Roof stock for turn key investing
Real Estate Agent · Broomfield, CO · Member since 2017 · 21 posts · 5 votes
Has anyone out there invested in SFR using roof stock.com? Seems like a good/ low cost way to get into real estate investing with someone who has about 20k to invest. Any thoughts?
Disclosure: I am an employee at Roofstock
@Zachary Beauchesne A turnkey provider is someone who rehabs the home and sells it for retail value. They're essentially flipping and selling it to a buy/hold investor. It's a great way to get started and learn the ropes (passive investing).
There are different levels of "turnkey" and suppliers on Roofstock - just depends on what you're looking for. They all go through a certification process before they're listed. Make sure you buy single family homes on comparable home sales vs buying based on a cap rate.
Run your numbers, evaluate different sources, and start picking the right strategy for you.
I've bought two rentals through Roofstock and here are the numbers on one of them:
Address: 19520 Pasnow Ave Euclid OH
https://www.zillow.com/homedetails/19520-Pasnow-Ave-Euclid-OH-44119/33624298_zpid/
Price: $52,000
Down payment (20%) + closing costs: $15,000
Rents: $950/mo
Expenses (principal, interest, taxes, insurance, management): $482/mo
Rents (950) - expenses ($482) = $468/mo
I didn't include repairs here since it varies but avg ~$200/mo
I hope this helps!
Search around a bit and you'll be able to find a few cases. Overall experiences seem mixed to negative. There are a lot of reputable turnkey companies out there, so if you want to go that route make sure you consider many options!
@Zachary Beauchesne Roofstock is not a true turn key company. They can better be described as an alternative platform to the MLS. They don't own the properties and they haven't done a full scale rehab that a a quality turn key company will have done. Essentially, you are just buying an existing rental with some assurance that they have had the property inspected and that it meets their standards.
@Zachary Beauchesne Roofstock is not a true turn key company. They can better be described as an alternative platform to the MLS. They don't own the properties and they haven't done a full scale rehab that a a quality turn key company will have done. Essentially, you are just buying an existing rental with some assurance that they have had the property inspected and that it meets their standards.
I agree with Mike, although hesitantly because every time I say I'm not a huge Roofstock fan, one of their employees messages me and gets on me for it. But Mike is right on how their company is set up. That's in contrast to how regular turnkey providers work- they source their properties in-house, rehab them in-house, and manage the tenant placement and property management. In my opinion that offers a lot more consistency in the product. But to your question though about--could this be a good potential investment strategy... sure! It's most of what I've always done. I've never wanted to work on my properties, so turnkey is perfect. I think there are a lot of reasons turnkeys can be great first investments, even if someone eventually wants to work on their properties later.
I'd be very careful with turnkey as a first time investor. Real estate agents are the best resource you have, and with turnkey, you don't have a buyer's agent with a legal obligation to represent your interests. In my mind, the primary value add for turnkey is finding potential deals, which is important for scale, but not so much if you just need to find a single property to invest in. I've also found many turnkey companies to be unresponsive, unprofessional, and even downright rude. I have tried to make several offers with properties listed by turnkey companies, but the best deals they advertise always seem to have "just sold" when it's time to write an offer. In fairness, I am still considering one turnkey company that has stood out above the rest. I won't mention them here because I don't want anyone to think I'm promoting one of them. When it's all said and done though, I do most of my deals with traditional brokers.
I looked at numerous properties on Roofstock (and with many other well known turn key companies) and I just didn't like the vast majority of the deals. The numbers looked great, but the properties just weren't what I was looking for. I like quality, and low risk, and I'm willing to give up a few points of yield for it. If you have the stomach for struggling cities, somewhat undesirable neighborhoods, and hit-and-miss property managers, there are big cap rates and COC returns to be had.
One tip about roofstock though - they do have a filter by (3%+ appreciation). I think this can be useful for broad market analysis (although there are many other factors to consider and other data sources). If you're looking for markets, use their research to find the cities, then just go to a traditional broker or Zillow to find your own specific properties.
If you do buy through them, let us know how it goes! New data = new perspective.
@Allen Tackett I have to disagree that the primary value add with turn keys is finding potential deals. You don't need a turn key company to find deals. The real value of turn key is that it provides a relatively passive investment for inexperienced investors that don't have a lot of time and that might be buying out of state. Turn key has opened up the world of real estate investment to a segment of investors that would not otherwise be able to invest in real estate. Another major advantage of turn key is that a quality turn key company will do a full renovation so that there will be no big Cap Ex expenses. Reputable turn key companies replace HVAC systems and roof if they don't have a certain amount of useful life. Someone selling on the MLS or even Roofstock isn't going to replace functioning mechanicals and roofs just because they don't have 5 or 10 years of useful life left. That's just not going to happen. With a turn key, buyers have a much better idea of what they are getting because they can see the scope of work that was done in the renovation. I also wouldn't put all my faith and trust in a buyers agent. Just like in any business, there are good ones and bad ones. There are plenty of agents that are perfectly willing to shove buyers in to anything just to make a commission, especially out of state investors that don't know any better.
Disclosure: I am an employee at Roofstock
@Zachary Beauchesne A turnkey provider is someone who rehabs the home and sells it for retail value. They're essentially flipping and selling it to a buy/hold investor. It's a great way to get started and learn the ropes (passive investing).
There are different levels of "turnkey" and suppliers on Roofstock - just depends on what you're looking for. They all go through a certification process before they're listed. Make sure you buy single family homes on comparable home sales vs buying based on a cap rate.
Run your numbers, evaluate different sources, and start picking the right strategy for you.
I've bought two rentals through Roofstock and here are the numbers on one of them:
Address: 19520 Pasnow Ave Euclid OH
https://www.zillow.com/homedetails/19520-Pasnow-Ave-Euclid-OH-44119/33624298_zpid/
Price: $52,000
Down payment (20%) + closing costs: $15,000
Rents: $950/mo
Expenses (principal, interest, taxes, insurance, management): $482/mo
Rents (950) - expenses ($482) = $468/mo
I didn't include repairs here since it varies but avg ~$200/mo
I hope this helps!