Roofstock (Review / Case Study)

[Jon Krombein]

I recently closed on my first rental property. I used Roofstock. I had set up a number of baseline searches in a few markets that I was interested in. Whenever one that fit my general criteria came up, I would drill into the details and run the numbers using both Roofstock's projections, and the BiggerPockets rental calculator tool. (My plan was to pull my downpayment and closing costs out of our primary residence on a HELOC, so there was some extra number crunching to make sure that it would all pencil out. My goal was to be able to cash flow about $100 after paying the mortgage, the HELOC payment, and setting aside money for repairs, maintenance, and taxes, so I had to be very discriminating about the potential deals.) I low-balled on a couple properties and haggled back and forth a couple times but stayed firm on my requirements. Finally, on 12/13/17 one of my offers was accepted for about 10% below asking price. It was going to barely clear my $100/month cash-flow requirement.

Within about 12 hours of offer acceptance, I received a call from Zack at Roofstock. (As far as I can tell, there are at least two Zack’s at Roofstock—this was Zack Carson). He congratulated me and gave me a quick rundown of what would be next and then followed-up with an email.

Two days later, I received a DocuSign for the final Purchase and Sale agreement. I sign and returned it. My wife received her copy to sign and return the next morning (Saturday 12/16). (We purchased the property under both our names, but the mortgage is only under mine—my thought is that if I keep us separated on the loans, we be able to maximize the number of conventional mortgages we use before we have to get more creative with financing.

Late Monday (12/18), I received a copy of the final, executed Purchase and Sale Agreement and instructions for wiring the $1500 earnest money (standard earnest money for all Roofstock deals).

Tuesday morning I received an email from Zack with more info on nextsteps (Insurance and Property Management) following by several emails making introductions to various third parties. One for Insurance (Real Protect—who seemed fine and is apparently one of the go-tos for investment property insurance), and introductions to the current property manager AMG as well as two other PM options.

I had already gotten pre-approved through TruLoan (one of Roofstock’s, recommended/preferred mortgage brokers.) I have my own mortgage guy in Seattle, but for a mortgage elsewhere, they seemed as good as anyone else, so I just went with them. It was not problem to qualify and get them all of the info they needed. Since I’m a W2 employee who owns a primary residence, it really felt like it was mostly a formality.

I talked to and emailed a fair bit with Real Protect and all of the PM options and eventually decided on Brick Lane Property Management (Brick Lane was the most helpful and responsive of the bunch, and AMG, the previous PM totally dropped the ball and respond to any of my follow-up or inquiries until two week later after I have already decided on Brick Lane). Then Christmas and New Years hit and it felt a bit like everything sort of went on hold. If anything I would say that this was the only really frustrating part. There were about 2-3 weeks when it felt like nothing was happening. I finally emailed Zack at Roofstock to ask for an update and closing details. After a few fits and starts and a PSA extension, they were able to pull the info together. Since I was using a HELOC for the down, I had to jump through couple extra hoops with TruLoan. We had opened the HELOC several months ago, anticipating buying something but it had just been sitting there with a zero balance. Once TruLoan had a ball park Good Faith Estimate for me, I had to snapshot/document the process of pulling that amount out of the HELOC, and then showing the new loan balance, interest rate and minimum payment so that they could finalize their underwriting. I will say that my loan agent at TruLoan, Tracy, was awesome. She was knowledgable, helpful, and very responsive.

Finally, we got word that we were good to go and would be signing with a mobile notary on Thursday 1/25. The morning of the 25th, I still had not received wiring instructions or a final amount for closing costs. I had been given the name of my closing agent at OSNational, but no contact info. For some reason, I still don’t understand, she had been trying to call me but it just kept going through to my voicemail (and the VM’s weren’t being delivered). She was eventually able to call my wife and tell us that they still didn’t have my final loan docs. Signing was postponed until the following afternoon, and it went smoothly from there.

I received confirmation on Monday 1/29 that the loan had funded and we have officially closed. I am now officially a Real Estate Investor. Overall, I would say the process has been pretty painless. I think that Roofstock has a really great tool/system and does a great job of what they have set out to do. I was a little frustrated by the miscommunication and phone tag at the end, but that isn't Roofstock's problem, and I know that generally, last minute changes right before closing aren't terribly uncommon. I would definitely use Roofstock again--in fact I plan too. I'm going to give it a few months for this purchase to settle in and convince myself that all is going well and as planned, and then I will hopefully start looking for another property in May or June. Ideally, I will pick up at least two more units this year, and at this point, unless some other awesome opportunity comes by, I will use Roofstock.