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Largest home buyer in HVA history signs franchise agreement
By Monica Feid  | | Mark Wolf, John Hayes, and Mitch Cohen. | | Mitch Cohen, a native of Brooklyn, NY, was hoping to earn $200 a week to pay for school and make a car payment when he took a job 20 years ago at a real estate agency. He was a gopher. He did everything from picking up lunch to answering the phone. It was a phone call one day that changed his whole future. A homeowner rang, wanting to talk to someone about selling his house. Cohen answered. But instead of asking for an agent to list the house, the owner explained that he was going through a messy divorce and he just wanted to get rid of the property for cash as quickly as possible. Cohen offered to meet with him. "I only had $500 dollars to my name," Cohen says. But he visited the homeowner, toured the house and made what he called a ridiculous offer. "The only problem was, he accepted it!" Thanks to a generous uncle in Dallas who loaned him the cash, he was able to follow through on the offer. Cohen turned around and sold the house and collected a nice profit. It was official. He was hooked. Cohen took that one experience and began repeating it. "It was relatively simple," Cohen explains. "I didn't have much money, but I took the profit from the first deal along with the principle investment, and I ended up doing one deal every three months. Then it became one a month." As business picked up, so did Cohen's knack for selling rehabbed properties to happy customers. That's when Cohen crossed paths with Mark Wolf some 10 years ago. Wolf, also from Brooklyn, runs the oldest mortgage banking business in the state of New York, which turned out to be the perfect career when a string of Cohen's homebuyers came looking for a loan. Before long, Cohen and Wolf were making deals together -- good deals, and lots of them. When Cohen invited Wolf to become his partner, business only got better. Today, their staff includes four buyers, five sales agents, and two sales managers. They purchase a dozen houses a month in an economy that is correcting itself. And business is still great. As the largest home buyer in the state, they buy homes in all of the New York boroughs except Manhattan, as well as parts of Long Island and Westchester. The average purchase price of a fixer-upper is about $275,000, according to Cohen. That might be a two-bedroom attached house, or a three-bedroom home that needs anywhere from $25,000 to $50,000 worth of work. "But the market is still strong," says Cohen. "And the demand to purchase is still strong." The secret to success, he says, is understanding the market. "We buy what the market allows us to buy," explains Cohen. "We had reached as high as 40-50 [homes] a month when the market allowed. But anybody whoever talks to me about this market and how to beat it is going to have problems. Hoping for a miracle is not a good business plan." However, a miracle might be exactly what customers experience when dealing with Cohen and Wolf, because the best part of the whole process is turning those homes into dream homes for buyers. The exit strategy is built into the marketing. "We have 400 to 500 people a month walking through our door because we're a large advertiser in local newspapers," Cohen says. Known as Buy A Home in the ads, specializing in the low- to middle-income bracket has allowed the business to turn many of their prospective buyers into homeowners. With 75-80% of buyers coming from advertising and the other 15-20% coming from referrals, Cohen says that Buy A Home sells everything they buy. "We're never concerned about the sale," he says. "We're more concerned about the buy and the rehab, because that's where you make your money." Cohen and Wolf buy houses at a deep enough discount that they're able to rehab and retail it for fair market value. And selling about three houses a week is a clear indication that buyers love the price! For one to three percent total cash at closing, buyers are able to get into a beautiful home for a song. "We're really selling a monthly payment [that is] not vastly different from paying rent," Cohen explains. For about the same cost as one month's rent, a month's security deposit, and a broker's fee, Cohen and Wolf make home ownership dreams come true. And the satisfaction is sweet. "We went to a closing last week, and the husband and wife had these tears of joy. Obviously, it was a big moment for them, the American Dream. Seeing that total joy and then hopefully getting referrals is the greatest thing." Now these real estate veterans are taking another big step and rolling their whole business into an HVA franchise. The seed was planted when Wolf read a six-page feature in Mortgage Banking magazine about a national franchise that did, well, what he and Cohen were doing. Only with a lot more cash. The article said HVA was in the business of lending money so investors could buy houses, and the company was planning to expand to the East Coast. Enough said. A trip to Dallas was in order. Access to more affordable financing was a huge draw for Cohen and Wolf. And as they inspected the franchise system up close, they saw that it fit in nicely with their current business model. They weren't going to have to change a lot of their organization, because what they had perfected on the local level mirrored what HVA was doing nationally. Cohen admits that he didn't phone other franchisees when researching HVA either. "I just spoke to John Hayes and Jason Killough," Cohen says. "And I clearly understood that these guys knew what they were doing." "It seemed to me to be a smart move for [HVA] to be involved with us, and us to be involved with [HVA]," says Cohen. And he also enjoyed the thought of bringing the brand to a whole new audience in New York. "I didn't see any downside to being [one of] the first in the door," he says. HVA President and CEO Dr. John P. Hayes agrees, and he can't help smiling when he talks about Cohen and Wolf. "First, these are genuinely good people with a sense of humor. Second, they're experts. We're hoping we can teach them a few things, but we all know they didn't buy our franchise because they need to learn how to buy and sell. They recognize the value of our brand and our financing. Awarding them a franchise is one of HomeVestors' finest moments. It strengthens our positioning as we open the New York City market. When the largest independent home buyer in the market becomes our franchisee, that sends a message to all of our competitors. Hayes is also excited about the effect Buy A Home will have on the HVA network. "Existing franchisees in the New York and New Jersey markets will appreciate having Mark and Mitch in their presence because they've been through a couple of different real estate cycles, and they have all the contacts they need in the marketplace," he explains. "They also raise the bar for our entire franchise network. These guys buy a house every other day! That sets a new level of performance for our top franchisees, who will enjoy the challenge." Cohen remembers a time when franchises like Century 21, McDonald's, and Burger King were just breaking into the New York market. "I heard all the naysayers say, 'This won't work here,'" he says. But history proved them all wrong. And Wolf and Cohen plan to have the same success with HVA. "If a franchise is set up correctly," Cohen says, "it will work in Dallas, it will work in Kansas, and it will work in New York." . . . Monica Feid of BizCom Associates handles public relations services for HomeVestors and its franchisees. You can contact her at 972.490.8053.
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