- High entry cost equals High risk. Flipping houses means you must buy a house with your own money, invest more money in remodeling the home, and then selling the home at high enough profit that it was worth your time, money, and energy. Re-Bath franchisees have less into the project than house flipping. Plus franchisees take a sizable down payment, meaning they fund the job with the customer’s funds, not personal funds.
- Relies on market timing. Flipping houses works best when there is a seller’s market, driving equity appreciation and mitigating risk. The real estate market goes in cycles, creating between ups and downs. During a buyer’s market, sellers have to discount their home or hang on to it longer, incurring more mortgage and interest payments plus maintenance costs, increasing risk and decreasing returns. In contrast, any homeowner who is looking to live in their home longer, looking to sell, or just recently purchased a home they want to customize to their taste, are all Re-Bath customers. Re-Bath franchisees don’t have to perfectly time the market to make money.
- Using your money or the bank’s money. House flippers tie up substantial personal funds or tie up credit to purchase a house to flip. Re-Bath customers leave sizeable deposits Re-Bath franchisees use to purchase materials and pay their help. In other works, they grow their businesses largely using the customer’s money.
- No equity being built. House flippers engage in buy-sell activity. They are in the business of transactions. Re-Bath franchisees build a brand. Brand equity is transferable to the next owner, creating equity for Re-Bath franchisees.
- Opportunistic. Competition for deals. House Flippers are high risk takers and bid against the same properties as other potential home buyers and speculators. In a seller’s market, this inflates price, increases risk and may diminish returns if the seller’s market doesn’t continue one the house flipper is ready to sell the home. Re-Bath franchisees are in a more evergreen business. Homes have multiple bathrooms and therefore multiple job opportunities with each home.
- Can’t defend their market position. Buying and selling houses is a commodity. The home buyer is buying a product or home, they aren’t buying into a brand. The homebuyer largely doesn’t care who owns it. In contrast, Re-Bath is the largest bathroom remodeling company in the country. Regardless of how they heard of Re-Bath, because of our stellar reputation customers want to do business with Re-Bath.