My Roofstock Investing Experience

[Ross Yeager]

I recently went through the full process of acquiring a property through Roofstock (www.roofstock.com). I haven't seen many reviews out there on them, so I wanted to provide one myself. 

My deal fell through at the last minute (i.e. after getting PM, insurance, loan, and going through the appraisal and inspection contingencies), but I documented the whole process on my blog which can be found here: www.investwithross.com . The blog has the most recent posts listed first, so you'll need to sort through to the end if you want to read through the experience in chronological order.

A summary of my findings can be found below: 

I would recommend Roofstock from a platform and customer service perspective, but it is very very hard to find deals that are worth pursuing. The deal I was engaged in was very good from a cash flow perspective ($400/month with 11-15% cash on cash return depending on what the final numbers would have been), however the seller terminated the contract after I offered the appraised value as a counter offer. 

I have a detailed list of pros and cons in the latest post on the blog, but I'll list some of them here as well:

Pros

• Great customer service. Both Alexis, Jason, and Zach were very helpful, quick to respond, and generally nice to work with.

• They are in the Bay Area, which is also where I live/work

• The process was super easy. They took care of putting together all of the paperwork and keeping track of timelines specified in the PSA. They also scheduled both the inspection and appraisal.

• They provided recommendations for home insurance, bank loans, and property management. I used their recommended bank and one of their recommended PM companies, but got a better deal with home insurance through the loaning bank. They provided options but you are completely free to shop around and choose your own for any of those categories.

• The Roofstock marketplace is like any other online shopping, so it is easy to take a look at a lot of properties quickly.

Cons

• It's really hard to find any deals that are, in my opinion, worth buying. Most of the properties listed on their site are at or above market price and in areas where appreciation will be a very small factor. I've been looking at their site for months now, and only found maybe 2-3 (including the duplex I entered into contract) that would cash flow above 8-9%.

• There is that strange feeling of conflict of interest with Roofstock being the middle man between both the buyer and the seller. As I mentioned in the blog, there is no sign of this actually occurring, it is just not a typical setup.

• You never get any direct contact with the seller. I believe this would be a key advantage for me during the negotiation stage as well as just building a positive relationship with the seller to potentially avoid situations like I experienced where the seller went dark for days beyond the expected response date, denied the counter, and terminated the contract.

• Due diligence on the property is still difficult despite getting inspection reports and pictures. Their reports are fairly detailed but still leave you wanting a bit more, and generally with only a few days to respond after receiving the inspection, there is generally not much that can be done unless there was something super obvious in the report.

• This negative was specific to my deal, which was a bit tainted due to the final outcome. The seller failed to respond within one of the contract deadlines so we had to extend the timeline. Once the seller finally got back 12 days after my counter offer, he did not counter again and instead terminated the contract. It seemed to me like he may have not been a very motivated buyer. Since I had no contact information or way to get a hold of the seller, it was completely in the hands of Roofstock and I felt a bit helpless through that whole time period. 

[Jay Hinrichs]

I am going to reply to your post from the other side of the table as a seller as I have sold properties on Roofstock and have many on the site today  .

One I love what they have done I have been to their Oakland headquarters and met with top management .. and Jason is a great guy to work with.

AS for dealing direct with sellers this is not common in any real estate transaction when you have brokers involved .. And as a seller one of the great things about roofstock is we don't have to deal with all the tire kickers out there.. 

Roofstock earns their fee by managing you the buyer.. Most sellers are like me professional in the industry or semi professional.. so its just black and white its a deal or no deal.. 

I think what happens is that people may confuse this site with a site like Auction . com were you bid in auction style for the homes.. 

I am constantly getting offers at 10 to 30% or more less than ask.. I don't even counter those.. those of us with ready to go turn key properties that cash flow 5 to 8% don't need to take lower offers.. Just like any other turn key seller in the US the price is the price..   Other wise a buyer needs to jump on a plane and go search this all out for themselves and spend a lot of time on the ground work with a local agent and make your offers.. there is a fine balance here. 

I closed a very nice property I had in INdy 2 weeks ago.. I had it on the site for 130k  rehab was retail standards slab granite stainless appliances great area for appreciation in a HOT indy sub market.. I got offers on it to start at 80k.. 

I did lower to 125k but that was as low as I was going to go I could just list it on MLS and sell it for the same or more.

What these guys have built is very robust and a game changer as it relates to 3rd party turn key marketing companies in the space if you have talked to any of those over the years most are represented on BP.

the value of roofstock is they are more cost effective than most 3rd party west coast based marketers and they handle the buyer.. most marketers just hand the seller a lead.. and that can be a HUGE time suck. 

So that's my thought from the other side from the sellers perspective.. but I Love what they have done and hope they really make it big..