Has anyone invested through Roofstock.com?

Question

Hi BP Investors!

I wanted to see if any members have gone through Roofstock to buy and hold for cash flow properties.  The main questions I have are 1. How was the process and current experience of buying and holding through them? 2. Are the numbers they advertise on their property listings close to being accurate? 3. Would you buy through them again if you have? I am looking for some turnkey options out of my market (Northern Virginia) because it is just too expensive for me to invest here outside of the one rental I own here.  Any and all feedback is greatly appreciated!

Rex Celle · Answer

@Marcus RiddickI bought a property in Stockbridge, Georgia through Roofstock.com In 2017. The process was pretty smooth and the numbers are accurate. What I like about them is that they vet the properties By requiring official information regarding the homes before they post them for sale, and they make it easy for buyers to connect with Lenders and out of state property management companies. In some cases the property management rate is lower than 10% as they have an agreement with roofstock To lower their rates for customers they earn business with through their website - in my case Excalibur Homes in GA honored a 6% management fee. I have not sold yet but I would consider them once that time comes

James Wise · Answer

Cool deal. Here are some best practices in regards to choosing markets & properties in those markets.

Tons of turnkey markets out there. Many are well represented by sellers & turnkey operators here on BiggerPockets. The most popular markets are

• Cleveland
• Toledo
• Memphis
• Birmingham
• KC
• Indy
• Detroit

Each of these markets is popular with turnkey investors because of the low barrier to entry, high rental demand & high rent to price ratio. I recommend setting up keyword alerts for each area as they are discussed in the forums daily with advertisements posted in the BiggerPockets marketplace hourly.

One thing to note when looking at the individual markets, you can make or loose money in any market. Don't think that one particular out of state market will shoot you to success or abject failure. It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.

• Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
• Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
• Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
• Make sure you get clear title. If using a lender this is a non-issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
• Make sure your property manager is a licensed real estate brokerage.
• Understand you can not eliminate all risk, only mitigate it. If you are risk-averse real estate, (especially out of state) is not for you.

James Wise · Answer

Roofstock isn't a turnkey company so you aren't doing anything through them other than viewing the properties online. It's basically a Loopnet or an MLS so depending on which property you buy from the marketplace you may have a widely differing experience as you'll be buying from different unrelated sellers and using different unrelated property management companies. What you want to do is figure out which property managers are in the markets you are looking at and then do due diligence on them as those are gonna be the folks you'll be involved with.

Jason G. · Answer

I've purchased several properties through Roofstock and I'm not a fan of their neighborhood rating.  I think it is one of the weakest aspects of their platform.  They should either chuck it or revamp how they review the areas.  I never trusted those ratings and would do my own research before moving forward on making an offer on a property.

Ken Maddis · Answer

I  joined Roofstock last August as a newbie looking for my first property.

I saw a property in Jackson Ms that they rated as a 4/5 star neighborhood priced at $80,000. When I researched that property I found another next door on the MLS, called a realtor and made an offer on it for $32,000 and won.

Through my conversations with the realtor, inspector, and PM (I called the Roofstock preferred PM), they all were all calling it more of a C class property with low property values, poor schools, and low rents, compared to some other better neighborhoods. I subsequently bailed out of it for those reasons, and also after the inspection revealed far more tenant and owner damage and neglect than I was willing to deal with on my first property. Though it was not a Roofstock property, it supported what the realtor, etc was telling me.

Based on what I learned from my own research, I would give the Roofstock rated 4/5 star neighborhood no more than a 2-1/2 star rating.

The other thing that I wasn't comfortable with is their quoted insurance rates were quite substantially different than what I found from my own research. My guess is they are quoting actual cash value policies (ACV) and I was looking for replacement cost, which is always higher. And lastly, it seemed the capex rates they use is 6%, which for me is low. I use 12% for all of my own projections.

I think Roofstock is doing a great job overall and if I found the right property I would no doubt use their platform, but my point is be sure to do your own research and vetting on the homes and neighborhoods, and try to use your own #'s when determining cash flows, etc.

Marcus Riddick · Answer

@James Wise Thanks for the info!  I planned on doing exactly that in regards to PM on any property that I decided to purchase through them.

Dan Rowley · Answer

I've kicked the tires with Roofstock also.  And as @ ken maddis pointed out I do think some of the neighborhood ratings are shaky.  I think they are chasing areas with cash flow and so mostly what I've seen there are more like C class (not B).  Not a terrible thing, just know this going in and do your own due diligence of the neighborhoods also.

Marcus Riddick · Answer

@Rex Celle Nevermind I found their estimate section for expenses!

Marcus Riddick · Answer

@Rex Celle Did you use their numbers to do your analysis or did you come up with your own to do your analysis?  I am trying to find where they estimate operating expenses on each property.

Marcus Riddick · Answer

@Rex Celle Thanks Rex! There is always that initial fear of doing something non traditional.   I think the concept of Roofstock is awesome. Being able to tap into other markets outside of my own is something that I really want to do.

Has anyone invested through Roofstock.com?

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