Roofstock Case Study

[Jason G.]

My girlfriend and I have been saving money for a down payment on our first rental property and had initially been looking at single family properties and multifamily properties in upstate New York. In May 2017 I came across Roofstock and that shifted our discussion to the idea of purchasing an out of state single family property. I haven't seen anyone write a really thorough review of their experience using Roofstock, so I decided to document the journey. I know a lot of people are scared to pull the trigger, especially when they really have no idea what to expect, and just hearing people casually say they either had a great experience or terrible experience really doesn't help much in giving others an understanding of what the experience will be like. I decided to organize the post in date order based upon steps we took and all the interactions we had with Roofstock and their partners that they connected us with, which include Tru Mortgage, Real Protect Insurance, Excalibur Homes, and Mortgage Connect. I found the entire process a good learning experience and I hope others find the same by reading through the post.

May 26, 2017 (Friday)

We applied for a mortgage through Tru Mortgage, a partner of Roofstock through their company in anticipation of purchasing a single family property at $150,000 or less in Atlanta Georgia. We chose the Atlanta area due to their low purchase costs.

June 8, 2017 (Thursday)

We were approved by Tru Mortgage and made an offer on a property in Lithonia, Georgia. The property is a 3 bedroom, 2.5 bath, 1,616 sq ft home built in 1975 on a 17,424 sq ft lot. Roofstock rates the neighborhood as a 3/5, the elementary school a 2/10, the middle school a 5/10, and the high school a 3/10. A tenant is already in the property leased through April 2019 and pays $893 a month. As part of the property inspection report the report indicated that the following capital expenditures would be required:

1. Scrape and paint wood siding - estimated cost $1,650 @ turn.

2. Repair driveway and walkway cracks - estimated cost $2,460 @ 1+ years.

3. Fill holes in yard to remove trip hazards - $90.00 @ turn.

Roofstock requires a credit card at this point and the seller has two days to accept, counter offer, or reject the offer or the offer will expire.

Property Photos

June 9, 2017 (Friday)

The seller submitted a counter offer and we then responded with a second offer which was accepted at $81,000.00 My credit card was then charged a "Marketplace Fee" of $405.00. The Marketplace Fee is .5% of the purchase price. I am also given access to a "Property Closing Timeline" feature on the site for the chosen property. There are twelve steps with an estimated closing date of July 18, 2017. These are the twelve steps:

01. Purchase and Sales Agreement

02. Earnest Money Deposit

03. Financing

04. Insurance

05. Documents and Financing

06. Appraisal Fee for Property

07. Final Insurance Quote and Terms

08. Loan Terms for Financing

09. Property Management

10. Property Management Agreement

11. Closing Documents

12. Final Disbursal of Funds

We were contacted by Marissa at Roofstock via e-mail and was told by Marissa that she would be our point of contact moving forward and requested that I call her to discuss certain details on the phone. I was told I would be sent a Purchase and Sale Agreement (PSA) that will need to be executed via Docusign and asked me who will be on the title, our mailing address, and information for our loan officer. She also stated she would be sending me a home insurance quote in the next few days and would like to know which property management company we would like to use. I told her we would like to go with Excalibur Homes, which was listed as an option on Roofstock. She said the PSA would be sent to us within twenty-four hours. I asked her if it would be sent on Monday since the next day was a Saturday and she said it would be sent on Saturday.

According to Roofstock, "A PSA will be delivered electronically promptly following payment of the Marketplace Fee and must be executed by Buyer within 24 hours of receipt."

June 12, 2017 (Monday)

I asked Marissa if everything was still on track because we had not received the PSA. She stated the seller signed it that morning and it would be sent over later in the day. We received the PSA and executed it through Docusign, but had a question related to part of the agreement which stated that we had an obligation under the DeKalb County Plumbing Ordinance. It stated that we "shall be obligated as a condition of applying for water service from DeKalb County to attach to the application a certificate of compliance signed by a home inspector, Department of Watershed Management inspector or licensed plumber certifying that all plumbing fixtures on the Property are water conserving plumbing fixtures." We wanted to know how we would go about having this completed.

June 13, 2017 (Tuesday)

We executed the Purchase and Sale Agreement. Roofstock verified that financing was selected through Tru Mortgage.

Marissa responded to my question about the plumbing ordinance telling me that as per the lease all utilities should be in the tenant's name and will be checking with the current property manager that it is in fact in the tenant's name and will continue to be in it when the property is sold. However, this did not answer my question because the ordinance appears clear that I need a certificate of compliance. I asked her if she knew if we still needed that certificate if this tenant leaves and is replaced by a new one. Marissa then contacted the DeKalb County Watershed Department who confirmed to her that nothing needed to change if the utilities were in the tenant's name, but that if the tenant left and a new tenant opened an account then the certificate of compliance would be required. They recommended that once I close on the property to have an account opened with the water/sewer service and keep it inactive. She also stated that she would be checking with their inspection company that conducted the inspection if they will be able to complete the certificate of compliance.

I received a separate e-mail from an Alexis at Roofstock who provided wiring instructions for the $1,500 Earnest Money Deposit. I then went to the bank and initiated the wire transfer, which cost $25.00 in addition to the $1,500 sent.

June 15, 2017 (Thursday)

Roofstock confirmed that the Earnest Money Deposit of $1,500.00 was wired to the Title Insurance Company.

Real Protect gave us a quote for insurance. What I found interesting was that in Roofstock's document/diligence vault they had a quote from a different carrier with a lower premium. Their application attached that we were required to fill out contained a lot of questions that are geared towards those with extensive real estate portfolios or who intend to flip houses. I was told that Marissa would be able to help us through those items of the application that we may not know the answers to regarding the actual property. I asked Marissa if we would be receiving quotes from any other insurance carriers and was told that we wouldn't, that this carrier was the only one and that it was a sister company to the one that provided the quote found in the document vault on their site. She also updated us that she was still waiting for a response from the inspection company on the certificate of compliance.

I filled out the application but we did not execute it. I asked Marissa to review and add in any property information we couldn't answer and asked her to send it back to me with any changes she made to it so we can then execute it and send it back to her.

Tru Mortgage sent instructions on completing the required documents to finalize the loan application which we filled out and sent back through their website.

June 16, 2017 (Friday)

We received a response from Tru Mortgage that they received the executed loan documents and that we will be receiving the instructions on how to pay the appraisal fee. Shortly thereafter we received those instructions and paid the fee of $695. We were told we would receive an update once the appraisal was scheduled.

Marissa e-mailed us a completed insurance application. We told her the Tru Mortgage documents were executed and the appraisal fee was paid and we would be sending her back the executed insurance application later in the day. We also asked for an update on the certificate of compliance for the water company. She told us that she followed up with the inspector and is waiting for a response. We sent her the completed insurance application and asked her what the next steps will be as we move towards closing.

An introduction e-mail was sent from Marissa to Excalibur Homes, the management company we chose to manage the property.

June 17, 2017 (Saturday)

Tru Mortgage informed us that our loan has been sent for processing.

June 19, 2017 (Monday)

Excalibur Homes followed up with us and we requested the management agreement for review. After reviewing the document and asking some questions about the fees we completed the agreement and e-mailed it back to them. The management fee is 6%.

Marissa informed us that the appraisal for the property has been scheduled for Thursday, June 22nd. She confirmed that she sent the completed insurance application to the insurance carrier and followed up again with the inspector for the certificate of compliance for the water company.

June 20, 2017 (Tuesday)

Marissa informed me that their inspector could not issue the certificate of compliance.

I was confused because one of Roofstock's guarantees is that they complete "[a] property inspection conducted by an experienced national inspection firm" and provide "[a]n estimate of the cost of major repairs." The entire point of the Roofstock certification process, as per Roofstock, states that "[t]he Roofstock Property Certification allows prospective buyers to see the diligence on each property from home, office or while on the road without the need to enter each home." This is especially important since as part of the buying process we waive the inspection contingency. According to Roofstock's site: "Waived Inspection Contingency: Since diligence information is provided prior to investment, there is no need for a traditional Inspection period or contingency. Investors should carefully review all of the materials in the Diligence Vault before investing." So the fact that the inspection company failed to either issue a certificate of compliance or indicate costs related to complying with the ordinance in order to obtain the certificate of compliance, puts into question, at least in my mind, the entire idea of relying on Roofstock's inspection process, to begin with.

I asked her to follow-up with the seller to see if they ever had one performed. She also explained that a company called Mortgage Connect will contact us to schedule a mobile notary to meet with us to sign the required closing documents once we get closer to the closing date.

Tru Mortgage sent us a Loan Estimate to sign, which we did.

June 21, 2017 (Wednesday)

The Roofstock website gave a notification that the insurance application was approved.

Marissa informed me that she contacted the seller to find out if they ever obtained a certificate of compliance.

I asked Excalibur if they received our completed management agreement and if they would be able to facilitate having such an inspection done to obtain the certificate of compliance. They responded that they can manage the property once we own it, but do not handle inspections prior. They provided a list of several inspectors we could use prior to closing.

June 22, 2017 (Thursday)

Marissa heard back from the seller who had not in the past obtained a certificate of compliance.

I asked Excalibur if they would be able to set up the inspection for the certificate of compliance after we close on the property.

June 23, 2017 (Friday)

I received appraisal report. The property is appraised at $88,000. Of note was that the report indicated that "[s]everal outlets are not properly secured to wall and some outlets do not function properly. Electrician is recommended to diagnose and repair. Estimated cost to cure $500." It also noted that "[d]riveway area by garage has severe cracking from nearby tree root system. Estimated cost to cure $500 (this price estimate does not include tree removal)." The issues with the electrical outlets were not reflected in the Roofstock inspection report.

I e-mailed Marissa with a copy of the report expressing my concerns as the electrical issues were not reflected in the inspection report and their inspector already won't issue a certificate of compliance for DeKalb Water even though they inspected the plumbing and fixtures and now we have an appraisal report that conflicts with the inspection report on the electrical review.

Roofstock gave a notification that the property was approved by the lender.

Marissa responded thanking me for sending her a copy of the appraisal report and said she would like to have the inspection company review the report as the electrical issues may have occurred after the inspection on November 23, 2016. She also reached out to the current property manager to see if they can shed some light on the matter.

I responded to her explaining that we are out of state investors who are relying on Roofstock to facilitate the purchase of this property. That the certificate of compliance issue is already frustrating enough because we have no way of handling it on our own and it is something that should be addressed prior to closing. That we haven't heard back from the management company if that is even something they can handle for us after closing. In addition, if the plumbing fixtures are not up to code then we are looking at potentially hundreds of dollars in extra costs that weren't revealed in Roofstock's diligence vault. Now with this electrical issue, there can be potentially very large costs if there are issues with wiring in the house. I explained that we already have a down payment ready to go on a second investment property and were planning on making offers on properties through Roofstock after we closed on this one, but that we were already stressed over the certificate of compliance issue and now we are getting a little freaked out with the possible electrical issues on top of the possible plumbing ones and I'm not sure how confident we can be in relying on Roofstock.

Moments after sending the above e-mail Marissa e-mailed the management company asking them to respond to my inquiry on whether they could handle the certificate of compliance.

Aside from one of our early contacts, all my communication with Marissa has been through e-mail. She responded to the above e-mail by calling. With respect to the certificate of compliance, she assured me that the management company would handle that. I explained that (1) This should have been something adequately documented in the Roofstock diligence vault prior to any offers being made, whether the faucets, shower heads, and toilets were up to code due to the local statutes requiring the certificate of compliance. (2) Irrespective of that not being done, I need to know if the management company will actually handle it for us after the fact because I still had not heard back from them. Her response was that as per the lease the tenant was responsible for utilities and that it would have been the tenant's responsibility to have a plumber inspect the property, remedy any deficiencies, and obtain the certificate of compliance. This definitely is not the case and she is mistaken about the tenant's responsibilities in this situation. I explained to her that one of the exemptions to the statute is if the property was purchased through foreclosure, which is what the seller did, a certificate of compliance was not needed. It is clear they purchased it on foreclosure, renovated the property, and then rented it and are now flipping it to yours truly. Moving on from that I explained that now we are dealing with this potential electrical issue and if there are wiring issues that mean opening up walls and it would cost a significant amount of money to remedy. She told me that she is (1) Waiting to hear back from their inspector to certify they inspected all the outlets and they were functioning as of the date of the inspection, (2) Waiting to hear back from the current property manager on whether or not the tenant made any complaints about electrical issues, and (3) Waiting to hear back from the current property manager on if the seller or tenant would be responsible for any electrical issues. She indicated from there she may need to get her Director involved in order to have the inspector sent back to inspect the electrical situation.

I received a response from Excalibur and was told the inspection could be completed for $250.00. I replied to confirm that they would set it up with the vendor and the tenant following closing and asked how I would pay for it; if I pay the vendor directly or the management company takes it out of a maintenance fund they will set up that is funded through collected rents.

June 24, 2017 (Saturday)

Excalibur confirmed they would be able to proceed once closing is completed with obtaining the certificate of compliance and explained we would send them the money and they would pay the vendor.

June 26, 2017 (Monday)

Marissa informed me that they will be scheduling a second inspection so the inspector can review the electrical issues indicated in the appraisal. The inspector will also inspect the plumbing to see if it conforms with the DeKalb water regulation and if so issue a certificate of compliance. I asked her if she heard back from the seller or current property manager as to whether they had any additional information regarding the electrical situation. She said she was still awaiting a response.

Tru Mortgage sent a status update informing me that my loan has been conditionally approved by underwriting.

June 29, 2017 (Thursday)

I asked Marissa if she had any updates. I also asked if there were any additional steps to finalize the insurance as the Roofstock website indicates the insurance has not yet been finalized. She told me that she has confirmed that we are all set with the insurance and that the only item outstanding prior to closing will be the inspection. She also confirmed with me that I will be using Excalibur for property management. She told me she will let me know tomorrow if she has the second inspection date, otherwise, another Roofstock employee would keep me updated next week since Marissa will be out of the office.

July 5, 2017 (Wednesday)

I asked Alexis, who Marissa indicated would keep us updated this week while she was out, if there were any status updates with respect to the scheduling of the inspection. She responded that they were currently working with the property manager and tenant for this inspection and will provide me with the scheduling information once available.

July 10, 2017 (Monday)

I asked Marissa if the second inspection had been scheduled and also if the closing will be pushed back since it is next week and the inspection hasn't been completed yet.

Tru Mortgage contacted me for some additional information relating to personal assets, employment verification, and a weird issue on my primary home's insurance which listed two mortgages when there really was only one.

July 11, 2017 (Tuesday)

Marissa responded that she reached out to her inspector facilitator for an update and will let me know as soon as she hears back.

I sent Tru Mortgage additional documentation they needed and a corrected insurance dec page.

July 12, 2017 (Wednesday)

Tru Mortgage confirmed receipt of the updated information I sent them.

July 13, 2017 (Thursday)

I asked Marissa if we would have to push back the losing since it is supposed to be on July 19th and the second inspection hasn't been completed yet. She said they are working with the inspector and hope to have it completed this week, they are just pending approval from the tenant. Roofstock is hoping to have the inspection completed this week with the report sent to me before having to send out an amendment to extend the closing.

I received a notification from Tru Mortgage that my loan had been fully approved by their underwriting department and was sent a final loan estimate to execute, which I did. I also asked Tru Mortgage some questions about planning for the future. I wanted to know if they offered only four mortgages to an individual or up to the ten limit and I also wanted to know if I took a HELOC out on my primary residence if I could use that to pay the down payments on future properties mortgaged through them. They told me that they go up to ten mortgages and could use the HELOC, but that they factor in the HELCO payments in my debt to income ratios to make sure I still qualify for a mortgage.

Mortgage Connect contacted us on my marital status for preparing the deed.

July 14, 2017 (Friday)

I asked Marissa for another update on the second inspection. I was told that Roofstock was still pending confirmation from the tenant and that they would be working to have it completed this weekend, or if not over the weekend, then on Monday.

I was sent a property management agreement from Excalibur Homes. This confused me because (1) we already sent them a signed agreement back on June 19th, and (2) the address on this agreement was incorrect. I was told his assistant sent it by mistake, but that they will follow-up next week since we are expected to close then.

July 17, 2017 (Monday)

The inspection was performed and the certificate of compliance was issued. A review of the electrical system revealed "1. The outlet behind the tv is not functioning properly. 2. The dining room outlet is not functioning properly. 3. The gfci outlet in kitchen is installed on an angle. It's hard to plug in appliances. 4. The living room outlet next to dining room is loose in the wall. 5. The living room outlet next to the foyer is loose. 6 Upstairs outlet by window is loose. 7. The Master outlet next to hall door isn't functioning properly. The Master outlet by the window isn't functioning properly. 8. After testing a representative number of outlets in each room it is recommended to have ALL outlets replaced. Most outlets are functioning properly but if you put any side pressure on the outlets they lose connection. This could be a possible fire hazard." I was told that with respect to closing Mortgage Connect and Tru Mortgage would be working together on the closing papers and I would be forwarded the documents to review along with wiring instructions for the down payment and closing costs and that Mortgage Connect would be contacting me to schedule the mobile notary for us to execute the closing papers.

We received a closing estimate from Tru Mortgage and executed it.

July 18, 2017 (Tuesday)

I e-mailed Mortgage Connect and asked them how the closing will be scheduled. According to the PSA it should be occurring tomorrow. They said it would be going forward tomorrow as scheduled and wanted to know the location where we wanted the mobile notary to meet us and at what time. We gave them our home address and asked to do it at 5:30 p.m. The time was confirmed and then a short time later we were informed that the lender was not prepared to proceed tomorrow, but would be ready for the day after, July 20th and asked if we can do the same location and time. We agreed. We were told we would need to make copies of two forms of identification and that they would bring all the closing documents.

July 19, 2017 (Wednesday)

Marissa sent me a pre-closing check-in e-mail to see if we had any questions. I told her I was confused about when to wire the down payment/closing funds as we had not yet received the wiring instructions from Mortgage Connect. She told me that it should be sent shortly before or after the closing.

I asked Mortgage Connect for the final wiring instructions and amount, which they provided.

The mobile notary called to confirm the meeting for tomorrow. She told me that we would also need an attorney from Georgia on the phone as we were signing the documents and that Mortgage Connect would set that up.

July 20, 2017 (Thursday) [CLOSING DAY]

We went to our bank and wired the down payment and closing funds as instructed. Wiring cost us $25.00.

The mobile notary was thirty minutes late due to traffic. Many of the documents for some reason did not include my name, but only my girlfriend's, so we had to add my name. There was also an issue of requiring a witness for several documents, which was not something the mobile notary or I were informed about. We had to recruit our thankfully very friendly neighbor for that. We wrapped up the closing at around 7:30 p.m. and the mobile notary headed to UPS to overnight the documents.

June 21, 2017 (Thursday)

I told Marissa about the issues with the closing documents. I also asked her about what happens next, such as when we receive the lease agreement, copies of all the executed closing documents, the seller's keys, etc. She e-mailed us the lease agreement and said, "we await to hear from Mortgage Connect that they’ve received funds from you and seller and dispersed them to the appropriate parties (security deposit will be transferred directly to Excalibur). Once they inform us this is done, I’ll be sending you official congratulations on purchasing the property. At this time, we will also be alerting Excalibur that the property has fully closed and they are free to reach out to the tenant. Additionally, as soon as the county courthouse records your title deed, Mortgage Connect will be sending that directly over to you (in the meantime, you should be receiving a copy of the fully executed closing docs soon). As for keys, the seller is an institutional seller and does not keep keys to avoid any liability concerns. They only access the property with the permission of the tenant. If you would like a copy of keys, Excalibur should be able to request a copy from the tenant."

I informed Excalibur Homes that we closed on the property and that Roofstock was able to obtain the certificate of conformity prior to closing. They told me that they are still waiting to receive the deposit and lease documents from the closing attorney and Roofstock, but expect to receive everything by Monday and at that time I will be introduced to the person that will specifically be handling the property management of the property.

Tru Mortage sent me a notification that my loan has been funded.

Expected Monthly Cashflow

Gross Income: $893.00

Expenses

- Mortgage (Principal, Interest, Insurance, and Taxes): $540.30

- Management Fee (6%): $53.58

- Vacancies (5%): $44.65

- Repaires & Maintenance (5%): $44.65

- CapEX (8%): $71.44

Net Income: $138.38

Thoughts on Roofstock

Fees: I've had friends ask me how Roofstock makes their money since it seems like they are doing a lot of work on their end to facilitate the sale and purchase of the property. The buyer pays a .5% marketplace fee when their offer is accepted and the seller pays a 2.5% broker commission and a 2.5% all-in-seller fee. So on a $100,000 sale, Roofstock should take in $5,500 total between the buyer and seller.

Property Ratings: Roof stock uses a five-star system to rate neighborhoods instead of the typical letter class system (A, B, C, and D). I prefer the typical letter system that is commonly used to discuss properties on investment forums and sites.

Roofstock Certification Process: Roofstock, through their certification process, provides a tremendous wealth of information on their listed properties. The properties aren't necessarily "turn-key," but it appears that many of the properties were once foreclosures that were purchased by companies that renovate the properties, place a tenant in them, and then chose to sell the property through Roofstock, so most of the properties we've looked at seem to be in very good shape.

Waived Inspection Contingency: "Since diligence information is provided prior to investment, there is no need for a traditional Inspection period or contingency. Investors should carefully review all of the materials in the Diligence Vault before investing." This issue with this is that depending on when the property went through the Roofstock Certification Process and was inspected, the inspection could have occurred months prior to your offer being accepted and issues may have occurred since then that you will not necessarily become aware of unless it is noted by the appraiser.

Offers and Negotiations: The price negotiations on the site are beyond simple because you cannot discuss with the seller why you are giving the offer you are giving. If the seller accepts offers you can submit your offer and the seller has two days to accept, reject, or counter offer. If they reject or counter offer there is no explanation as to how they have arrived at the new value. This continues until either both parties arrive at a number they agree on or the process fails. On one property I put an offer in that was rejected by the seller, I received an e-mail from Roofstock telling me the seller rejected the offer because it was less than half the asking price and that they think the asking price is fair based upon estimates from Zillow, Trulia, and Realtor, and that Roofstock accounts for any repairs needed when the seller and Roofstock determine the list price. I was also told that most of their properties sell for 97% of list price. If you receive a message from Roofstock like this after having an offer rejected, just ignore it, don't let it sway your personal determination on the property. Good properties on the site go very quickly and if you notice a property sitting on the site for months and month, then there is likely a reason for that. Also, their inspection report is not fool proof. The inspector may not notice things and use your best judgment when looking through these reports and material found on the property from other websites, as there can be indications that there can be issues with the property that are likely more significant than the estimates being represented in the inspection report, and that Roofstock is not factoring into the list price for the property.

The Actual Process: Roofstock holds your hand through the entire process from start to finish. The employees at Roofstock we've interacted with have always been polite, helpful, and took the time to answer any questions we've had throughout the process and work with us to address concerns. They also connect you with 3rd party partners they have for obtaining financing, insurance, and property management and will coordinate with those partners through the process.

Convenience: Roofstock literally allows you to go through the entire process of purchasing an out of state investment property without ever needing to leave your home.

Website Interface: I found their site to be very straight forward and easy to use. I compare it to a site like HomeUnion, the main competitor of Roofstock, which I find a bit confusing.

Interested Party: No matter what though, always remember that Roofstock is an interested party. That means that through your interactions with them prior to any deal being accepted, it is in their interest for the property to sell for as much as possible. Remember that between the seller and buyer they are walking away with 5.5% of the sale price. Do your own homework on properties, look at sites like Trulia, Zillow, Realtor, the local county's property lookup page, check school rates, crime rates, check out the area using Google Maps, and do your own math to see what you think the property is worth and don't let anyone from Roofstock tell you that they think you've given the seller too low of an offer.

Would I Use Roofstock Again? Yes. I felt that even though I had issues with the certificate of compliance, the inspection/appraisal report, and closing, I would use Roofstock again and would recommend it to others. Obviously, that recommendation may change as we move forward and have more experiences with Roofstock, and become more experienced investors, but as of right now I have been pleased with the experience, communication, and ultimate result of using Roofstock for our first out of state rental purchase.

[Jason G.]

Originally posted by @Hnin Thiri:

@Jason Gines

My PM ask me to fill out W9.I have no LLC yet.

so I am not sure How PM will handle my SSN on W9.I will ask W9 from them too.

1) How did you do with W9?

I choose realprotect for my rental insurance.

2) How you choose lower or higher deductible for your first property?

Thanks inadvance

Thiri

I did not form an LLC. I have insurance and then an umbrella policy. So properties are in personal name and property management tax documents are in my personal name and social. I chose the lower deductible for insurance for all five properties. It is based on your comfort with varying levels of exposure.

[Hnin Thiri]

Thanks.It is helpful.

[Antonio Cucciniello]

@Jason G. Thanks so much for this, being in NYC I am looking to take my money elsewhere for cashflow.  I came across Roofstock and was skeptical.  Any update on how you feel abiut

[Jason G.]

Originally posted by @Antonio Cucciniello:

@Jason G. Thanks so much for this, being in NYC I am looking to take my money elsewhere for cashflow.  I came across Roofstock and was skeptical.  Any update on how you feel abiut

I'm very happy with the properties.  Last year around this time on this thread I posted the numbers for each property owned for at least a full year.  As I prepare my documents for taxes I will do the same and do a side by side with the 2018 numbers so everyone can see for themselves the results, just laying out the numbers without any opinion mixed in.  So that should be up here probably sometime in February.  

[Joseph Vu]

deleted.

[Hnin Thiri]

@Jason G. Thanks and looking forward to it
@Antonio Cucciniello here is my journey with roofstock
I found roof stock from Bigger pocket forum, roofstock case study. I followed step by step from the case study. I started looking for the property from 1st week of October 2019.I made 2 to 3 offers per week after calculating and researching. I also viewed webinar series on roofstock. I checked all diligence documents and financial highlight from roofstock. I learned about rental properties calculator, pest control ,property tax,home insurance, property management and Lender review etc. from Bigger Pocket forum. I also checked zillow and other market places for property value, neighborhood etc .

Roofstock advisor was helpful. He answered all my questions as soon as possible. He recommended me the Lender and sent me email about properties that I might be interested.

After some offers were made, 2 of them were rejected.4 of them asked for counter-offer. Later then 2 only left. I checked every single page of roofstock inspection report and looked for the value to add like how old is the HVAC system & Roof , Garage size etc. I found one of the properties was needed pest control and AC unit was missing in the report. I asked advisor to check with seller team. Advisor replied me seller want to sell as it is. I understood Roofstock is not turn-key company. So,I checked AC unit cost and run the numbers. I decided not to make counter-offer back. Then I accepted the counter offer for the other unit on October 31. Accepted offer was 1.5k less than listed. Appraisal from bank came back the value of the property with 2k more than my offer which is great to move forward.

My frustration moments for purchasing 1st property with Roofstock

1)Buyer information sheet

Based on Roofstock check list,Once Purchase and Sale Agreement is signed, Roofstock will send you a copy of the lease and Buyer Info Sheet that is needed to open escrow.

I waited for Roofstock Transaction coordinator (TC) to get Buyer Info sheet to fill out and sent for Escrow. Escrow agent also asked me for buyer info sheet one day after signing PSA.I am not sure who is responsible for. TC have no idea what is buyer info sheet and she said checklist need to amend and will check with Escrow agent. After 3 days,I directly asked Escrow agent for buyer info sheet. Escrow agent sent me buyer info sheet later that day.

2)Outstanding Property Tax

I was aware that outstanding property tax was 1950$ by checking county website for 2019. TC said 56$.I found out 1950$ in the closing statement.

3) Closing date

We done mobile notary on 5 December after wire transferring the closing funds. Seller couldn't make it to sign on the same day , due to emergency. We needed to redo the mobile notary again and Final closing was done later on 9th December.

4) Property Transaction from old PM to new PM

I am not sure who is responsible for transaction from current PM to New PM.I checked with new PM about transaction 13 December. They said they still waiting on closing, lease, and tenant info from the closing office or Roof stock. I sent email to TC and cc to closing agent. TC replied with all information that my PM need and asked my PM to contact to current PM directly. Closing agent said still have not heard back from my PM and asked me for my PM address to post rental deposit on 16 December. My PM replied me they received the deposit on 2nd January 2020.

5)Error on title

I received the original deed on 3rd January 2020.Tittle insurance policy was under both name. But my husband name was not included on deed. The reason may be mortgage is under my name only. But I am not sure. I called and email to tittle company and roofstock TC. Title officer asked me to send it back original title to rerecording it again. I am still waiting for original title with Me and my husband name on it.

Entire buying process took about 2 months. I earned 135 (net income) per month from that property which is good starting.

All above review is based on my personal experience. Different agents may handle differently for each case. In my case,not holding my hand in each step. Every time I needed to ask for next step. I think roofstock need more transparency and better communication in process. I have learned many things through out the process. I think I am more familiar with the process. I may use the roofstock again.
Hope this helps.

[Antonio Cucciniello]

Originally posted by @Hnin Thiri:

@Jason G. Thanks and looking forward to it
@Antonio Cucciniello here is my journey with roofstock
I found roof stock from Bigger pocket forum, roofstock case study. I followed step by step from the case study. I started looking for the property from 1st week of October 2019.I made 2 to 3 offers per week after calculating and researching. I also viewed webinar series on roofstock. I checked all diligence documents and financial highlight from roofstock. I learned about rental properties calculator, pest control ,property tax,home insurance, property management and Lender review etc. from Bigger Pocket forum. I also checked zillow and other market places for property value, neighborhood etc .

Roofstock advisor was helpful. He answered all my questions as soon as possible. He recommended me the Lender and sent me email about properties that I might be interested.

After some offers were made, 2 of them were rejected.4 of them asked for counter-offer. Later then 2 only left. I checked every single page of roofstock inspection report and looked for the value to add like how old is the HVAC system & Roof , Garage size etc. I found one of the properties was needed pest control and AC unit was missing in the report. I asked advisor to check with seller team. Advisor replied me seller want to sell as it is. I understood Roofstock is not turn-key company. So,I checked AC unit cost and run the numbers. I decided not to make counter-offer back. Then I accepted the counter offer for the other unit on October 31. Accepted offer was 1.5k less than listed. Appraisal from bank came back the value of the property with 2k more than my offer which is great to move forward.

My frustration moments for purchasing 1st property with Roofstock

1)Buyer information sheet

Based on Roofstock check list,Once Purchase and Sale Agreement is signed, Roofstock will send you a copy of the lease and Buyer Info Sheet that is needed to open escrow.

I waited for Roofstock Transaction coordinator (TC) to get Buyer Info sheet to fill out and sent for Escrow. Escrow agent also asked me for buyer info sheet one day after signing PSA.I am not sure who is responsible for. TC have no idea what is buyer info sheet and she said checklist need to amend and will check with Escrow agent. After 3 days,I directly asked Escrow agent for buyer info sheet. Escrow agent sent me buyer info sheet later that day.

2)Outstanding Property Tax

I was aware that outstanding property tax was 1950$ by checking county website for 2019. TC said 56$.I found out 1950$ in the closing statement.

3) Closing date

We done mobile notary on 5 December after wire transferring the closing funds. Seller couldn't make it to sign on the same day , due to emergency. We needed to redo the mobile notary again and Final closing was done later on 9th December.

4) Property Transaction from old PM to new PM

I am not sure who is responsible for transaction from current PM to New PM.I checked with new PM about transaction 13 December. They said they still waiting on closing, lease, and tenant info from the closing office or Roof stock. I sent email to TC and cc to closing agent. TC replied with all information that my PM need and asked my PM to contact to current PM directly. Closing agent said still have not heard back from my PM and asked me for my PM address to post rental deposit on 16 December. My PM replied me they received the deposit on 2nd January 2020.

5)Error on title

I received the original deed on 3rd January 2020.Tittle insurance policy was under both name. But my husband name was not included on deed. The reason may be mortgage is under my name only. But I am not sure. I called and email to tittle company and roofstock TC. Title officer asked me to send it back original title to rerecording it again. I am still waiting for original title with Me and my husband name on it.

Entire buying process took about 2 months. I earned 135 (net income) per month from that property which is good starting.

All above review is based on my personal experience. Different agents may handle differently for each case. In my case,not holding my hand in each step. Every time I needed to ask for next step. I think roofstock need more transparency and better communication in process. I have learned many things through out the process. I think I am more familiar with the process. I may use the roofstock again.
Hope this helps.

 Thank you for this explanation. So it seems like you had some troubles but bottom line you are ok with the outcome of the property?

[Jason G.]

Below are the raw number breakdowns for each of our five Georgia properties for 2019.

In total we grossed $72,865.78.

Specific property expenses totaled: $55,550.11

However, we also have a $2m umbrella policy which cost $1,182 annually and we utilized a HELOC for some of the purchases whose annual interest totaled $5,548.28. Factoring those costs in, since they are directly related to the investment portfolio, total expenses for the portfolio totaled: $62,280.39

In the end our net income was: $10,585.39

When looking at these numbers please note that I prepared this in the course of my preparations for my taxes and did not include principal paydown on any of the mortgages as an expense. But for purposes of full transparency and to allow you guys to calculate things out using whatever numbers you wish, the principal payments across all five properties were $1,069.41 (Lithonia) + $1,583.06 (Villa Rica) + $1,890.83 (Canton) + $2,175.15 (Dacula) $1,228.40 (Conyers) for a total of: $7,946.85.

So our total actual cash flow for the year was $2,638.54 or $219.88 a month. That comes out to around $43.98 per property per month. So ultimately, not an impressive year for cash flow. We had some maintenance and repairs that really ate into it.

The way we look at these properties is like having a pension plan for when we retire. We are in our late thirties right now. These are all long term buy and hold investments that will probably remain with us until we move on from this world, so once they are paid off we can really appreciate the cash flow and as we get close to retirement we may sell one or more to pay off the others. Hopefully they will continue to appreciate and we will be able to continue to steadily raise rents over time. Right now our goal is to pay off our primary residence and the HELOC, which should only take another few years but we've put picking up more properties on hold for the time being until that is done. The wife is currently between jobs and that made us realize the importance of not being over leveraged and having the primary residence mortgage and HELOC paid off would give us a lot of peace of mind.

Feel free to ask any questions you like. I will continue to respond on this thread and chronicle my real estate investing journey and around this time each year will continue to post our results.

Lithonia, GA SFH: Purchased in July 2017 for $81,000

Rent: $11,172.23
Property Management: $1,003.06
Maintenance & Repairs: $3,928.00
Interest: $2,986.95
Taxes: $2,060.42
Insurance: $689.52
Net: $504.28

Villa Rica, GA SFH: Purchased in October 2017 for $119,300

Rent: $12,023.55
Property Management: $1,455.38
Maintenance & Repairs: $2,300.00
Utilities: $520.10
Interest: $4,305.22
Taxes: $1,138.07
Insurance: $686.40
Net: $1,618.38

Canton, GA SFH: Purchased in October 2017 for $145,500

Rent: $15,600.00
Property Management: $1,846.00
Maintenance & Repairs: $0.00
Interest: $5,395.57
Taxes: $2,248.19
Insurance: $818.48
HOA: $1,350.00
Net: $3,941.76

Dacula, GA SFH: Purchased in April 2018 for $179,000

Rent: $16,920.00
Property Management: $1,501.70
Maintenance & Repairs: $175.00
Interest: $7,049.61
Taxes: $2,823.61
Insurance: $1,009.84
Net: $4,360.24

Conyers, GA Duplex: Purchased in December 2018 for $127,000

Rent: $17,150.00
Property Management: $1,802.50
Maintenance & Repairs: $835.00
Utilities: $42.63
Interest: $4,557.27
Taxes: $1,870.31
Insurance: $1,151.28
Net: $6,891.01

[Tiago Camilo]

Let me be another one to thank you for your detail description on your RoofStock path @Jason G.!! I just finished reading it from first day up to the 2019 report.

Would like to ask you some points that would help me better your experience

1. Are the PM costs inline with what roofstock is claiming on their site?

2. Were you able to leverage your portfolio in GA to decrease PM costs?

3. Interesting to see that your Canton property had a huge decrease on the CapEx, seems that the 2018 investments were a good choice.

4. Can you elaborate a bit more on the 2m umbrella policy that you use to avoid going for the LLC model?

all the best for 2020!

[Jason G.]

Originally posted by @Tiago Camilo:

Let me be another one to thank you for your detail description on your RoofStock path @Jason G.!! I just finished reading it from first day up to the 2019 report.

Would like to ask you some points that would help me better your experience

1. Are the PM costs inline with what roofstock is claiming on their site?

2. Were you able to leverage your portfolio in GA to decrease PM costs?

3. Interesting to see that your Canton property had a huge decrease on the CapEx, seems that the 2018 investments were a good choice.

4. Can you elaborate a bit more on the 2m umbrella policy that you use to avoid going for the LLC model?

all the best for 2020!

The particular PM we used had a discount through using Roofstock and the discount was below Roofstock's estimated calculation. Because of the discount there wasn't an additional one given for more properties managed. If you create an LLC you will need a commercial loan and insurance vs buying in your own name and getting a lower rate conventional loan, insurance, and an umbrella. Some people transfer a property to an LLC after purchasing in their own name and getting a conventional mortgage, but that can trigger a due on sale clause and depending on how the LLC is run may or may not provide the protection needed. There are lots of threads on umbrella vs LLC that provide a lot of valuable insight.

[Tyler M.]

@Jason G. Just read through this great thread! What are your main take a ways on which types of properties to purchase and has your strategy changed since you started? In terms of quality, age, purchase price, neighborhood type, market, duplex/SFH. Also, how much time do you spend on your existing properties and how much time looking for new properties each month?

[Jason Pennacchio]

Originally posted by @Tyler M.:

@Jason G. Just read through this great thread! What are your main take a ways on which types of properties to purchase and has your strategy changed since you started? In terms of quality, age, purchase price, neighborhood type, market, duplex/SFH. Also, how much time do you spend on your existing properties and how much time looking for new properties each month?

I think this is a great question, as an Atlanta investor and someone following the roofstock story since the beginning I'd love to read @Jason G.'s response. Also props to Roofstock for having employees monitor and respond on forums such as these, shows dedication. 

One question @Jason G., would you be able to provide the lender you've been using? Since the world is currently, sadly, falling apart I'm sure you've seen interest rates are dramatically lower. I've inquired twice with my lender in the past year for a refinance to lower interest rates, I'm at 4.75% now but even most recently they wouldn't budge below 4.25%. Can't tell if that's typical or good? I also went the personal, insured route vs setting up an LLC. Anyone with advise on rates can chime in.

[Jason G.]

Originally posted by @Tyler M.:

@Jason G. Just read through this great thread! What are your main take a ways on which types of properties to purchase and has your strategy changed since you started? In terms of quality, age, purchase price, neighborhood type, market, duplex/SFH. Also, how much time do you spend on your existing properties and how much time looking for new properties each month?

I look at properties online every few days.  We were originally concerned with the duplex tenants after purchase because we wanted them to sign an updated lease simply reflecting that the lease was between us and them now vs the prior owner and the property management company was having such difficulty having that done from them.  But after that was completed they have been fine and I think our next purchase will probably be a multifamily.  And yes, our investment strategy became more refined based upon evaluating choices we've made with our current purchases. We spend practically no time on our current properties.  Our PM contacts us if a maintenance request order has been made by a tenant or if a periodic inspection was completed, but otherwise they are pretty much passive investments. 

[Jason G.]

Originally posted by @Jason Pennacchio:

Originally posted by @Tyler M.:

@Jason G. Just read through this great thread! What are your main take a ways on which types of properties to purchase and has your strategy changed since you started? In terms of quality, age, purchase price, neighborhood type, market, duplex/SFH. Also, how much time do you spend on your existing properties and how much time looking for new properties each month?

I think this is a great question, as an Atlanta investor and someone following the roofstock story since the beginning I'd love to read @Jason G.'s response. Also props to Roofstock for having employees monitor and respond on forums such as these, shows dedication. 

One question @Jason G., would you be able to provide the lender you've been using? Since the world is currently, sadly, falling apart I'm sure you've seen interest rates are dramatically lower. I've inquired twice with my lender in the past year for a refinance to lower interest rates, I'm at 4.75% now but even most recently they wouldn't budge below 4.25%. Can't tell if that's typical or good? I also went the personal, insured route vs setting up an LLC. Anyone with advise on rates can chime in.

Better Mortgage.  I believe that if you connect to them through BiggerPockets there is a 1k credit they apply.  Should be under member perks or some other similar section here on the site.  Be aware though that even though mortgage rates are very low now, they are likely going to be higher for investment properties vs owner occupied.  All my properties are between 4-5%.

[Nick Grasela]

Hi Jason, How has it been going since you last updated especially now with the new eviction guidelines and being out of state from these properties? This thread has peaked my interest alot  so I thank you for providing all of the income numbers for your properties!

[Anthony Vargas]

@Jason G.

Wow -- again, many thanks for keeping up with this thread. It has provided a wealth of information for me as a potential investor with Roofstock. 

I am actually a little surprised that you were able to secure traditional financing on the sub-$100K property. Do Roofstock's financial partners provide this type of financing? I was always of the mind that sub-$100K properties were typically difficult to secure traditional financing for. 

[Jason G.]

Originally posted by @Nick Grasela:

Hi Jason, How has it been going since you last updated especially now with the new eviction guidelines and being out of state from these properties? This thread has peaked my interest alot  so I thank you for providing all of the income numbers for your properties!

Sorry, I don't know why I missed this question.  The eviction restrictions have impacted me to date.  

[Jason G.]

Originally posted by @Anthony Vargas:

@Jason G.

Wow -- again, many thanks for keeping up with this thread. It has provided a wealth of information for me as a potential investor with Roofstock. 

I am actually a little surprised that you were able to secure traditional financing on the sub-$100K property. Do Roofstock's financial partners provide this type of financing? I was always of the mind that sub-$100K properties were typically difficult to secure traditional financing for. 

I had once asked Better what the lowest mortgage they would handle and I believe they said 50k.  But you would have to confirm with them.  Only one property was sub 100k and that was with a lender that no longer exists, but i had absolutely no difficulty obtaining financing for it.  

[Timothy Young]

@Jason G. Just reviewing your roofstock case study. Thanks for sharing this valuable information. Im looking at roofstock and a couple of turnkey providers to purchase my second rental property.

[Derek York]

@Jason G. love the thread. I had a questions about lenders. I'm looking to purchase my fist property. Any specific lenders you would recommend?

[Jason G.]

Originally posted by @Derek York:

@Jason G. love the thread. I had a questions about lenders. I'm looking to purchase my fist property. Any specific lenders you would recommend?

I liked Better.  The last time I used them BP had a discount so make sure to check to see that is still available if you decide to go with them.  

[Derek York]

Thanks, I will look into that! Have you heard anything about Axos bank? they seem to have a good discount through roofstock

[Alex Alexander]

@Jason G. Hello Jason, just to make sure when bough the property from roofstock, can you optain another loan against the property you bought already so you can buy another one?

Thank you

[Alex Alexander]

@Jason G. Another question, did you go through there real estate study course so you can learn the in and the out of real estate investing?

Thank you

[Jason G.]

Originally posted by @Derek York:

Thanks, I will look into that! Have you heard anything about Axos bank? they seem to have a good discount through roofstock

Sorry I missed this. I have never heard of Axos Bank.