Franchise Buys 'Ugly Houses'
Duo's business also has shown the ability to revitalize neighborhoods.
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When Roland Beason's mother learned that an $80,000 rental house she owned in Houston required $30,000 worth of repairs to put it on the market, she turned to HomeVestors of America.
It would have been difficult to travel from Birmingham, Ala., to Houston to oversee a renovation project for the home previously owned by one of her relatives. So she sold the house to the Houston company in 2003. The company either made repairs and sold it for a profit or sold it to investors looking to do the same.
"We sold it at a loss, but because the house is in Houston we were happy to get rid of it," said Beason, 30. "I decided that if rational people like my mother and her family would do that, then maybe there was something to it. And I was looking for a business to buy."
Beason partnered with his friend Spencer Sutton to start the first HomeVestors franchise in Birmingham. The business is promoted on billboards throughout the area that proclaim, "We buy ugly houses."
The billboards have resulted in about 140 calls a month from people looking to sell homes in need of repair, Beason said. Many of the people have inherited the homes or are selling them for their elderly parents.
"We get more calls than houses we can rehab," said Beason, 30. "We definitely exceeded our expectations."
Most homes require about $20,000 worth of repairs and usually resell for about $80,000 to $130,000.
The median price for all homes in Birmingham is $138,000, Sutton said. The company hires a crew of contractors and subcontractors to renovate the homes. The work can take two weeks to two months depending on the amount of repairs needed.
The franchise also has about 300 to 400 investors willing to buy the distressed homes from the company, Beason said.
Dallas-based HomeVestors of America Inc. was founded in 1989 and became a franchise in 1996. The company has more than 200 franchises throughout the United States.
Sutton, 32, sees the company as a way to bring more integrity to an industry where less-reputable businesses take advantage of their customers.
He's a member of FaithWorks Properties, a group of Christian entrepreneurs. Sutton represents FaithWorks as a co-owner.
"We saw this as a great ministry opportunity to help people in bad situations but also to help the neighborhood," Sutton said. "We meet a lot of people in distressed situations. So to be able to talk to them and build relationships with them, that's what we want to do."
HomeVestors also has strict standards for its franchisees, he said. "It's a national company and they have standards that they want you to live up to and you have to promise that you will," he said.
The business also has shown the ability to revitalize neighborhoods, Beason said. The franchises in Atlanta and Dallas target specific neighborhoods for rehabilitation.
"Over the course of a few years they can turn an entire neighborhood around," Beason said.
(Jamie Kizzire writes for Scripps Howard News Service.)
Before hitting the streets to look for a home, check out these helpful facts and figures from the experts at Sleep On It.