Should I buy using Roofstock?

[Chandler Harker]

I found Roofstock.com to be very helpful in determining rent value, expenses, current tenant history, and management options but I was wondering if successful investors actually use this website. It seems like this website does most of the due diligence for me but it may be hard to find a great deal Thoughts?

[Tim Johnson]

Happy to share my experience:

I was looking to diversify geographically, and though maybe a small ($100K) property might be a good way to test drive Roofstock. (And apparently I also felt like being an idiot, and throwing some money away). As others have noted, you’re unlikely to find a screamingly great deal on Roofstock, but I found a property I felt might be decent in the Pittsburgh. And with Roofstock’s “rent guarantee” program (essentially Roofstock promises payment 90% of rent starting 30 days after close if PM company can’t place a tenant, as well as covering initial leasing fee.). That coverage swayed me, and made the offer and had it accepted.

Through the purchase process, have to say the Roofstock team was exceptional. The website is great, very easy to use; and the people I interacted with were very professional, quick communication, everything you’d want.

...and then it went off the rails.

After closing, it was a struggle to get communication. When I did get communication, it was like they were using the wrong boilerplate. I was assigned to a "Zack" who I will not be surprised if I one day learn is actually a bot. As you have to use one of their "approved" property management companies to get the "guaranteed rent" program, I wanted to get those introductions complete. Should be simple enough, right? Instead, the email dialogue went like this: Roofstock Zack "Roofstock will notify your property manager that your property has closed and transfer all documents such as tenant contact information, lease, ledger, and final HUD." Me: "can you connect me with a property management company" (property is actually vacant!). Roofstock Zack: "We are making sure your PM, Marketplace, will receive the security deposit, the tenant info so they can collect rent payments, and the keys if available". This went on for waaaaay too long. Took more effort than it should have to convince that the property is vacant and we needed to start marketing.

One side point here, Roofstock does have a 30 day satisfaction guarantee. Potentially this “slow rolling” during that 30 day period is designed to stall the amount of time you have to realize there are serious problems that need addressing?

When we finally got locked in with a property manager, some issues started to pop up. Apparently, some of the kitchen cabinets don’t have doors; the water heater was actually red-tagged (need proper venting) and the PM feels the steep driveway is a big deterrent. If I squint, in one of the photos in the home inspection report, just a corner of a cabinet without a door peeks out - but all the kitchen photos do not show this issue! The red-tagged water heater is not mentioned at all (I’m out $1500 to fix that one!).

90 days in, I’m still tenant-less and my efforts to collect on the “guaranteed rent” program are fruitless. Responses include “I appreciate you!” “My manager is out of town!” “These things are slow, we need a few more weeks to set it up!” In their marketing material, they refer to the “guaranteed rent” program as “Immediate cash flow”. I’m reminded of the line in A Princess Bride: “There is that word again...I do not think it means, what you think it means.” One of us, at least, doesn’t get the word “immediate”.

Have tried addressing these with RoofStock, but the response are usually dodges - when asking about how to get the guaranteed rent program going, I get responses like “what is your property manager doing to get a tenant in?” “We will reach out to your property management company to see what can be done about getting a tenant”. “My manager is out of town, but I’ll reach out”. As apparently only Zack-bot’s manager can resolve issues, I’ve asked for that person’s contact info...dead silence.

Frankly, as I am 90 days in with no progress on collecting on their “guaranteed rent” program, I had have to advise it appears to be a marketing scam they have no intention of following through on - as always, caveat emptor.

They’ve also shown no inclination to address the key issues (red-tagged water heater; missing kitchen cabinet doors) that were missed in the vetting and inspection process. if you’re making a remote investment, you are 100% reliant on the quality and integrity of the partners you’re choosing...again, caveat emptor.

If you’ve been doing this for any period of time at all, I’m sure you’d agree that any transaction can go sideways at any point. The key to getting through those moments is at least being able to pick up the phone, or sit down in person, and work out a fair deal. Perspective is everything, but I think my concerns are pretty reasonable and Roofstock should be working to set them right. Unfortunately, my experience with Roofstock is the opposite - a lot of dodging the questions, not willing to back up their marketing claims and transactions. They say you learn more about someone in stressful situation than in a successful situation - and I am learning a lot about how Roofstock handles disappointments. Can’t recommend them at this point.