVestors franchise.
1: Initial Research and Contact
- Learn About the Franchise: Research HomeVestors and understand their business model, specifically how they focus on buying, rehabbing, and selling distressed properties.
- Contact HomeVestors: Reach out through their website to express your interest and request detailed information about the franchising opportunity.
2: Review Franchise Disclosure Document (FDD)
- Obtain and Review FDD: Once you express a formal interest, you’ll receive the Franchise Disclosure Document that provides detailed information about the franchise costs, obligations, and the support provided.
- Consult with Professionals: It’s advisable to consult with a franchise attorney and a financial advisor to fully understand the FDD and all related legal and financial implications.
3: Financial Planning and Approval
- Secure Financing: Determine your financing strategy to cover the initial franchise fee, which can range from $39,000 to $85,000, plus additional startup costs.
- Application and Approval Process: Submit your application and go through HomeVestors’ approval process, which may include background checks and interviews to assess your suitability as a franchisee.
4: Training and Preparation
- Undergo Training: Complete HomeVestors’ comprehensive training program, which covers aspects of real estate investment, property rehabilitation, and the specifics of operating a franchise.
- Set Up Operations: Following training, set up your business operations, which may include establishing an office and utilizing HomeVestors’ proprietary software and business tools.
Disclaimer
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