HomeVestors of America
Encyclopedia
HomeVestors of America, Inc. is a privately owned
U.S. real estate franchise
company that sells franchises to investors who provide real estate services by buying homes in need of repair, renovating them and either selling or renting them. Founded in 1989 and franchising since 1996, the company consists of 200 independently owned and operated franchisees
located in 33 states. Acting on approximately 160,000 leads, franchisees buy an average of 8,000 homes within a year, holding them about six months on average. Headquartered in Dallas, Texas
, HomeVestors is the largest homebuyer in the United States
.
HomeVestors has been ranked on Entrepreneur magazine's “Franchise 500” for five consecutive years; ranked on Entrepreneur magazine’s “Fastest-Growing Franchises” list for four consecutive years; and ranked on the SMU Cox School of Business
“Dallas 100” fastest-growing private companies based in Dallas for four consecutive years. Additionally, HomeVestors was named to the Franchise Business Review “Top 50 Franchises” for the fifth consecutive year in 2010.
of current rental property
investment
opportunities. The quarterly rankings forecast the expected performance of rental real estate
properties, specifically single-family homes maintained as rental properties, so investors can gauge local markets relative to the national average and other markets.
According to a recent Wall Street Journal
article featuring the rankings, “housing markets
that have seen the biggest plunges on home values have topped a new ranking of the best markets for rental-property
investors
.” Additionally, ”investors
have increasingly turned to buying homes that can rent for a few years.”
The rankings are used by investors
to determine the extra return, or risk-return premium, that must be demanded from rental properties
in local markets. The risk-return premium should be added to the regular capitalization rate
to produce a risk-adjusted cap rate
at full occupancy for a local market. The ranking is calculated based on three-year forecasts
of home prices
(reflecting underlying home-price appreciation
potential) and gross
rents (as a proxy for potential investor cash flow
).
, “one in four American borrowers are under water. Over 4m households owe at least twice as much as their home is worth. The resulting foreclosures cause a lot of damage. When homes are foreclosed upon and sold by lenders, the discount rises to 35%, largely because the property is not being maintained. The steep drop in price harms other homeowners. The values of neighboring houses are pushed down, forcing other borrowers deeper under water”.” Additionally, “some 5m homes have entered foreclosure in the past three years. Credit Suisse estimates that over 9m more will enter in the process in the next four years. (In normal times, new foreclosures run at fewer than 1m a year).”
With the recent mortgage crisis, a lot of homeowners have to get out of real estate quickly as prices and equity go down. Many of the sellers are looking for a quick sale. HomeVestors franchisees offer 55% to 65% of the estimated market value of the homes, minus the renovation costs. This service benefits people who lack the time or inclination to fix up and sell a home themselves as well as the surrounding homes and community.
in 1996. After D’Angelo died in 2004, John P. Hayes, a consultant for HomeVestors, took over the franchise company. Hayes, a former Communications professor at Temple University
, fell into the franchise business after writing the book Franchising: The Inside Story. Hayes is no longer with the company. The current management consists of Ken Channell and David Hicks, who are co-presidents of HomeVestors.
of Rebuilding Together
, a Washington, D.C.
-based non-profit group
that preserves affordable homeownership and revitalizes communities by providing critical home repair and modification services to those in need at no cost to homeowners.
Privately held company
A privately held company or close corporation is a business company owned either by non-governmental organizations or by a relatively small number of shareholders or company members which does not offer or trade its company stock to the general public on the stock market exchanges, but rather the...
U.S. real estate franchise
Franchising
Franchising is the practice of using another firm's successful business model. The word 'franchise' is of anglo-French derivation - from franc- meaning free, and is used both as a noun and as a verb....
company that sells franchises to investors who provide real estate services by buying homes in need of repair, renovating them and either selling or renting them. Founded in 1989 and franchising since 1996, the company consists of 200 independently owned and operated franchisees
Franchising
Franchising is the practice of using another firm's successful business model. The word 'franchise' is of anglo-French derivation - from franc- meaning free, and is used both as a noun and as a verb....
located in 33 states. Acting on approximately 160,000 leads, franchisees buy an average of 8,000 homes within a year, holding them about six months on average. Headquartered in Dallas, Texas
Texas
Texas is the second largest U.S. state by both area and population, and the largest state by area in the contiguous United States.The name, based on the Caddo word "Tejas" meaning "friends" or "allies", was applied by the Spanish to the Caddo themselves and to the region of their settlement in...
, HomeVestors is the largest homebuyer in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
.
HomeVestors has been ranked on Entrepreneur magazine's “Franchise 500” for five consecutive years; ranked on Entrepreneur magazine’s “Fastest-Growing Franchises” list for four consecutive years; and ranked on the SMU Cox School of Business
SMU
SMU may stand for:*Southern Methodist University in University Park, Texas, USA**SMU Mustangs, the athletic program of the above school*St. Martin's University in Lacey, Washington, USA*Saint Mary's University in Halifax, Nova Scotia, Canada...
“Dallas 100” fastest-growing private companies based in Dallas for four consecutive years. Additionally, HomeVestors was named to the Franchise Business Review “Top 50 Franchises” for the fifth consecutive year in 2010.
”Best Markets to Invest in Rental Property” Rankings
The “Best Markets to Invest in Rental Property” rankings was launched in July 2011 by HomeVestors and Local Market Monitor to help inform real estate investorsReal estate investor
A real estate investor or a real estate entrepreneur to a lesser extent is someone who actively or passively invests in real estate. An active investor may buy a property, make repairs and/or improvements to the property, and sell it later for a profit. A passive investor might hire a firm to...
of current rental property
Renting
Renting is an agreement where a payment is made for the temporary use of a good, service or property owned by another. A gross lease is when the tenant pays a flat rental amount and the landlord pays for all property charges regularly incurred by the ownership from landowners...
investment
Investment
Investment has different meanings in finance and economics. Finance investment is putting money into something with the expectation of gain, that upon thorough analysis, has a high degree of security for the principal amount, as well as security of return, within an expected period of time...
opportunities. The quarterly rankings forecast the expected performance of rental real estate
Real estate
In general use, esp. North American, 'real estate' is taken to mean "Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water; immovable property of this nature; an interest vested in this; an item of real property; buildings or...
properties, specifically single-family homes maintained as rental properties, so investors can gauge local markets relative to the national average and other markets.
According to a recent Wall Street Journal
The Wall Street Journal
The Wall Street Journal is an American English-language international daily newspaper. It is published in New York City by Dow Jones & Company, a division of News Corporation, along with the Asian and European editions of the Journal....
article featuring the rankings, “housing markets
Real estate economics
Real estate economics is the application of economic techniques to real estate markets. It tries to describe, explain, and predict patterns of prices, supply, and demand...
that have seen the biggest plunges on home values have topped a new ranking of the best markets for rental-property
Renting
Renting is an agreement where a payment is made for the temporary use of a good, service or property owned by another. A gross lease is when the tenant pays a flat rental amount and the landlord pays for all property charges regularly incurred by the ownership from landowners...
investors
Real estate investor
A real estate investor or a real estate entrepreneur to a lesser extent is someone who actively or passively invests in real estate. An active investor may buy a property, make repairs and/or improvements to the property, and sell it later for a profit. A passive investor might hire a firm to...
.” Additionally, ”investors
Real estate investor
A real estate investor or a real estate entrepreneur to a lesser extent is someone who actively or passively invests in real estate. An active investor may buy a property, make repairs and/or improvements to the property, and sell it later for a profit. A passive investor might hire a firm to...
have increasingly turned to buying homes that can rent for a few years.”
The rankings are used by investors
Real estate investor
A real estate investor or a real estate entrepreneur to a lesser extent is someone who actively or passively invests in real estate. An active investor may buy a property, make repairs and/or improvements to the property, and sell it later for a profit. A passive investor might hire a firm to...
to determine the extra return, or risk-return premium, that must be demanded from rental properties
Renting
Renting is an agreement where a payment is made for the temporary use of a good, service or property owned by another. A gross lease is when the tenant pays a flat rental amount and the landlord pays for all property charges regularly incurred by the ownership from landowners...
in local markets. The risk-return premium should be added to the regular capitalization rate
Capitalization rate
Capitalization rate is the ratio between the net operating income produced by an asset and its capital cost or alternatively its current market value...
to produce a risk-adjusted cap rate
Capitalization rate
Capitalization rate is the ratio between the net operating income produced by an asset and its capital cost or alternatively its current market value...
at full occupancy for a local market. The ranking is calculated based on three-year forecasts
Forecasting
Forecasting is the process of making statements about events whose actual outcomes have not yet been observed. A commonplace example might be estimation for some variable of interest at some specified future date. Prediction is a similar, but more general term...
of home prices
Real estate pricing
Real estate pricing deals with the valuation of real estate and all the standard methods of determining the price of fixed assets apply....
(reflecting underlying home-price appreciation
Appreciation
In accounting, appreciation of an asset is an increase in its value. In this sense it is the reverse of depreciation, which measures the fall in value of assets over their normal life-time...
potential) and gross
Gross (economics)
In economics, gross means before deductions. The antonym is net, meaning after deductions.-Usage:In this sense, it may appear an adjective, following the noun it modifies, e.g., "earned two million dollars, gross"...
rents (as a proxy for potential investor cash flow
Cash flow
Cash flow is the movement of money into or out of a business, project, or financial product. It is usually measured during a specified, finite period of time. Measurement of cash flow can be used for calculating other parameters that give information on a company's value and situation.Cash flow...
).
Mortgage Crisis
With the slowdown in housing sales, HomeVestors has helped the real estate market by buying homes from distressed owners who are facing foreclosures. According to The EconomistThe Economist
The Economist is an English-language weekly news and international affairs publication owned by The Economist Newspaper Ltd. and edited in offices in the City of Westminster, London, England. Continuous publication began under founder James Wilson in September 1843...
, “one in four American borrowers are under water. Over 4m households owe at least twice as much as their home is worth. The resulting foreclosures cause a lot of damage. When homes are foreclosed upon and sold by lenders, the discount rises to 35%, largely because the property is not being maintained. The steep drop in price harms other homeowners. The values of neighboring houses are pushed down, forcing other borrowers deeper under water”.” Additionally, “some 5m homes have entered foreclosure in the past three years. Credit Suisse estimates that over 9m more will enter in the process in the next four years. (In normal times, new foreclosures run at fewer than 1m a year).”
With the recent mortgage crisis, a lot of homeowners have to get out of real estate quickly as prices and equity go down. Many of the sellers are looking for a quick sale. HomeVestors franchisees offer 55% to 65% of the estimated market value of the homes, minus the renovation costs. This service benefits people who lack the time or inclination to fix up and sell a home themselves as well as the surrounding homes and community.
History
HomeVestors was launched in the late 1980s when real estate agent Keneth D’Angelo started flipping houses. By the mid-1990s D’Angelo was recycling 150 houses a year in the Dallas area. He sold his first franchiseFranchising
Franchising is the practice of using another firm's successful business model. The word 'franchise' is of anglo-French derivation - from franc- meaning free, and is used both as a noun and as a verb....
in 1996. After D’Angelo died in 2004, John P. Hayes, a consultant for HomeVestors, took over the franchise company. Hayes, a former Communications professor at Temple University
Temple University
Temple University is a comprehensive public research university in Philadelphia, Pennsylvania, United States. Originally founded in 1884 by Dr. Russell Conwell, Temple University is among the nation's largest providers of professional education and prepares the largest body of professional...
, fell into the franchise business after writing the book Franchising: The Inside Story. Hayes is no longer with the company. The current management consists of Ken Channell and David Hicks, who are co-presidents of HomeVestors.
Corporate Sponsorships
HomeVestors is the corporate sponsorSponsor
To sponsor something is to support an event, activity, person, or organization financially or through the provision of products or services. A sponsor is the individual or group that provides the support, similar to a benefactor.-Definition:...
of Rebuilding Together
Rebuilding Together
Rebuilding Together is the nation's leading non-profit organization working to preserve affordable homeownership and revitalize neighborhoods by providing critical home repair and modification services to those in need at no cost to homeowners...
, a Washington, D.C.
Washington, D.C.
Washington, D.C., formally the District of Columbia and commonly referred to as Washington, "the District", or simply D.C., is the capital of the United States. On July 16, 1790, the United States Congress approved the creation of a permanent national capital as permitted by the U.S. Constitution....
-based non-profit group
Non-profit organization
Nonprofit organization is neither a legal nor technical definition but generally refers to an organization that uses surplus revenues to achieve its goals, rather than distributing them as profit or dividends...
that preserves affordable homeownership and revitalizes communities by providing critical home repair and modification services to those in need at no cost to homeowners.