Doorvest experience journal

[Harris Lee]

Hello BiggerPockets, 

I'm going to start a thread that details my investment journey with Doorvest (https://doorvest.com) . Doorvest claims that they help identify, purchase, and own rental homes for a littles as 35K and help generate cash flow.

At the moment, I'm little skeptical but wanted to give it a try and write each steps here (good or bad) and help the community here. 

My very first step was signing up and Doorvest books an appointment with you. I received an email as shown below. My first appointment with them is early May, so i will updated how the meeting went and answers to questions that I have for them as well.

How it Works:

We’re a full-service real estate investing company simplifying rental property ownership.

• We work with you to spec out a home. Build your home criteria based on investment goals, risk profile, returns desired, holding timeline.
• After the framework is filled out, our acquisitions team will start curating a selection of homes specifically for you to choose from. Once you’ve chosen a home, we buy it, renovate it, place a resident, and offer it to you for purchase.
• Once you become the homeowner, we transition into a property management role and handle the day-to-day operations of the rental.

The Numbers:

We specialize in single-family rental homes in the $160-250k range, with an average price of $170k-$190k. The ideal home price for you will depend on: 1) downpayment size 2) risk appetite, 3) preference for more cash flow or appreciation.

• Given our price points, our investors need to have 35-45K to start, on average.
• The typical cash-on-cash return on our properties net of loan payments, insurance, taxes, and property management fees is 6-8%.
• Ultimately, you can obtain financing from any lender, although we have partner lenders that can provide very competitive rates.
• Our customers typically get a 30 year fixed mortgage with a 20-25% down payment. You can structure your home with an LLC, or even invest with multiple people.

Peace of Mind:

• 1-Yr Rent Guarantee: We guarantee rent for the first year, so no matter what you will receive your rental payments uninterrupted and you’ll be making money from day one.
• We only ask for a 1-yr commitment to working with us as property managers. Beyond that year, there are no commitments and no restrictions to what you do with the home. You are also not committed before you purchase the home, and can back out at any point.

[Carlos Ortega]

They're fine for buying a turnkey, older home that gets "spruced up" and comes with a 1-year warranty on their repairs. Especially if you don't have the time or know-how to do it yourself. It's the one-year required management agreement at 10% that can get you (although you can re-up the following year at a discount if you pay the entire year at once).

What you definitely need to avoid is leasing through them, should your property become vacant. See, it's a snazzy start-up where everything is remote (besides their main office in SF) and they got da fancy "algorithms" & da nifty "machine learning" with a coefficient quadratic equation here and a pythagorean theorem there that tells them what rent should be and tenant profiles you should look for. Say you got a neighborhood in suburban Georgia with a certain type of industry in the area, well, okay, cool, but you're gonna have a 24-year old recent Berkley graduate still living with their parents to manage the property! Because see, they've got a script & the software to tell them how to respond to tenants & owners, what the cost of a repair or appropriate vacancy rate should be, etc... see where this is going?

Without proper boots on the ground, your property will never get the proper love & respect it truly deserves (I get it. It's an investment. It's a dollar figure on a spreadsheet. But it's also A HOME). If it sits vacant for months at a time, the data model gets recalibrated and they'll tell you to lower your rent calibrations, but maybe what it needs is someone to tell you "you know what? yellow walls don't really work in this city" or "actually, there's a bottomless pit in the front lawn that is putting people off". But because Doorvest relies on a Zillow feed to feed their data monster, they may not know you have a portal to the 7th layer of Hell located on your property. "It looked fine on Google Maps!" 

So... if I were to advise a friend, I'd tell them, sure, if you really wanna buy, this platform is fine, just like Roofstock is fine, if you really don't have a team built out and trust built in to find better deals & opportunities. But please for the love of all that is good, plan your exit strategy with their property management, because that has been a giant dud for me and do not see it getting any better should they continue the hands-off, digital approach to placing & managing tenants.