Another Roofstock Review

[Mike Garner]

Every 6 months or so a Roofstock review pops up and I've completed two purchases with them and so I figured I'd share my experience(s) with everyone here. 

Both were cash deals on low cost properties in the midwest. In both cases, I paid almost exactly 20% below the listed price. In one case, this was accepted with 1 back-and-forth offer, and in the second case there were literally 10+ offers/counters over a week or so. While there are many hundreds of properties available to buy on roofstock, only a small portion are going to be great at their list price and, as you might expect, those tend to go quickly. I've had more luck following properties that aren't quite great deals, but if they sit on the market and you can negotiate better numbers, can turn into great deals. 

Cash deals close quickly on Roofstock. My first one took 9 calendar days and my second took 14. 

In both cases I had the same transaction coordinator: Danielle Sees. This person basically serves as a liaison between the interested parties. Important to know that you don't have a real estate agent in this transaction but you're only paying Roofstock .5% or $500 (higher of two) to be able to buy on their platform, have them do some due diligence for you, connect you with vendors, etc. But, always look out for your own best interest. 

Positives: 
The deals closed very quickly, they were as-represented, and the transaction coordinator is very helpful in keeping everything moving. You could be a complete novice and buy a property, with tenants, have a PM in place, and really never even touch the property. Because it was a cash deal, I didn't even have to use a notary, and we just did an e-closing. 
Roofstock's projections are fair, if not accurate. My experience is that the numbers are not accurate but they still work. Eg. They'll assume too much appreciation, but they'll also assume the property taxes are way higher than they actually are. I think they try to be fair, and you can edit any assumptions that you'd like. 
Roofstock basically gives you an undo button. You can buy the property and within 30 days change your mind and they'll buy it back from you. I'm not really sure of anywhere else that is going to give you this. 

Negatives:
You cannot communicate when making offers and the only thing you can really negotiate is price. So, if your skills are negotiating, they'll be under-utilized here. 
Roofstock makes small mistakes that seem to always disadvantage the end-user. For example, they might say that the deductible on a home warranty is $75, when it's actually $100. They might say something has an inspection contingency when it doesn't, etc. I never encountered any major mistakes, and even on minor mistakes they gave me the option to back out, but it would be better to just not have errors. 
They have suggested property managers, insurance companies, etc., but you shouldn't really take this as any sort of endorsement or vouching. My anecdotal experience is these companies are no better than you could find on your own and sometimes worse. While communication with roofstock was often good, communication with vendors they recommended was often terrible. If a PM takes 5 days to reply to me when they want my business, you can guarantee their communication will be poor after they have it. Be prepared to find your own PM. You do NOT need to use their recommendations. 

How the process works:
Once offer is accepted, you'll be charged the $500 or .5% to your card and the transaction coordinator reaches out. 
You'll need to sign a PSA within a couple days. 
Shortly after that, you'll be given instructions on wiring earnest money deposit $1500 (Note that most banks will charge you something like $25 for this)
Next the coordinator will ask insurance and PM companies to contact you. Sometimes this is just one company, sometimes there are several. 
While you're choosing people to work with Title will be doing their job and the coordinator will work with them to make sure they have everything they need. 
Before closing, you'll want to have insurance in place and a PM (should you choose to use one). You'll need to sign an agreement with a PM and a request to bind with insurance. Insurance will have to be paid, but you won't need to wire this money. 
During closing you'll have dozens of pages to sign, but Title should make this super easy. Sign here, sign there, date here, date there. The exact amount that you'll have to wire upon closing is not as simple as Price from roofstock minus 1500 earnest. There are some fees with title but usually you'll also get some prorated amount of rent (suppose you close June 14, you'll get 16/30ths of June's rent), etc. Security deposit will be transferred to PM. Back taxes should get taken care of, etc. 
They'll verify your wire, make sure all parties have correctly signed all documents and voila. You'll get a congrats email and now you're basically on your own. Your PM will notify tenants of the change and if you have a good PM, they should take care of everything after that and you'll start receiving money deposited into your account the next month. 


Whether you should use Roofstock really depends on what you're looking for. If you want a truly turnkey opportunity, Roofstock isn't that. They'll help you put the pieces together but it stops just shy of actually being turnkey. If you want to find the diamond in the rough that is off-market and will be an amazing flip after you put a bunch of work into it, this isn't a great fit either. But, if you want someone to hold your hand and make things very simple for you, then this is a good entrance into the market.