HomeVestors of America

OKLAHOMA

Source: HomeVestors of America

Karen and Richard McLain of HomeVestors buy old or rundown homes "as is," then renovate them for resale or rent.

Description: National network of real estate investors

Owners: Richard and Karen McLain

Years in business: 13

No. of franchises owned: 1

Start-up costs: $16,000 to $55,000, depending on associate or full franchise status; $50,000 cash

Franchisor fees: Sliding scale based on volume and sales price of property transaction

2015 revenue, 2016 projection: $3 million; $4 million

2016 projected annual growth rate: 33%

Richard McLain had spent nearly his entire career in business with his brothers and dad buying and selling commercial real estate in and around Oklahoma City, Oklahoma, when he first discovered HomeVestors of America, a national franchise that buys homes "as is," then renovates and sells or rents them. "Commercial real estate was great, but it was taking too long between when we bought the properties, renovated them and got them back on the market," he said. "My brothers and I had young families, and we needed money for the day to day."

Then one day, while driving to lunch at a local restaurant, McLain saw a billboard for a business called WeBuyUglyHouses.com — the more catchy slogan name for HomeVestors. "I said, 'That's the business we need to be in,'" McLain recalled. He and his family spoke to the parent company and a month later bought their franchise in Oklahoma City in 2003 for $50,000. He bought out his brothers and dad in 2013 and now owns the business with his wife.

Additional franchisee resources

McLain buys old or rundown homes that owners simply want to get rid of, renovates them, and then flips them by putting them back on the market for sale. Prior to the housing crisis in 2008 and 2009, he would typically have between 40 and 50 houses in various states of renovation and resale. That number dropped to around six or seven houses during the crisis, but is starting to climb back up again, he says. "We were well capitalized during the housing crisis, so we didn't feel the hit as bad, but there were some HomeVestors franchisees that really suffered," he said.

Though housing markets are local in nature, McLain said the parent brand is great at facilitating a national network of franchisees that consistently exchange best practices and tips. The franchisor has also arranged for national accounts with Home Depot and property insurance companies that can offer great deals to franchisees. "We would never be able to negotiate prices that low on our own," he said.

McLain said, "Reining myself in from the temptation to spread myself too thin and trying to do too much" is a constant battle. He works about 50 to 55 hours a week and has also became a licensed Realtor so that he can sell his houses once they are renovated.

"It's a challenge maintaining a work-life balance when the business opportunities are so exciting," he said. His advice to other potential franchise owners is to carefully consider whether you want to build everything yourself or buy into an existing system. "Do the math and see if the risks and rewards make sense to you," he said.