Thursday, November 09, 2006

Thoughts On HomeVestors

Sorry no posts for so long. Life has been pretty busy lately. We went to California Thursday and spent Friday at Disneyland. It was the first visit for my almost 3 year old daughter and she really enjoyed it. Got back into town on Saturday and spent most of Sunday in the hospital emergency room because my wife's back locked up and she can barely move. She's been home in bed all week and I've been taking care of her and my daughter. Needless to say, I'm pretty busy these days.

I thought it was somewhat ironic to have received a mailing from HomeVestors when we got back from California, given what I do. It was obviously a mass mailing and it was asking if I was interested in a CASH OFFER for my home. The letter says they pay most closing costs (I wonder what they don't pay) and they pay cash and can close quick. Basically, they do what I am doing. However, they are a franchise, which means whoever is running the business has to pay a franchise fee to the parent company and likely an ongoing fee which may be a percentage of their profits. This obviously means they have a lot of overhead. I expect the fee is quite large, given the large amount of advertising they do. I have to wonder if it pays off though. I mean, if they sent me a mailing, they are most likely just mailing to all houses in an area, which isn't very targeted. I would think you'd get much higher response rates if you sent mailings to people in foreclosure or somehow otherwise targeted your audience.

With the costly overhead of being a franchise and the not-so-savvy marketing I see, I can't help but think I can give people a better deal for their house than these guys can.


Anonymous said...

I know what you mean! I get postcards from other investors on our properties all the time! I have to wonder--do they deliberately target landlords, or do they just not narrow their property search to more productive prospects? If you can go shoulder-to-shoulder with other investors (not a newbie, in other words), doing a mailing for JUST LLC's might be a clever way to find some don't-wanters!

Anonymous said...

Sounds like you're really onto something with this 'house buying' thing, Shaun! You're going to make a ton of money doing it, too! Real Estate only goes up!

Shaun said...

Your sarcasm is showing.

Anonymous said...

Well, I tried to be transparent; it didn't work.

But seriously, look at this graphic from the NYT (from about 6 months ago), and tell me where you think values are headed.

The party's over, and the smartest of us (investors) knew it quite a while ago.

When would be the best time to buy back in? When conventional wisdom SCREAMS otherwise. When the Bum on the street says, "You're going to buy real estate? You're crazy man, don't you know that you can never make money in real estate?"

That's when I'll be buying back in. It's also referred to as 'the bottom' and may not be here for many many years.

Shaun said...

Where have I said anything that disagrees with that? I have said many, many times that money is made when you buy, not when you sell. You need to buy BELOW current market value. How far below depends on how you plan on making your money - rehabbing, flipping, or renting. Anyone who buys with the expectation of making a profit due to appreciation is not investing - they are gambling.

Rich said...

I agree with Shaun..If you can't make money in real estate right now, then you're a clown. In South Florida, this is the first time in a while that you could buy a house for retail and create positive cash flow on a rental. Obviously, I don't pay anywhere close to retail...We're picking them up for 50 cents on the dollar and selling them to first time home buyers all day long for retail or holding them in a rental portfolio. Sure the real estate market has dropped, and it's possible that it will drop a bit more, but I haven't stopped making money yet my friend. I've found that there are so many more renters now that want to become home owners because the monthly payments have finally become more affordable for the average family to buy a home. As I said before, it's cheaper than renting. Again, this is in my area of S. Florida, you didn't state where you were located.

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