Ask About A Real Estate Company
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback
Roofstock review. NEWBIES BEWARE!!
Looks like most of the reviews or case studies on Roofstock are about the closing process. I suppose since the vast majority of investors who’ve purchased properties from Roofstock use the properties as buy-and-hold rentals and Roofstock is a start-up that hasn’t been around for long, not a whole lot of investors have sold those properties. I got burnt on my way out when I tried to sell one acquired through Roofstock, which I’ve only kept for ~1.5 years. I wasted a lot of time and lost over 30K from this property. The only thing I gained is increased cancer risks from all that stress.
The short version of what happened:
A local flipper I befriended pointed out a serious undisclosed permitting issue he discovered from public record, which compelled me to sell the property at a discounted price to a local wholesaler instead of keeping it as a rental or selling on the MLS. The Roofstock inspection report made no mention of this issue. I have strong reasons to believe the seller chose not to disclose intentionally.
Due to the way the Roofstock purchase and sale agreement was drafted and certain provisions in Roofstock's Terms&Conditions that investors have to agree to but few actually read before using their website, the seller and Roofstock are well protected from liabilities, much better than a seller and brokers would in a typical MLS transaction scenario. As a result, I have very limited ways or no way of recourse.
Combined with some other things that have happened and my interactions with Roofstock, I feel that buying properties from Roofstock is like buying properties without a buyer’s agent, their “one stop for all” business model is inherently flawed, and the water is too deep for newbie buyers. The increased efficiency is achieved at the cost of buyers' best interests.
Furthermore, despite Roofstock’s effort to find top providers to work with their investors, it looks like Roofstock struggles to bring all of them up to standards and keep them in check. The quality of service from different providers (title companies, PMs, inspectors) swing so widely that the good ones exceed my expectations, and the bad ones make me wonder how they stay in business or why hasn’t got taken out by the FTC. I’ve dealt with just as many bad ones as the good ones. In some cases, buyers have the options to pick the ones they prefer; in other cases just a hit or miss.
Last but not least, Roofstock advisors' excellent work ethics can’t compensate for their lack of knowledge of the local markets. On the other hand, lots of the sellers are institutional investors or local RE professionals, which inevitably shifts even more risks to newbie buyers.
This is a 1-star review for newbie buyers; 3-star review for seasoned buyers who know what to watch out for when evaluating deals; 5-star review for sellers, especially those who want to evade scrutinization from shrewd local brokers and failure-to-disclose-property-defects lawsuits.
Well, since I rate Roofstock 5 stars for sellers, why don't I just list it for sale on Roofstock? The simple answer is that the actual market rent ($900-965/mo) to list price ratio (ARV 120 -140K) would not be enticing to SFR buyers. The market rent Roofstock gave ($1025/mo) when I made the purchase was inflated btw.
I can post a long version to elaborate on the above-mentioned points if more than 10 people on BP are interested to know more.
Originally posted by @JC Wu:
@Susan Little@Tony Kim@Natalie Schanne@Jason G.@Jay Hinrichs@Engelo Rumora@Account Closed
Not sure if people can see my update without being @ed. If you got two emails, sorry about that. Looks like I can only @ people who've left public comments under this thread. Anyway, Please feel free to criticize and give your feedback. I always appreciate views from different perspectives.
Thanks for the tag JC,
Without reading this thread in much detail all I can say is this.
I find it very hard if not impossible for out of state (Or country investors) to successfully invest unless they are going directly to a turnkey operator that has in-house property management.
I see Roofstock as the "turnkey" Zillow or the MLS.
They have some decent due diligence measures in place but it isn't enough in my opinion.
It's easy to buy (Or for someone to sell you a house).
It's hard to manage it and make it perform long term.
Reputable and TRUE turnkey providers can do the latter part very well.
Plus, wouldn't you want someone vested in your long term success?
Whenever we sell a property and S#!@ hits the fan after a few months with the tenants (It happens).
We MUST go in and bat for that investor no matter what.
Why?
Because we want you to make the promised paper return and we want you to buy more and refer us to others.
I don't see this happening when you buy a property through Roofstock.
3rd party property managers are known to nickel and dime so they can survive (It's a thank less industry and the 10% from the monthly collected rent is chump change really).
And the sellers off loading the product through a "sales channel" per se.
Well, it doesn't affect their name so they are more than happy to take the money and run.
Speaking of "sales channels" and 3rd party listing platforms, etc...
I've spoken to quite a few over the years and pleaded with them to keep it tight.
As in, only endorse and sell in 2-3 markets max.
As soon as you start getting greedy and expanding further you won't be able to tame the monster.
We have done 500+ deals in Toledo and still get screwed by contractors to this day.
It's hard enough keeping everyone in check locally and I wouldn't want to imagine trying to manage multiple markets.
Even just selling in multiple markets without doing the full scope turnkey work is still a "no go" for us...
It's just too risky from a reputation standpoint putting your name behind another product in another market.
I have seen some decent sales channels, with decent ideas getting gobbled up by the monster because they didn't want to stick to just a few select markets.
Just my 0.02 Aussie cents guys and I hope it helps you.
Much success
I think your 2c input is really worth 2K. Thank you for taking the time to write it up! What you said about turnkeys sticking to the local market and keeping it tight especially got me thinking.
I originally thought the reason why many true turnkeys stay local is that they lack the money and resources to expand like Roofstock. I conjectured that if given the resources, they would expand as much as possible. And since the high profile venture capital investors chose to invest millions in Roofstock instead of those local turnkeys, it must be that Roofstock got a better business model that makes more sense to investors.
Roofstock's rapid expansion to so many markets gave me the impression that their business model really caught on among investors.
After seeing how my close family member raised money from VCs for his Silicon Valley startup, I begin to see how VCs tend to be herd followers so I shouldn't give too much credit to their confidence in the companies they invest in. When my family member first presented his idea to a bunch of VCs, most weren't impressed, some said they'd be willing to invest after he finds a lead investor, but nobody dared to be the first to jump in and be the lead investor. When the prototype came out and it looked promising, one high profile VC took the jump, then everybody followed like a shark feeding frenzy. Several VCs that initially decided to pass, came back and asked him to take their money.
I also had the "follow the herd" mentality when I bought this Jacksonville property back in 2017. Roofstock was super popular at that time, maybe still is, I thought popular must be good and the more popular the better.
When you said 3rd party PMs nickel and dime to survive, why don't true turnkeys have to do that to survive?
I checked out HomeUnion before, which seems to be a true turnkey that manages the properties they sell, operating in quite a few markets although not as many as Roofstock. At that time, I was told they charge 12% for the monthly PM fee. I thought 12% was a bit high.
The majority of Roofstock certified PMs charge between 6% to 10%. The one I worked with and fired in Jacksonville charged 8%. However as time went on, I realized with a bunch of add-on fees this PM charged, the PM fee actually averaged over 12% per month. They not only nickel and dime -- it looks like they went far and beyond to brazenly rip me off and deceive me. It seemed as though all they cared about was charging me fees while being extremely negligent. Based on the >100 online complaints from investors and renters against them, I wasn't alone.
It's scary to know you have done 500+ deals in your local market and still get screwed by contractors to this day. I'd assume after doing so many deals, you'd know who's trustworthy and who's not. Perhaps residential rental is a dirty business no matter what market you're in and how long you've been in.
Funny how both you and @Charles Kao mentioned the word "greedy."
Originally posted by @JC Wu:
I think your 2c input is really worth 2K. Thank you for taking the time to write it up! What you said about turnkeys sticking to the local market and keeping it tight especially got me thinking.
I originally thought the reason why many true turnkeys stay local is that they lack the money and resources to expand like Roofstock. I conjectured that if given the resources, they would expand as much as possible. And since the high profile venture capital investors chose to invest millions in Roofstock instead of those local turnkeys, it must be that Roofstock got a better business model that makes more sense to investors.
Roofstock's rapid expansion to so many markets gave me the impression that their business model really caught on among investors.
After seeing how my close family member raised money from VCs for his Silicon Valley startup, I begin to see how VCs tend to be herd followers so I shouldn't give too much credit to their confidence in the companies they invest in. When my family member first presented his idea to a bunch of VCs, most weren't impressed, some said they'd be willing to invest after he finds a lead investor, but nobody dared to be the first to jump in and be the lead investor. When the prototype came out and it looked promising, one high profile VC took the jump, then everybody followed like a shark feeding frenzy. Several VCs that initially decided to pass, came back and asked him to take their money.
I also had the "follow the herd" mentality when I bought this Jacksonville property back in 2017. Roofstock was super popular at that time, maybe still is, I thought popular must be good and the more popular the better.
When you said 3rd party PMs nickel and dime to survive, why don't true turnkeys have to do that to survive?
I checked out HomeUnion before, which seems to be a true turnkey that manages the properties they sell, operating in quite a few markets although not as many as Roofstock. At that time, I was told they charge 12% for the monthly PM fee. I thought 12% was a bit high.
The majority of Roofstock certified PMs charge between 6% to 10%. The one I worked with and fired in Jacksonville charged 8%. However as time went on, I realized with a bunch of add-on fees this PM charged, the PM fee actually averaged over 12% per month. They not only nickel and dime -- it looks like they went far and beyond to brazenly rip me off and deceive me. It seemed as though all they cared about was charging me fees while being extremely negligent. Based on the >100 online complaints from investors and renters against them, I wasn't alone.
It's scary to know you have done 500+ deals in your local market and still get screwed by contractors to this day. I'd assume after doing so many deals, you'd know who's trustworthy and who's not. Perhaps residential rental is a dirty business no matter what market you're in and how long you've been in.
Funny how both you and @Charles Kao mentioned the word "greedy."
haha,
Thanks mate and I appreciate it.
It's not just the turnkey operators that should stay local but more so the marketing companies and sales channels selling turnkey properties.
They put their name/brand behind too many markets and they usually ruin it within 24 months.
Their have been so many instances of this happening over the years (I won't mention any names but they are all known and well talked about on for forum).
Only very few are still alive that work in multiple markets but even they had many setbacks and lost face on multiple occasions and in multiple markets.
As I mentioned in my prior comment, it's hard enough doing a good job in just one market lol
Roofstock isn't a turnkey company by the way.
They are more of a tech platform.
VC's gobble that stuff up.
Not sure if Roofstock has any IP with their tech but if they do, it doesn't look like anything fancy or that can't be easily replicated IMO.
VC's are very hot lately on real estate tech so I'm sure Rooftsock will be able to raise more capital if needed and expand further.
Business these days has become more about raising capital, spending it, raising more, spending it and then hopefully getting a high enough valuation for some of early investors (Series A for example) to sell and make a high ROI.
I like the old fashioned way of doing business lol.
It's called "Growing revenue and profit every year and never loosing or borrowing money".
Yep, you call me "An old dog" business owner I guess lol
The market is full or "Wantrapreneurs" these days and not many true entrepreneurs.
Anyway, back to turnkey lol
Turnkey companies don't need to nickel and dime on PM because they make their margin on the sale and not necessarily on the PM.
Don't get me wrong, they will still make their money on the PM side but they will also cover a lot out of pocket themselves.
Most of us want our clients to be happy and to buy more so we go above and beyond for them during the after sale process.
Even if it means putting our hand in our own pocket sometimes.
12% is high for PM but not unusual.
We charge 10% and for some lower class properties we charge 12%.
PM is a ****** business mate and you only start seeing something come from it after you manage around 300 units.
It's usually a **** show for the first 3-4 years lol
PM is a thankless job mate and tenants will always complain and post bad reviews no matter what.
As long as their aren't many bad reviews from landlords, that's what matters most when judging a PM company.
Here is a tip for you.
Any PM with reviews of 4 stars or better on Google is doing a very very good job.
Even 3.5 isn't bad.
3 stars is borderline IMO (Make sure to check them out to see if any landlords are posting complaints).
You can't win with contractors mate.
It's a non stop cycle of "hire and fire".
It's just a cost of doing business in this line of work.
Thanks mate and much success
Originally posted by @Engelo Rumora:
Originally posted by @JC Wu:
I think your 2c input is really worth 2K. Thank you for taking the time to write it up! What you said about turnkeys sticking to the local market and keeping it tight especially got me thinking.
I originally thought the reason why many true turnkeys stay local is that they lack the money and resources to expand like Roofstock. I conjectured that if given the resources, they would expand as much as possible. And since the high profile venture capital investors chose to invest millions in Roofstock instead of those local turnkeys, it must be that Roofstock got a better business model that makes more sense to investors.
Roofstock's rapid expansion to so many markets gave me the impression that their business model really caught on among investors.
After seeing how my close family member raised money from VCs for his Silicon Valley startup, I begin to see how VCs tend to be herd followers so I shouldn't give too much credit to their confidence in the companies they invest in. When my family member first presented his idea to a bunch of VCs, most weren't impressed, some said they'd be willing to invest after he finds a lead investor, but nobody dared to be the first to jump in and be the lead investor. When the prototype came out and it looked promising, one high profile VC took the jump, then everybody followed like a shark feeding frenzy. Several VCs that initially decided to pass, came back and asked him to take their money.
I also had the "follow the herd" mentality when I bought this Jacksonville property back in 2017. Roofstock was super popular at that time, maybe still is, I thought popular must be good and the more popular the better.
When you said 3rd party PMs nickel and dime to survive, why don't true turnkeys have to do that to survive?
I checked out HomeUnion before, which seems to be a true turnkey that manages the properties they sell, operating in quite a few markets although not as many as Roofstock. At that time, I was told they charge 12% for the monthly PM fee. I thought 12% was a bit high.
The majority of Roofstock certified PMs charge between 6% to 10%. The one I worked with and fired in Jacksonville charged 8%. However as time went on, I realized with a bunch of add-on fees this PM charged, the PM fee actually averaged over 12% per month. They not only nickel and dime -- it looks like they went far and beyond to brazenly rip me off and deceive me. It seemed as though all they cared about was charging me fees while being extremely negligent. Based on the >100 online complaints from investors and renters against them, I wasn't alone.
It's scary to know you have done 500+ deals in your local market and still get screwed by contractors to this day. I'd assume after doing so many deals, you'd know who's trustworthy and who's not. Perhaps residential rental is a dirty business no matter what market you're in and how long you've been in.
Funny how both you and @Charles Kao mentioned the word "greedy."
haha,
Thanks mate and I appreciate it.
It's not just the turnkey operators that should stay local but more so the marketing companies and sales channels selling turnkey properties.
They put their name/brand behind too many markets and they usually ruin it within 24 months.
Their have been so many instances of this happening over the years (I won't mention any names but they are all known and well talked about on for forum).
Only very few are still alive that work in multiple markets but even they had many setbacks and lost face on multiple occasions and in multiple markets.
As I mentioned in my prior comment, it's hard enough doing a good job in just one market lol
Roofstock isn't a turnkey company by the way.
They are more of a tech platform.
VC's gobble that stuff up.
Not sure if Roofstock has any IP with their tech but if they do, it doesn't look like anything fancy or that can't be easily replicated IMO.
VC's are very hot lately on real estate tech so I'm sure Rooftsock will be able to raise more capital if needed and expand further.
Business these days has become more about raising capital, spending it, raising more, spending it and then hopefully getting a high enough valuation for some of early investors (Series A for example) to sell and make a high ROI.
I like the old fashioned way of doing business lol.
It's called "Growing revenue and profit every year and never loosing or borrowing money".
Yep, you call me "An old dog" business owner I guess lol
The market is full or "Wantrapreneurs" these days and not many true entrepreneurs.
Anyway, back to turnkey lol
Turnkey companies don't need to nickel and dime on PM because they make their margin on the sale and not necessarily on the PM.
Don't get me wrong, they will still make their money on the PM side but they will also cover a lot out of pocket themselves.
Most of us want our clients to be happy and to buy more so we go above and beyond for them during the after sale process.
Even if it means putting our hand in our own pocket sometimes.
12% is high for PM but not unusual.
We charge 10% and for some lower class properties we charge 12%.
PM is a ****** business mate and you only start seeing something come from it after you manage around 300 units.
It's usually a **** show for the first 3-4 years lol
PM is a thankless job mate and tenants will always complain and post bad reviews no matter what.
As long as their aren't many bad reviews from landlords, that's what matters most when judging a PM company.
Here is a tip for you.
Any PM with reviews of 4 stars or better on Google is doing a very very good job.
Even 3.5 isn't bad.
3 stars is borderline IMO (Make sure to check them out to see if any landlords are posting complaints).
You can't win with contractors mate.
It's a non stop cycle of "hire and fire".
It's just a cost of doing business in this line of work.
Thanks mate and much success
Every time I see "mate" I can't help think of that Youtube video of slow-motion kangaroo streetfight in a quiet Australian neighborhood with classical music in the background. Thanks, pal.
I think Roofstock falls into the soft-core tech company category. I've noticed the typical Silicon Valley hard-core tech startups have a disproportionately high male to female employee ratio, a large portion of engineers hold advanced degrees from big-name tech schools like Stanford and MIT, the C level execs all have extensive tech background even the ones that deal with the business side, etc.
checking out online reviews is actually not that straightforward and without traps.
The Roofstock certified PM that screwed me over appeared to have had >750 fake 5-star reviews written, which successfully tricked me and swamped out the complaints. People have recently caught on and started calling them out. Their Better Business Bureau page has been taken down and being updated. I'd be surprised if they can keep their BBB accreditation.
The other Roofstock certified PM started out with an overall 1.5-star rating when I hired them. Most of the complaints were from tenants. Their rating and reputation have been consistently improving since then. So far it has proven itself to be a great company. They aren't perfect and do occasionally make errors, but I've always been satisfied with their attitude and the way they fixed their mistakes.
My observation tells me that PMs change over time, for better or for worse. Perhaps that Jacksonville PM started out fine when Roofstock decided to partner with them years back.
After I fired the Jacksonville PM, I found another one on my own, which turned out to be awesome. Instead of charing a percentage of the monthly rent, they charge a flat fee with no add-on fees and no fees during vacancies. They also offer three pricing plans, like those bronze, silver and gold health insurance plans. The higher the flat monthly management fee, the more services it includes.
When I asked the business owner why flat fee structure over percentage, he said its the same work regardless if your house is renting for $1200 or $2000, so why would an owner pay them $120 (10%) for one house and $200 (10% of 2000) for another house. In reality the more expensive the house the less the work. Percentage based management is not logical and is a way for a property manager to offset the $60/month they make on the $600/month rentals and that's where all the work is! I think it totally makes sense.
That's probably a more clear cut fee structure than your 10% on middle and higher end properties and 12% on low-end ones. It's the same concept though.
Hey look! A newbie offering you two cents. :-) Hope that helps mate.
Originally posted by @JC Wu:
Originally posted by @Engelo Rumora:
Originally posted by @JC Wu:
I think your 2c input is really worth 2K. Thank you for taking the time to write it up! What you said about turnkeys sticking to the local market and keeping it tight especially got me thinking.
I originally thought the reason why many true turnkeys stay local is that they lack the money and resources to expand like Roofstock. I conjectured that if given the resources, they would expand as much as possible. And since the high profile venture capital investors chose to invest millions in Roofstock instead of those local turnkeys, it must be that Roofstock got a better business model that makes more sense to investors.
Roofstock's rapid expansion to so many markets gave me the impression that their business model really caught on among investors.
After seeing how my close family member raised money from VCs for his Silicon Valley startup, I begin to see how VCs tend to be herd followers so I shouldn't give too much credit to their confidence in the companies they invest in. When my family member first presented his idea to a bunch of VCs, most weren't impressed, some said they'd be willing to invest after he finds a lead investor, but nobody dared to be the first to jump in and be the lead investor. When the prototype came out and it looked promising, one high profile VC took the jump, then everybody followed like a shark feeding frenzy. Several VCs that initially decided to pass, came back and asked him to take their money.
I also had the "follow the herd" mentality when I bought this Jacksonville property back in 2017. Roofstock was super popular at that time, maybe still is, I thought popular must be good and the more popular the better.
When you said 3rd party PMs nickel and dime to survive, why don't true turnkeys have to do that to survive?
I checked out HomeUnion before, which seems to be a true turnkey that manages the properties they sell, operating in quite a few markets although not as many as Roofstock. At that time, I was told they charge 12% for the monthly PM fee. I thought 12% was a bit high.
The majority of Roofstock certified PMs charge between 6% to 10%. The one I worked with and fired in Jacksonville charged 8%. However as time went on, I realized with a bunch of add-on fees this PM charged, the PM fee actually averaged over 12% per month. They not only nickel and dime -- it looks like they went far and beyond to brazenly rip me off and deceive me. It seemed as though all they cared about was charging me fees while being extremely negligent. Based on the >100 online complaints from investors and renters against them, I wasn't alone.
It's scary to know you have done 500+ deals in your local market and still get screwed by contractors to this day. I'd assume after doing so many deals, you'd know who's trustworthy and who's not. Perhaps residential rental is a dirty business no matter what market you're in and how long you've been in.
Funny how both you and @Charles Kao mentioned the word "greedy."
haha,
Thanks mate and I appreciate it.
It's not just the turnkey operators that should stay local but more so the marketing companies and sales channels selling turnkey properties.
They put their name/brand behind too many markets and they usually ruin it within 24 months.
Their have been so many instances of this happening over the years (I won't mention any names but they are all known and well talked about on for forum).
Only very few are still alive that work in multiple markets but even they had many setbacks and lost face on multiple occasions and in multiple markets.
As I mentioned in my prior comment, it's hard enough doing a good job in just one market lol
Roofstock isn't a turnkey company by the way.
They are more of a tech platform.
VC's gobble that stuff up.
Not sure if Roofstock has any IP with their tech but if they do, it doesn't look like anything fancy or that can't be easily replicated IMO.
VC's are very hot lately on real estate tech so I'm sure Rooftsock will be able to raise more capital if needed and expand further.
Business these days has become more about raising capital, spending it, raising more, spending it and then hopefully getting a high enough valuation for some of early investors (Series A for example) to sell and make a high ROI.
I like the old fashioned way of doing business lol.
It's called "Growing revenue and profit every year and never loosing or borrowing money".
Yep, you call me "An old dog" business owner I guess lol
The market is full or "Wantrapreneurs" these days and not many true entrepreneurs.
Anyway, back to turnkey lol
Turnkey companies don't need to nickel and dime on PM because they make their margin on the sale and not necessarily on the PM.
Don't get me wrong, they will still make their money on the PM side but they will also cover a lot out of pocket themselves.
Most of us want our clients to be happy and to buy more so we go above and beyond for them during the after sale process.
Even if it means putting our hand in our own pocket sometimes.
12% is high for PM but not unusual.
We charge 10% and for some lower class properties we charge 12%.
PM is a ****** business mate and you only start seeing something come from it after you manage around 300 units.
It's usually a **** show for the first 3-4 years lol
PM is a thankless job mate and tenants will always complain and post bad reviews no matter what.
As long as their aren't many bad reviews from landlords, that's what matters most when judging a PM company.
Here is a tip for you.
Any PM with reviews of 4 stars or better on Google is doing a very very good job.
Even 3.5 isn't bad.
3 stars is borderline IMO (Make sure to check them out to see if any landlords are posting complaints).
You can't win with contractors mate.
It's a non stop cycle of "hire and fire".
It's just a cost of doing business in this line of work.
Thanks mate and much success
Every time I see "mate" I can't help think of that Youtube video of slow-motion kangaroo streetfight in a quiet Australian neighborhood with classical music in the background. Thanks, pal.
I think Roofstock falls into the soft-core tech company category. I've noticed the typical Silicon Valley hard-core tech startups have a disproportionately high male to female employee ratio, a large portion of engineers hold advanced degrees from big-name tech schools like Stanford and MIT, the C level execs all have extensive tech background even the ones that deal with the business side, etc.
checking out online reviews is actually not that straightforward and without traps.
The Roofstock certified PM that screwed me over appeared to have had >750 fake 5-star reviews written, which successfully tricked me and swamped out the complaints. People have recently caught on and started calling them out. Their Better Business Bureau page has been taken down and being updated. I'd be surprised if they can keep their BBB accreditation.
The other Roofstock certified PM started out with an overall 1.5-star rating when I hired them. Most of the complaints were from tenants. Their rating and reputation have been consistently improving since then. So far it has proven itself to be a great company. They aren't perfect and do occasionally make errors, but I've always been satisfied with their attitude and the way they fixed their mistakes.
My observation tells me that PMs change over time, for better or for worse. Perhaps that Jacksonville PM started out fine when Roofstock decided to partner with them years back.
After I fired the Jacksonville PM, I found another one on my own, which turned out to be awesome. Instead of charing a percentage of the monthly rent, they charge a flat fee with no add-on fees and no fees during vacancies. They also offer three pricing plans, like those bronze, silver and gold health insurance plans. The higher the flat monthly management fee, the more services it includes.
When I asked the business owner why flat fee structure over percentage, he said its the same work regardless if your house is renting for $1200 or $2000, so why would an owner pay them $120 (10%) for one house and $200 (10% of 2000) for another house. In reality the more expensive the house the less the work. Percentage based management is not logical and is a way for a property manager to offset the $60/month they make on the $600/month rentals and that's where all the work is! I think it totally makes sense.
That's probably a more clear cut fee structure than your 10% on middle and higher end properties and 12% on low-end ones. It's the same concept though.
Hey look! A newbie offering you two cents. :-) Hope that helps mate.
haha,
Have you ever seen the video with the kangaroo getting punched by the farmer?
Check it out - https://www.youtube.com/watch?v=FIRT7lf8byw
It's funny as hell lol
Wow on the reviews
I guess a thief will always find a way to swindle someone lol
You can't swindle Google that easily tho?
Googling a persons name or company with the word "scam" behind it usually revels a ton of fun stuff :)
I like the flat fee structure and something to consider for sure.
I wouldn't necessarily agree that it's the same amount of work tho.
Some markets and areas require a much more "hands on" approach and also posses a higher risk for the PM.
Risk can be somewhat subsidized by the larger fee.
Thanks and keep the dream alive.
Originally posted by @Engelo Rumora:
Originally posted by @JC Wu:
Originally posted by @Engelo Rumora:
Originally posted by @JC Wu:
I think your 2c input is really worth 2K. Thank you for taking the time to write it up! What you said about turnkeys sticking to the local market and keeping it tight especially got me thinking.
I originally thought the reason why many true turnkeys stay local is that they lack the money and resources to expand like Roofstock. I conjectured that if given the resources, they would expand as much as possible. And since the high profile venture capital investors chose to invest millions in Roofstock instead of those local turnkeys, it must be that Roofstock got a better business model that makes more sense to investors.
Roofstock's rapid expansion to so many markets gave me the impression that their business model really caught on among investors.
After seeing how my close family member raised money from VCs for his Silicon Valley startup, I begin to see how VCs tend to be herd followers so I shouldn't give too much credit to their confidence in the companies they invest in. When my family member first presented his idea to a bunch of VCs, most weren't impressed, some said they'd be willing to invest after he finds a lead investor, but nobody dared to be the first to jump in and be the lead investor. When the prototype came out and it looked promising, one high profile VC took the jump, then everybody followed like a shark feeding frenzy. Several VCs that initially decided to pass, came back and asked him to take their money.
I also had the "follow the herd" mentality when I bought this Jacksonville property back in 2017. Roofstock was super popular at that time, maybe still is, I thought popular must be good and the more popular the better.
When you said 3rd party PMs nickel and dime to survive, why don't true turnkeys have to do that to survive?
I checked out HomeUnion before, which seems to be a true turnkey that manages the properties they sell, operating in quite a few markets although not as many as Roofstock. At that time, I was told they charge 12% for the monthly PM fee. I thought 12% was a bit high.
The majority of Roofstock certified PMs charge between 6% to 10%. The one I worked with and fired in Jacksonville charged 8%. However as time went on, I realized with a bunch of add-on fees this PM charged, the PM fee actually averaged over 12% per month. They not only nickel and dime -- it looks like they went far and beyond to brazenly rip me off and deceive me. It seemed as though all they cared about was charging me fees while being extremely negligent. Based on the >100 online complaints from investors and renters against them, I wasn't alone.
It's scary to know you have done 500+ deals in your local market and still get screwed by contractors to this day. I'd assume after doing so many deals, you'd know who's trustworthy and who's not. Perhaps residential rental is a dirty business no matter what market you're in and how long you've been in.
Funny how both you and @Charles Kao mentioned the word "greedy."
haha,
Thanks mate and I appreciate it.
It's not just the turnkey operators that should stay local but more so the marketing companies and sales channels selling turnkey properties.
They put their name/brand behind too many markets and they usually ruin it within 24 months.
Their have been so many instances of this happening over the years (I won't mention any names but they are all known and well talked about on for forum).
Only very few are still alive that work in multiple markets but even they had many setbacks and lost face on multiple occasions and in multiple markets.
As I mentioned in my prior comment, it's hard enough doing a good job in just one market lol
Roofstock isn't a turnkey company by the way.
They are more of a tech platform.
VC's gobble that stuff up.
Not sure if Roofstock has any IP with their tech but if they do, it doesn't look like anything fancy or that can't be easily replicated IMO.
VC's are very hot lately on real estate tech so I'm sure Rooftsock will be able to raise more capital if needed and expand further.
Business these days has become more about raising capital, spending it, raising more, spending it and then hopefully getting a high enough valuation for some of early investors (Series A for example) to sell and make a high ROI.
I like the old fashioned way of doing business lol.
It's called "Growing revenue and profit every year and never loosing or borrowing money".
Yep, you call me "An old dog" business owner I guess lol
The market is full or "Wantrapreneurs" these days and not many true entrepreneurs.
Anyway, back to turnkey lol
Turnkey companies don't need to nickel and dime on PM because they make their margin on the sale and not necessarily on the PM.
Don't get me wrong, they will still make their money on the PM side but they will also cover a lot out of pocket themselves.
Most of us want our clients to be happy and to buy more so we go above and beyond for them during the after sale process.
Even if it means putting our hand in our own pocket sometimes.
12% is high for PM but not unusual.
We charge 10% and for some lower class properties we charge 12%.
PM is a ****** business mate and you only start seeing something come from it after you manage around 300 units.
It's usually a **** show for the first 3-4 years lol
PM is a thankless job mate and tenants will always complain and post bad reviews no matter what.
As long as their aren't many bad reviews from landlords, that's what matters most when judging a PM company.
Here is a tip for you.
Any PM with reviews of 4 stars or better on Google is doing a very very good job.
Even 3.5 isn't bad.
3 stars is borderline IMO (Make sure to check them out to see if any landlords are posting complaints).
You can't win with contractors mate.
It's a non stop cycle of "hire and fire".
It's just a cost of doing business in this line of work.
Thanks mate and much success
Every time I see "mate" I can't help think of that Youtube video of slow-motion kangaroo streetfight in a quiet Australian neighborhood with classical music in the background. Thanks, pal.
I think Roofstock falls into the soft-core tech company category. I've noticed the typical Silicon Valley hard-core tech startups have a disproportionately high male to female employee ratio, a large portion of engineers hold advanced degrees from big-name tech schools like Stanford and MIT, the C level execs all have extensive tech background even the ones that deal with the business side, etc.
checking out online reviews is actually not that straightforward and without traps.
The Roofstock certified PM that screwed me over appeared to have had >750 fake 5-star reviews written, which successfully tricked me and swamped out the complaints. People have recently caught on and started calling them out. Their Better Business Bureau page has been taken down and being updated. I'd be surprised if they can keep their BBB accreditation.
The other Roofstock certified PM started out with an overall 1.5-star rating when I hired them. Most of the complaints were from tenants. Their rating and reputation have been consistently improving since then. So far it has proven itself to be a great company. They aren't perfect and do occasionally make errors, but I've always been satisfied with their attitude and the way they fixed their mistakes.
My observation tells me that PMs change over time, for better or for worse. Perhaps that Jacksonville PM started out fine when Roofstock decided to partner with them years back.
After I fired the Jacksonville PM, I found another one on my own, which turned out to be awesome. Instead of charing a percentage of the monthly rent, they charge a flat fee with no add-on fees and no fees during vacancies. They also offer three pricing plans, like those bronze, silver and gold health insurance plans. The higher the flat monthly management fee, the more services it includes.
When I asked the business owner why flat fee structure over percentage, he said its the same work regardless if your house is renting for $1200 or $2000, so why would an owner pay them $120 (10%) for one house and $200 (10% of 2000) for another house. In reality the more expensive the house the less the work. Percentage based management is not logical and is a way for a property manager to offset the $60/month they make on the $600/month rentals and that's where all the work is! I think it totally makes sense.
That's probably a more clear cut fee structure than your 10% on middle and higher end properties and 12% on low-end ones. It's the same concept though.
Hey look! A newbie offering you two cents. :-) Hope that helps mate.
haha,
Have you ever seen the video with the kangaroo getting punched by the farmer?
Check it out - https://www.youtube.com/watch?v=FIRT7lf8byw
It's funny as hell lol
Wow on the reviews
I guess a thief will always find a way to swindle someone lol
You can't swindle Google that easily tho?
Googling a persons name or company with the word "scam" behind it usually revels a ton of fun stuff :)
I like the flat fee structure and something to consider for sure.
I wouldn't necessarily agree that it's the same amount of work tho.
Some markets and areas require a much more "hands on" approach and also posses a higher risk for the PM.
Risk can be somewhat subsidized by the larger fee.
Thanks and keep the dream alive.
Haha, yes, I've replayed that video many times. The part where the kangaroo's arms fly up right after taking a punch to the face and that WTF expression never fail to make me laugh. That kangaroo is probably either a wuss or juvenile that doesn't know how to use its tail and deliver kicks. The guy won't stand a chance against a 6'7" 200lb alpha male like this one:
I visited Australia a couple of years ago. Had a kangaroo steak. It was a bit too stringy. If it was ripped like the one in the pic, no wonder why it didn't taste tender enough - too much muscle and not enough fat.
This is a super hilarious video too kangaroo kicks kid into river I feel guilty every time I laugh at it but I really can't help.
Google and Facebook can easily be swindled and abused. I believe each account can only write one review for each business. It's time-consuming to create those accounts. So when a large number of fake reviews need to be written, the business owners often don't have the time to write them so they purchase fake review packages. It looks like the Roofstock certified Jacksonville PM has the majority of their fake reviews on Google and Facebook, mostly on Google.
Yelp is not easily swindled. They introduced a consumer alerts program back in 2012. They not only issue consumer alerts on businesses that write fake reviews, they also issue consumer alerts on businesses that threaten reviewers with legal action for writing negative reviews. Yelp issued a consumer alert on this Jacksonville PM last year. When I visited their Yelp page, a message popped up and said, "A number of positive reviews for this business originated from the same IP address. Someone may be trying to artificially inflate the rating for this business."
The awesome Jacksonville PM uses the flat fee structure with the intention of avoiding managing low-end properties in "war zone" areas that require a more hands-on approach and pose higher risks to PMs. The low-end property owners would find their management fee too high and not hire them.
They have an in-house RE attorney, so their evictions move along super quickly. This attorney is a co-founder of several PMs. He handles evictions, messy closings and disputes with clients, etc. He divides his time among several PM companies because none of the companies needs a full-time attorney. The PMs don't pay attorney fees when they need one; the attorney is vested in the success and growth of the PM companies for his own sake.
They also utilize a department management style instead of the traditional portfolio management style.
Originally posted by @JC Wu:
Originally posted by @Engelo Rumora:
Originally posted by @JC Wu:
Originally posted by @Engelo Rumora:
Originally posted by @JC Wu:
I think your 2c input is really worth 2K. Thank you for taking the time to write it up! What you said about turnkeys sticking to the local market and keeping it tight especially got me thinking.
I originally thought the reason why many true turnkeys stay local is that they lack the money and resources to expand like Roofstock. I conjectured that if given the resources, they would expand as much as possible. And since the high profile venture capital investors chose to invest millions in Roofstock instead of those local turnkeys, it must be that Roofstock got a better business model that makes more sense to investors.
Roofstock's rapid expansion to so many markets gave me the impression that their business model really caught on among investors.
After seeing how my close family member raised money from VCs for his Silicon Valley startup, I begin to see how VCs tend to be herd followers so I shouldn't give too much credit to their confidence in the companies they invest in. When my family member first presented his idea to a bunch of VCs, most weren't impressed, some said they'd be willing to invest after he finds a lead investor, but nobody dared to be the first to jump in and be the lead investor. When the prototype came out and it looked promising, one high profile VC took the jump, then everybody followed like a shark feeding frenzy. Several VCs that initially decided to pass, came back and asked him to take their money.
I also had the "follow the herd" mentality when I bought this Jacksonville property back in 2017. Roofstock was super popular at that time, maybe still is, I thought popular must be good and the more popular the better.
When you said 3rd party PMs nickel and dime to survive, why don't true turnkeys have to do that to survive?
I checked out HomeUnion before, which seems to be a true turnkey that manages the properties they sell, operating in quite a few markets although not as many as Roofstock. At that time, I was told they charge 12% for the monthly PM fee. I thought 12% was a bit high.
The majority of Roofstock certified PMs charge between 6% to 10%. The one I worked with and fired in Jacksonville charged 8%. However as time went on, I realized with a bunch of add-on fees this PM charged, the PM fee actually averaged over 12% per month. They not only nickel and dime -- it looks like they went far and beyond to brazenly rip me off and deceive me. It seemed as though all they cared about was charging me fees while being extremely negligent. Based on the >100 online complaints from investors and renters against them, I wasn't alone.
It's scary to know you have done 500+ deals in your local market and still get screwed by contractors to this day. I'd assume after doing so many deals, you'd know who's trustworthy and who's not. Perhaps residential rental is a dirty business no matter what market you're in and how long you've been in.
Funny how both you and @Charles Kao mentioned the word "greedy."
haha,
Thanks mate and I appreciate it.
It's not just the turnkey operators that should stay local but more so the marketing companies and sales channels selling turnkey properties.
They put their name/brand behind too many markets and they usually ruin it within 24 months.
Their have been so many instances of this happening over the years (I won't mention any names but they are all known and well talked about on for forum).
Only very few are still alive that work in multiple markets but even they had many setbacks and lost face on multiple occasions and in multiple markets.
As I mentioned in my prior comment, it's hard enough doing a good job in just one market lol
Roofstock isn't a turnkey company by the way.
They are more of a tech platform.
VC's gobble that stuff up.
Not sure if Roofstock has any IP with their tech but if they do, it doesn't look like anything fancy or that can't be easily replicated IMO.
VC's are very hot lately on real estate tech so I'm sure Rooftsock will be able to raise more capital if needed and expand further.
Business these days has become more about raising capital, spending it, raising more, spending it and then hopefully getting a high enough valuation for some of early investors (Series A for example) to sell and make a high ROI.
I like the old fashioned way of doing business lol.
It's called "Growing revenue and profit every year and never loosing or borrowing money".
Yep, you call me "An old dog" business owner I guess lol
The market is full or "Wantrapreneurs" these days and not many true entrepreneurs.
Anyway, back to turnkey lol
Turnkey companies don't need to nickel and dime on PM because they make their margin on the sale and not necessarily on the PM.
Don't get me wrong, they will still make their money on the PM side but they will also cover a lot out of pocket themselves.
Most of us want our clients to be happy and to buy more so we go above and beyond for them during the after sale process.
Even if it means putting our hand in our own pocket sometimes.
12% is high for PM but not unusual.
We charge 10% and for some lower class properties we charge 12%.
PM is a ****** business mate and you only start seeing something come from it after you manage around 300 units.
It's usually a **** show for the first 3-4 years lol
PM is a thankless job mate and tenants will always complain and post bad reviews no matter what.
As long as their aren't many bad reviews from landlords, that's what matters most when judging a PM company.
Here is a tip for you.
Any PM with reviews of 4 stars or better on Google is doing a very very good job.
Even 3.5 isn't bad.
3 stars is borderline IMO (Make sure to check them out to see if any landlords are posting complaints).
You can't win with contractors mate.
It's a non stop cycle of "hire and fire".
It's just a cost of doing business in this line of work.
Thanks mate and much success
Every time I see "mate" I can't help think of that Youtube video of slow-motion kangaroo streetfight in a quiet Australian neighborhood with classical music in the background. Thanks, pal.
I think Roofstock falls into the soft-core tech company category. I've noticed the typical Silicon Valley hard-core tech startups have a disproportionately high male to female employee ratio, a large portion of engineers hold advanced degrees from big-name tech schools like Stanford and MIT, the C level execs all have extensive tech background even the ones that deal with the business side, etc.
checking out online reviews is actually not that straightforward and without traps.
The Roofstock certified PM that screwed me over appeared to have had >750 fake 5-star reviews written, which successfully tricked me and swamped out the complaints. People have recently caught on and started calling them out. Their Better Business Bureau page has been taken down and being updated. I'd be surprised if they can keep their BBB accreditation.
The other Roofstock certified PM started out with an overall 1.5-star rating when I hired them. Most of the complaints were from tenants. Their rating and reputation have been consistently improving since then. So far it has proven itself to be a great company. They aren't perfect and do occasionally make errors, but I've always been satisfied with their attitude and the way they fixed their mistakes.
My observation tells me that PMs change over time, for better or for worse. Perhaps that Jacksonville PM started out fine when Roofstock decided to partner with them years back.
After I fired the Jacksonville PM, I found another one on my own, which turned out to be awesome. Instead of charing a percentage of the monthly rent, they charge a flat fee with no add-on fees and no fees during vacancies. They also offer three pricing plans, like those bronze, silver and gold health insurance plans. The higher the flat monthly management fee, the more services it includes.
When I asked the business owner why flat fee structure over percentage, he said its the same work regardless if your house is renting for $1200 or $2000, so why would an owner pay them $120 (10%) for one house and $200 (10% of 2000) for another house. In reality the more expensive the house the less the work. Percentage based management is not logical and is a way for a property manager to offset the $60/month they make on the $600/month rentals and that's where all the work is! I think it totally makes sense.
That's probably a more clear cut fee structure than your 10% on middle and higher end properties and 12% on low-end ones. It's the same concept though.
Hey look! A newbie offering you two cents. :-) Hope that helps mate.
haha,
Have you ever seen the video with the kangaroo getting punched by the farmer?
Check it out - https://www.youtube.com/watch?v=FIRT7lf8byw
It's funny as hell lol
Wow on the reviews
I guess a thief will always find a way to swindle someone lol
You can't swindle Google that easily tho?
Googling a persons name or company with the word "scam" behind it usually revels a ton of fun stuff :)
I like the flat fee structure and something to consider for sure.
I wouldn't necessarily agree that it's the same amount of work tho.
Some markets and areas require a much more "hands on" approach and also posses a higher risk for the PM.
Risk can be somewhat subsidized by the larger fee.
Thanks and keep the dream alive.
Haha, yes, I've replayed that video many times. The part where the kangaroo's arms fly up right after taking a punch to the face and that WTF expression never fail to make me laugh. That kangaroo is probably either a wuss or juvenile that doesn't know how to use its tail and deliver kicks. The guy won't stand a chance against a 6'7" 200lb alpha male like this one:
I visited Australia a couple of years ago. Had a kangaroo steak. It was a bit too stringy. If it was ripped like the one in the pic, no wonder why it didn't taste tender enough - too much muscle and not enough fat.
This is a super hilarious video too kangaroo kicks kid into river I feel guilty every time I laugh at it but I really can't help.
Google and Facebook can easily be swindled and abused. I believe each account can only write one review for each business. It's time-consuming to create those accounts. So when a large number of fake reviews need to be written, the business owners often don't have the time to write them so they purchase fake review packages. It looks like the Roofstock certified Jacksonville PM has the majority of their fake reviews on Google and Facebook, mostly on Google.
Yelp is not easily swindled. They introduced a consumer alerts program back in 2012. They not only issue consumer alerts on businesses that write fake reviews, they also issue consumer alerts on businesses that threaten reviewers with legal action for writing negative reviews. Yelp issued a consumer alert on this Jacksonville PM last year. When I visited their Yelp page, a message popped up and said, "A number of positive reviews for this business originated from the same IP address. Someone may be trying to artificially inflate the rating for this business."
The awesome Jacksonville PM uses the flat fee structure with the intention of avoiding managing low-end properties in "war zone" areas that require a more hands-on approach and pose higher risks to PMs. The low-end property owners would find their management fee too high and not hire them.
They have an in-house RE attorney, so their evictions move along super quickly. This attorney is a co-founder of several PMs. He handles evictions, messy closings and disputes with clients, etc. He divides his time among several PM companies because none of the companies needs a full-time attorney. The PMs don't pay attorney fees when they need one; the attorney is vested in the success and growth of the PM companies for his own sake.
They also utilize a department management style instead of the traditional portfolio management style.
haha
That roo sure is buff lol
I didn't know that about Yelp.
We usually get our investors to post on Google, Facebook and Turnkey-Reviews.
I guess we need to request Yelp now also :)
You learn something new everyday
Speak soon
ps. The river kicking roo is hilarious lol
Originally posted by @JC Wu:
@Ned Carey I'd rather be over cautious than not to be cautious enough, especially since I'm a newbie and the property is ~2700 miles away. When I make decisions, I only care about the worst case scenario and whether I can handle it or not, which involves asking "what if" questions.
Roofstock inspection reports aren’t created equal. The report for this particular property is only 13 pages long including all the pics, not very detailed. Some Roofstock inspection reports are over 100 pages long.
My then prospective buyers cared about the roof permit and factored into their offer amount.
JC, I guess you may try semi local market in the future like Bakersfield/Fresno etc. You will able to resolve many problem within 2 hour drive.
Originally posted by @Maurice George:
Originally posted by @JC Wu:
@Ned Carey I'd rather be over cautious than not to be cautious enough, especially since I'm a newbie and the property is ~2700 miles away. When I make decisions, I only care about the worst case scenario and whether I can handle it or not, which involves asking "what if" questions.
Roofstock inspection reports aren’t created equal. The report for this particular property is only 13 pages long including all the pics, not very detailed. Some Roofstock inspection reports are over 100 pages long.
My then prospective buyers cared about the roof permit and factored into their offer amount.
JC, I guess you may try semi local market in the future like Bakersfield/Fresno etc. You will able to resolve many problem within 2 hour drive.
Maurice. Bakersfield is more like 5 hrs drive away from me and Fresno 4 hrs (I live in San Francisco). But presuming there're good semi local markets within 2 hr drive, would you still mainly rely on a property manager? I guess potential problems that come with acquisition can be resolved since I can see the property with my own eyes and meet an agent in person before I enter a PSA, but what part of "being a landlord" would you do it on your own and what part can be relegated to a PM? Unless I have to, I wouldn't make a 4 hr round trip, just because it's too time-consuming.
I can relate to JC's post: I think her categorization based on Newbie to Seller was sufficient.
The fact is even with the details being requested: it would be a retroactive assessment. Roofstock as a service is supposed to make the purchase simple for the novice buyers and even easier for the experienced buyers. I've purchased properties through roofstock and the contrast in service from one purchase to another was a big decline. Due diligence, service and support, and whatever criteria they use for their partnerships actually had me stop bids on properties. I completely agree it's the buyers responsibility to be mindful of all the risks in purchasing properties, but presenting roofstock other than anything as a way to see greater inventory (as of now) is a stretch
Originally posted by @JC Wu:
Originally posted by @Maurice George:
Originally posted by @JC Wu:
@Ned Carey I'd rather be over cautious than not to be cautious enough, especially since I'm a newbie and the property is ~2700 miles away. When I make decisions, I only care about the worst case scenario and whether I can handle it or not, which involves asking "what if" questions.
Roofstock inspection reports aren’t created equal. The report for this particular property is only 13 pages long including all the pics, not very detailed. Some Roofstock inspection reports are over 100 pages long.
My then prospective buyers cared about the roof permit and factored into their offer amount.
JC, I guess you may try semi local market in the future like Bakersfield/Fresno etc. You will able to resolve many problem within 2 hour drive.
Maurice. Bakersfield is more like 5 hrs drive away from me and Fresno 4 hrs (I live in San Francisco). But presuming there're good semi local markets within 2 hr drive, would you still mainly rely on a property manager? I guess potential problems that come with acquisition can be resolved since I can see the property with my own eyes and meet an agent in person before I enter a PSA, but what part of "being a landlord" would you do it on your own and what part can be relegated to a PM? Unless I have to, I wouldn't make a 4 hr round trip, just because it's too time-consuming.
I do not necessary mean Bakersfield, you can try Stockton or Modesto if you are in Bay Area. The reason I do not recommend your local market is price is way too high in Bay/LA. What I suggested is if your property manager cannot resolve it, you can drive there (or find a local friend) to resolve it. For Jacksonville, it is way too far from Bay and distance creates difficulties.
@JC Wu I'm coming in late to this convo, but I live in Modesto. What information/answers exactly are you looking for? I have a couple of rentals in Modesto but I invest out of state in the Midwest as well so I'm familiar with both the market you're being advised to look in, as well as the mode of investing ~2500 miles away that you're being advised AGAINST. From my experience I can tell you to take the long distance advice with a grain of salt but don't give up on long distance investing altogether. David Green, a close neighbor of yours, would agree! We have a Meetup in Modesto here that deals with both our local markets and investing out of state, you're more than welcome to come over and che
Originally posted by @Michael R.:
@JC Wu I'm coming in late to this convo, but I live in Modesto. What information/answers exactly are you looking for? I have a couple of rentals in Modesto but I invest out of state in the Midwest as well so I'm familiar with both the market you're being advised to look in, as well as the mode of investing ~2500 miles away that you're being advised AGAINST. From my experience I can tell you to take the long distance advice with a grain of salt but don't give up on long distance investing altogether. David Green, a close neighbor of yours, would agree! We have a Meetup in Modesto here that deals with both our local markets and investing out of state, you're more than welcome to come over and che
I'm actually not against long-distance investing. What I'm against is buying properties from Roofstock, and other online platforms that claim to revolutionize RE investing and simplify the process. They're like Amazon for properties. Technically, anything can be bought online nowadays. But the fact is it doesn't work for many things. Even for simple merchandize like shoes, eight out of ten bought online don't fit.
Which Midwest markets are you in? Do you only use the out-of-state properties as rentals? Did you acquire them through local agents?
I feel that investing ~2500 miles away isn't fundamentally different from investing ~250 miles away. Those markets are all far away enough that I have no familiarity with them; gotta rely on a local PM for the day to day hassles of being a landlord; can't frequently attend open houses; won't visit unless something goes seriously wrong, have to take a plane to get there, etc.
Do you also use more hands-on strategies like BRRR in your local Modesto market besides keeping them as rentals? Many investors and companies aren't interested in the monthly cash flow from rentals. They profit more and faster from flipping, wholesaling and other strategies that're impossible or really difficult to implement outside local markets.
When did you buy your Modesto properties? The ones that value between 200K to 300K now only rents between 1K-2K/mo.
@JC Wu I see, I'm not familiar with those companies but I'd have to agree. As different as everyone's style is in purchasing investments i'd have a hard time believing a website could make it "easy" and meet everyone's criteria or satisfy everyone's research checklist.
I'm in Fort Wayne IN. 2nd largest city in IN by population. Its got good things going for it and it isn't as hyped as Indy is, though I watch Indy some too and know poeple investing there. I buy and hold in FW. I've done some rehabbing on the properties that I own but no flips for immediate resale. I do use local agents. I'm also on some wholesaler lists so get leads from them too. You're pretty much spot on with the 2500/250, other than cost of visiting. A tank of gas and a day for 250mi would be cheaper than a plane ticket and 3 days for 2500mi. But my goal has always been to build processes that make it where I don't have to visit often. You gotta assemble a team you can trust, thats for sure.
I bought my Modesto properties during the downturn so they do cashflow nicely. Currently I can't make rent numbers work for places around here while getting a loan for purchasing. It might work for someone who finds a good deal, buys with cash, and cares more about longterm appreciation and tax protections, but it doesn't work for me because of little cashflow. I didn't technically BRRR the Modesto places as I got them before knowing anything about BP. One was my old primary home and I fully rehabbed it while living in it and on turning it into a rental it has always rented at a premium because its very nice. The other was lower end, not because of location but because of condition. I rehabbed the bathrooms and kitchen several years ago and was able to modestly raise the rent. I just rehabbed the remainder of everything with new can lighting, doors, flooring, paint throughout. I can now get the same premium rent as the other.
If you have questions about Modesto areas and need local head knowledge or boots on the ground let me know, I was born and raised here so know it very well. Cheers.
Originally posted by @Michael R.:
@JC Wu I see, I'm not familiar with those companies but I'd have to agree. As different as everyone's style is in purchasing investments i'd have a hard time believing a website could make it "easy" and meet everyone's criteria or satisfy everyone's research checklist.
I'm in Fort Wayne IN. 2nd largest city in IN by population. Its got good things going for it and it isn't as hyped as Indy is, though I watch Indy some too and know poeple investing there. I buy and hold in FW. I've done some rehabbing on the properties that I own but no flips for immediate resale. I do use local agents. I'm also on some wholesaler lists so get leads from them too. You're pretty much spot on with the 2500/250, other than cost of visiting. A tank of gas and a day for 250mi would be cheaper than a plane ticket and 3 days for 2500mi. But my goal has always been to build processes that make it where I don't have to visit often. You gotta assemble a team you can trust, thats for sure.
I bought my Modesto properties during the downturn so they do cashflow nicely. Currently I can't make rent numbers work for places around here while getting a loan for purchasing. It might work for someone who finds a good deal, buys with cash, and cares more about longterm appreciation and tax protections, but it doesn't work for me because of little cashflow. I didn't technically BRRR the Modesto places as I got them before knowing anything about BP. One was my old primary home and I fully rehabbed it while living in it and on turning it into a rental it has always rented at a premium because its very nice. The other was lower end, not because of location but because of condition. I rehabbed the bathrooms and kitchen several years ago and was able to modestly raise the rent. I just rehabbed the remainder of everything with new can lighting, doors, flooring, paint throughout. I can now get the same premium rent as the other.
If you have questions about Modesto areas and need local head knowledge or boots on the ground let me know, I was born and raised here so know it very well. Cheers.
My ultimate goal is also to build processes that make it where I don't have to visit often. Assembling a team I can trust is definitely the way to do it. If I can achieve that, even those more hands-on investing strategies can become feasible. Sometimes, you just need to find that one key trustworthy person to get the whole team. But it takes a stroke of luck to stumble upon a person like that, often after being screwed over multiple times by shady ppl. It's only possible to know for sure whether people are trustworthy or not through the test of time and working on projects together, to see how they handle conflict of interest and how they take responsibilities when things go south.
I figured you bought your Modesto properties during the downturn. It was probably a once in a lifetime opportunity to acquire investment properties. Unfortunately, I missed it. I'm hoarding up cash now hoping to scoop up some properties during the next recession, but each recession is unique - be it the triggers, the different sectors that get hit, severity, etc. How much did housing prices drop in Modesto during the last downturn? I know in places like Palo Alto, home value only dropped about 10%, compared to as much as 50% in some other places. I feel that a lot of times, investment is all about timing. If the timing is right, strategies don't even matter - bitcoin for instance. I'll reach out to you to inquire more about the Modesto market when the next recession hits. :) Thanks in advance.
I feel that betting on long term appreciation is a long shot, simply because the future is too unpredictable and the market is dynamic.
Oh in 2009-2011 prices were down at LEAST 50% around here! I got lucky in that i was just old enough to start buying a house and lucky that I nabbed two. Back then I wasn't into it enough to know to nab as many as I could unfortunately! :D Definitely though, keep my name in your rolodex and come over for a drink and a look around when prices get affordable again!
@JC Wu , Thanks for starting the thread it was very informative. I was recently introduced to roofstock and I'm considering posting our inventory on the website, as you mentioned it is a 5 star rating for the sellers. I have done some study while I was reading the comments on this post. As a BP community we can pick 3-5 zipcodes we are not familiar with and pick up some listings on roofstock and analyze if they are actually worth what they are asked for. I have come to conclusion that most of the listings on roofstock are overpriced compare to all the homes that are sold/for sale in the area and also current rental income and market rental income is about 10-15% over the comps as well. I have done my study for Georgia 31097 zip code and found for sale homes about 30% discount of the house that is listed on roofstock.
My opinion is as a buyer roofstock has great tools to analyze the properties and it makes easier for investors to find rental properties since all the listings on the website are for that purpose however you will still need an expert in the area before you make a purchase.
It’s been months since I started this thread. Since then, many people have shared their opinions and insights, both privately and publicly. Piecing together what they/you told me, what I read, what I experienced, and some interesting new developments, you might find this post very intriguing, perhaps a little disturbing.
@Baris Keser concluded that most of the listings on roofstock are overpriced compared to all the homes that are sold/for sale in the area and also current rental income and market rental income is about 10-15% over the comps as well. He has done his study for Georgia 31097 zip code and found for sale homes about 30% discount of the house that is listed on roofstock.
@Tony Kim mentioned that Roofstock listings aren’t exactly what he would call good deals.
@Brian Ploszay wrote that Roofstock properties in his market are overpriced.
Here’s what I find very interesting:
In another BP thread that @Jason G. started (the same Jason who wrote Roofstock a long ravishing review and posed those good questions I used as template on this thread), he wrote that he was told most of Roofstock properties are sold for 97% of list price. I don’t know who told him that. I presume it was somebody from Roofstock given the seemingly good relationship he has with Roofstock. Here’s the link https://www.biggerpockets.com/forums/92/topics/468304-roofstock-case-study
In an article, Roofstock CEO said that roughly 93 percent of investors on the platform are buying out of state and 75 percent are first-time buyers. Here’s the link https://www.curbed.com/2019/9/10/20852849/millennial-buy-a-home-homeownership-remote
If what they say is true, it seems that there are too many naive and inexperienced newbies like myself overpaying for the properties listed on Roofstock, while being unaware of the depth of the water.
However, I’d like to point out that buyers are free to offer less than the list price and it’s up to sellers to accept or decline the offers.
A very interesting new development:
The Roofstock certified property management company in Florida that ripped me off and screwed me over appears to have had hundreds of fake positive reviews written on multiple review sites. Yelp issued consumer alert on them. It seems that even their CFO impostures as investor to write themselves five-star reviews and the employees compliment themselves and each other.
I complained about this company and pointed out their shady conduct to Roofstock. To my disappointment, Roofstock kept it on their certified provider list. This PM company has also been an active seller on Roofstock.
I filed a complaint with the Florida Attorney General along with the evidence I had analyzed and compiled, reminding them of the legal precedent of the NY attorney general imposing fines as high as 350K on a number of companies that wrote fake reviews and how a scammer behind hundreds of fake reviews on TripAdvisor received prison sentence last year. The attorney general office scanned all the hard copy pages I mailed, attached the PDF file to an email they sent me, saying that they are sharing my correspondence with their Consumer Protection Division. I don’t know whether they’ll eventually bring enforcement actions upon this PM company or not, but I doubt they’d bother to take the time to scan all 21 pages if they don’t plan to do anything about it.
I also brought it to Better Business Bureau’s attention that this PM company might be writing fake reviews on BBB. BBB took down their page a couple of weeks later. My guess is their BBB accreditation will be revoked.
Another interesting new development:
I sold this Florida property through a local wholesaler to an investor located in Israel, so the end buyer is not just an out-of-state investor, but an out-of-country investor.
The end buyer did some light rehab on the property and listed it for sale on the MLS. It has been sitting on the market for 186 days and the list price has been reduced multiple times. Zillow shows 1256 views but only 41 saves since listing. This investor will lose money for sure.
The biggest winner in this whole thing is the local wholesaler who made a quick 10K assignment fee. Myself and the investor after me (both unfamiliar with the local market) are the losers.
Last but not least, I’d like to point out that you don’t know if an investment is good or bad until you fully exit. It’s especially true for RE investments. You could be making 10K/yr of rent from one property for 10 years straight.
But if, say, there’s an undisclosed material fact or omission on the inspection report, polybutylene piping for instance (I’m just giving out a random example off the top of my head, not implying anything), those pipes suddenly burst 10 years after you buy the property and floods the house, the water damages could easily exceed the sum of the profits you’d made for the past ten years. Most investors who buy rentals from online platforms (not just Roofstock) out of state keep them as buy-and-hold. Many of those platforms are too new for certain types of “ticking time bombs” to explode. It’d be interesting to see how that plays out in the next few years. In the meantime, ignorance is bliss.
It looks like most ppl on BP only read the first page of any thread. The more interesting stuff is on the later pages really. I assume people who’ve contributed to this discussion are interested to know more and many people only check posts they’ve been @ed in. Sorry to disturb you if you don’t want to be @ed. Please don’t feel pressured to reply.
@Heshel Mangel@Account Closed
@Santosh K.@Michael Canlas@Joanna Li@Jason Alloway@Jason Wong@Matthew Ryan@Volker Durre@Amit Jadhav meant to @ you in my last post
#5 Ask About A Real Estate Company Contributor
- Rental Property Investor
- Long Island, NY
- 490
- Votes |
- 434
- Posts
#5 Ask About A Real Estate Company Contributor
- Rental Property Investor
- Long Island, NY
Originally posted by @JC Wu:
It’s been months since I started this thread. Since then, many people have shared their opinions and insights, both privately and publicly. Piecing together what they/you told me, what I read, what I experienced, and some interesting new developments, you might find this post very intriguing, perhaps a little disturbing.
@Baris Keser concluded that most of the listings on roofstock are overpriced compared to all the homes that are sold/for sale in the area and also current rental income and market rental income is about 10-15% over the comps as well. He has done his study for Georgia 31097 zip code and found for sale homes about 30% discount of the house that is listed on roofstock.
@Tony Kim mentioned that Roofstock listings aren’t exactly what he would call good deals.
@Brian Ploszay wrote that Roofstock properties in his market are overpriced.
Here’s what I find very interesting:
In another BP thread that @Jason G. started (the same Jason who wrote Roofstock a long ravishing review and posed those good questions I used as template on this thread), he wrote that he was told most of Roofstock properties are sold for 97% of list price. I don’t know who told him that. I presume it was somebody from Roofstock given the seemingly good relationship he has with Roofstock. Here’s the link https://www.biggerpockets.com/forums/92/topics/468304-roofstock-case-study
In an article, Roofstock CEO said that roughly 93 percent of investors on the platform are buying out of state and 75 percent are first-time buyers. Here’s the link https://www.curbed.com/2019/9/10/20852849/millennial-buy-a-home-homeownership-remote
If what they say is true, it seems that there are too many naive and inexperienced newbies like myself overpaying for the properties listed on Roofstock, while being unaware of the depth of the water.
However, I’d like to point out that buyers are free to offer less than the list price and it’s up to sellers to accept or decline the offers.
A very interesting new development:
The Roofstock certified property management company in Florida that ripped me off and screwed me over appears to have had hundreds of fake positive reviews written on multiple review sites. Yelp issued consumer alert on them. It seems that even their CFO impostures as investor to write themselves five-star reviews and the employees compliment themselves and each other.
I complained about this company and pointed out their shady conduct to Roofstock. To my disappointment, Roofstock kept it on their certified provider list. This PM company has also been an active seller on Roofstock.
I filed a complaint with the Florida Attorney General along with the evidence I had analyzed and compiled, reminding them of the legal precedent of the NY attorney general imposing fines as high as 350K on a number of companies that wrote fake reviews and how a scammer behind hundreds of fake reviews on TripAdvisor received prison sentence last year. The attorney general office scanned all the hard copy pages I mailed, attached the PDF file to an email they sent me, saying that they are sharing my correspondence with their Consumer Protection Division. I don’t know whether they’ll eventually bring enforcement actions upon this PM company or not, but I doubt they’d bother to take the time to scan all 21 pages if they don’t plan to do anything about it.
I also brought it to Better Business Bureau’s attention that this PM company might be writing fake reviews on BBB. BBB took down their page a couple of weeks later. My guess is their BBB accreditation will be revoked.
Another interesting new development:
I sold this Florida property through a local wholesaler to an investor located in Israel, so the end buyer is not just an out-of-state investor, but an out-of-country investor.
The end buyer did some light rehab on the property and listed it for sale on the MLS. It has been sitting on the market for 186 days and the list price has been reduced multiple times. Zillow shows 1256 views but only 41 saves since listing. This investor will lose money for sure.
The biggest winner in this whole thing is the local wholesaler who made a quick 10K assignment fee. Myself and the investor after me (both unfamiliar with the local market) are the losers.
Last but not least, I’d like to point out that you don’t know if an investment is good or bad until you fully exit. It’s especially true for RE investments. You could be making 10K/yr of rent from one property for 10 years straight.
But if, say, there’s an undisclosed material fact or omission on the inspection report, polybutylene piping for instance (I’m just giving out a random example off the top of my head, not implying anything), those pipes suddenly burst 10 years after you buy the property and floods the house, the water damages could easily exceed the sum of the profits you’d made for the past ten years. Most investors who buy rentals from online platforms (not just Roofstock) out of state keep them as buy-and-hold. Many of those platforms are too new for certain types of “ticking time bombs” to explode. It’d be interesting to see how that plays out in the next few years. In the meantime, ignorance is bliss.
It looks like most ppl on BP only read the first page of any thread. The more interesting stuff is on the later pages really. I assume people who’ve contributed to this discussion are interested to know more and many people only check posts they’ve been @ed in. Sorry to disturb you if you don’t want to be @ed. Please don’t feel pressured to reply.
@Heshel Mangel@Account Closed
The 97% figure came form @Zach Evanish in an e-mail to me back in July of 2017 when we were having an e-mail exchange regarding the pricing of one of the properties on Roofstock. I do not know the accuracy of that figure or if it is what the average is presently. I do agree that many properties on the site simply cannot work for an investor seeking cashflow. I have purchased four properties through Roofstock, but I do not think anyone at Roofstock has treated me any differently than they would any other customer. There was a property priced very well in the Atlanta Market just a couple of months ago which was located a few houses down from one I currently own which I wish I was able to get, but someone outbid me by a few grand. Good deals do come up, but it requires setting alerts and checking the site. It is just another resource investors can use to get started and grow their portfolio. I don't think I would have investment properties now if I didn't come across Roofstock.
Originally posted by @Jason G.:
Originally posted by @JC Wu:
It’s been months since I started this thread. Since then, many people have shared their opinions and insights, both privately and publicly. Piecing together what they/you told me, what I read, what I experienced, and some interesting new developments, you might find this post very intriguing, perhaps a little disturbing.
@Baris Keser concluded that most of the listings on roofstock are overpriced compared to all the homes that are sold/for sale in the area and also current rental income and market rental income is about 10-15% over the comps as well. He has done his study for Georgia 31097 zip code and found for sale homes about 30% discount of the house that is listed on roofstock.
@Tony Kim mentioned that Roofstock listings aren’t exactly what he would call good deals.
@Brian Ploszay wrote that Roofstock properties in his market are overpriced.
Here’s what I find very interesting:
In another BP thread that @Jason G. started (the same Jason who wrote Roofstock a long ravishing review and posed those good questions I used as template on this thread), he wrote that he was told most of Roofstock properties are sold for 97% of list price. I don’t know who told him that. I presume it was somebody from Roofstock given the seemingly good relationship he has with Roofstock. Here’s the link https://www.biggerpockets.com/forums/92/topics/468304-roofstock-case-study
In an article, Roofstock CEO said that roughly 93 percent of investors on the platform are buying out of state and 75 percent are first-time buyers. Here’s the link https://www.curbed.com/2019/9/10/20852849/millennial-buy-a-home-homeownership-remote
If what they say is true, it seems that there are too many naive and inexperienced newbies like myself overpaying for the properties listed on Roofstock, while being unaware of the depth of the water.
However, I’d like to point out that buyers are free to offer less than the list price and it’s up to sellers to accept or decline the offers.
A very interesting new development:
The Roofstock certified property management company in Florida that ripped me off and screwed me over appears to have had hundreds of fake positive reviews written on multiple review sites. Yelp issued consumer alert on them. It seems that even their CFO impostures as investor to write themselves five-star reviews and the employees compliment themselves and each other.
I complained about this company and pointed out their shady conduct to Roofstock. To my disappointment, Roofstock kept it on their certified provider list. This PM company has also been an active seller on Roofstock.
I filed a complaint with the Florida Attorney General along with the evidence I had analyzed and compiled, reminding them of the legal precedent of the NY attorney general imposing fines as high as 350K on a number of companies that wrote fake reviews and how a scammer behind hundreds of fake reviews on TripAdvisor received prison sentence last year. The attorney general office scanned all the hard copy pages I mailed, attached the PDF file to an email they sent me, saying that they are sharing my correspondence with their Consumer Protection Division. I don’t know whether they’ll eventually bring enforcement actions upon this PM company or not, but I doubt they’d bother to take the time to scan all 21 pages if they don’t plan to do anything about it.
I also brought it to Better Business Bureau’s attention that this PM company might be writing fake reviews on BBB. BBB took down their page a couple of weeks later. My guess is their BBB accreditation will be revoked.
Another interesting new development:
I sold this Florida property through a local wholesaler to an investor located in Israel, so the end buyer is not just an out-of-state investor, but an out-of-country investor.
The end buyer did some light rehab on the property and listed it for sale on the MLS. It has been sitting on the market for 186 days and the list price has been reduced multiple times. Zillow shows 1256 views but only 41 saves since listing. This investor will lose money for sure.
The biggest winner in this whole thing is the local wholesaler who made a quick 10K assignment fee. Myself and the investor after me (both unfamiliar with the local market) are the losers.
Last but not least, I’d like to point out that you don’t know if an investment is good or bad until you fully exit. It’s especially true for RE investments. You could be making 10K/yr of rent from one property for 10 years straight.
But if, say, there’s an undisclosed material fact or omission on the inspection report, polybutylene piping for instance (I’m just giving out a random example off the top of my head, not implying anything), those pipes suddenly burst 10 years after you buy the property and floods the house, the water damages could easily exceed the sum of the profits you’d made for the past ten years. Most investors who buy rentals from online platforms (not just Roofstock) out of state keep them as buy-and-hold. Many of those platforms are too new for certain types of “ticking time bombs” to explode. It’d be interesting to see how that plays out in the next few years. In the meantime, ignorance is bliss.
It looks like most ppl on BP only read the first page of any thread. The more interesting stuff is on the later pages really. I assume people who’ve contributed to this discussion are interested to know more and many people only check posts they’ve been @ed in. Sorry to disturb you if you don’t want to be @ed. Please don’t feel pressured to reply.
@Heshel Mangel@Account Closed
The 97% figure came form @Zach Evanish in an e-mail to me back in July of 2017 when we were having an e-mail exchange regarding the pricing of one of the properties on Roofstock. I do not know the accuracy of that figure or if it is what the average is presently. I do agree that many properties on the site simply cannot work for an investor seeking cashflow. I have purchased four properties through Roofstock, but I do not think anyone at Roofstock has treated me any differently than they would any other customer. There was a property priced very well in the Atlanta Market just a couple of months ago which was located a few houses down from one I currently own which I wish I was able to get, but someone outbid me by a few grand. Good deals do come up, but it requires setting alerts and checking the site. It is just another resource investors can use to get started and grow their portfolio. I don't think I would have investment properties now if I didn't come across Roofstock.
They don't say properties sell at 97% of original list price, they say 97% of list price. I can list a property for 120,000, get no offers, so they push me to lower it and lower it until the price is 100k, and then it sells for 97k - they will call that 97% of list price (even though it is 80% of original list price).
Does that make sense, and make it more reasonable?
I think the risks experienced here are risks inherent to all rental property purchases- in and out of state.
A prospective investor should have a clear and well developed due diligence plan when purchasing a property. It doesn't matter who you get it from.
Here are some things I recommend investors do to avoid surprises, specifically when making some of their earlier purchases out of state:
1. Market research. Learn about the economies and what drives them in the specific regions and asset classes you aim to invest in. Talk to several property managers about these assets. Tenant dynamics, rental demand, turnover frequency, trends, etc... These are your market experts. Forget realtors. Get on wikipedia. Look at rental listings. Check out news stories. Google map surf the hell out of an area. Review streets with property manager to make sure the area is manageable.
2. Gather all financial info. Current rents. Potential rents (research/ask PM to estimate this). Pull the taxes off county records. Get an insurance estimate. Ask which utilities owner pays, then call the local utilities companies and get 12 months of meter readings for gas/electric/water and average them out to verify your utility expense. Find out who handles mowing and snow removal if applicable. Make sure to include reserves for long term vacancy and maintenance expenses.
3. Gather tenant information. Who is the tenant? How many people live in each unit? How many adults or children? How many income sources? What kind of income sources? Are they on a lease or month to month? When do leases expire? How long have they lived there? When was the last rent increase? Can they afford an increase? Do they own appliances in the property, or does the landlord?
4. Gather property information. Condition of foundation/ roof/ gutters, soffit, fascia/ windows/ hvac/ plumbing/ electrical/ kitchens/ bathrooms/ floors/ paint/ garage (roof/doors/motor/siding).
5. Call the city building department and see if there are outstanding code violations.
6. Order a 3rd party inspection. Review results with property manager. Don't nitpick the seller.
7. Collect rent roll, operating statements, leases, and estoppel letters from seller.
8. Get a 3rd party appraisal. If you're buying with financing this should happen through your bank anyways.
9. Review your game plan with property management prior to closing.
...this should cover it. Due diligence is a good amount of work. This is something we do for every single property my company purchases. I think individual buyers should do the same thing.
#5 Ask About A Real Estate Company Contributor
- Rental Property Investor
- Long Island, NY
- 490
- Votes |
- 434
- Posts
#5 Ask About A Real Estate Company Contributor
- Rental Property Investor
- Long Island, NY
Originally posted by @Heshel Mangel:
Originally posted by @Jason G.:
Originally posted by @JC Wu:
It’s been months since I started this thread. Since then, many people have shared their opinions and insights, both privately and publicly. Piecing together what they/you told me, what I read, what I experienced, and some interesting new developments, you might find this post very intriguing, perhaps a little disturbing.
@Baris Keser concluded that most of the listings on roofstock are overpriced compared to all the homes that are sold/for sale in the area and also current rental income and market rental income is about 10-15% over the comps as well. He has done his study for Georgia 31097 zip code and found for sale homes about 30% discount of the house that is listed on roofstock.
@Tony Kim mentioned that Roofstock listings aren’t exactly what he would call good deals.
@Brian Ploszay wrote that Roofstock properties in his market are overpriced.
Here’s what I find very interesting:
In another BP thread that @Jason G. started (the same Jason who wrote Roofstock a long ravishing review and posed those good questions I used as template on this thread), he wrote that he was told most of Roofstock properties are sold for 97% of list price. I don’t know who told him that. I presume it was somebody from Roofstock given the seemingly good relationship he has with Roofstock. Here’s the link https://www.biggerpockets.com/forums/92/topics/468304-roofstock-case-study
In an article, Roofstock CEO said that roughly 93 percent of investors on the platform are buying out of state and 75 percent are first-time buyers. Here’s the link https://www.curbed.com/2019/9/10/20852849/millennial-buy-a-home-homeownership-remote
If what they say is true, it seems that there are too many naive and inexperienced newbies like myself overpaying for the properties listed on Roofstock, while being unaware of the depth of the water.
However, I’d like to point out that buyers are free to offer less than the list price and it’s up to sellers to accept or decline the offers.
A very interesting new development:
The Roofstock certified property management company in Florida that ripped me off and screwed me over appears to have had hundreds of fake positive reviews written on multiple review sites. Yelp issued consumer alert on them. It seems that even their CFO impostures as investor to write themselves five-star reviews and the employees compliment themselves and each other.
I complained about this company and pointed out their shady conduct to Roofstock. To my disappointment, Roofstock kept it on their certified provider list. This PM company has also been an active seller on Roofstock.
I filed a complaint with the Florida Attorney General along with the evidence I had analyzed and compiled, reminding them of the legal precedent of the NY attorney general imposing fines as high as 350K on a number of companies that wrote fake reviews and how a scammer behind hundreds of fake reviews on TripAdvisor received prison sentence last year. The attorney general office scanned all the hard copy pages I mailed, attached the PDF file to an email they sent me, saying that they are sharing my correspondence with their Consumer Protection Division. I don’t know whether they’ll eventually bring enforcement actions upon this PM company or not, but I doubt they’d bother to take the time to scan all 21 pages if they don’t plan to do anything about it.
I also brought it to Better Business Bureau’s attention that this PM company might be writing fake reviews on BBB. BBB took down their page a couple of weeks later. My guess is their BBB accreditation will be revoked.
Another interesting new development:
I sold this Florida property through a local wholesaler to an investor located in Israel, so the end buyer is not just an out-of-state investor, but an out-of-country investor.
The end buyer did some light rehab on the property and listed it for sale on the MLS. It has been sitting on the market for 186 days and the list price has been reduced multiple times. Zillow shows 1256 views but only 41 saves since listing. This investor will lose money for sure.
The biggest winner in this whole thing is the local wholesaler who made a quick 10K assignment fee. Myself and the investor after me (both unfamiliar with the local market) are the losers.
Last but not least, I’d like to point out that you don’t know if an investment is good or bad until you fully exit. It’s especially true for RE investments. You could be making 10K/yr of rent from one property for 10 years straight.
But if, say, there’s an undisclosed material fact or omission on the inspection report, polybutylene piping for instance (I’m just giving out a random example off the top of my head, not implying anything), those pipes suddenly burst 10 years after you buy the property and floods the house, the water damages could easily exceed the sum of the profits you’d made for the past ten years. Most investors who buy rentals from online platforms (not just Roofstock) out of state keep them as buy-and-hold. Many of those platforms are too new for certain types of “ticking time bombs” to explode. It’d be interesting to see how that plays out in the next few years. In the meantime, ignorance is bliss.
It looks like most ppl on BP only read the first page of any thread. The more interesting stuff is on the later pages really. I assume people who’ve contributed to this discussion are interested to know more and many people only check posts they’ve been @ed in. Sorry to disturb you if you don’t want to be @ed. Please don’t feel pressured to reply.
@Heshel Mangel@Account Closed
The 97% figure came form @Zach Evanish in an e-mail to me back in July of 2017 when we were having an e-mail exchange regarding the pricing of one of the properties on Roofstock. I do not know the accuracy of that figure or if it is what the average is presently. I do agree that many properties on the site simply cannot work for an investor seeking cashflow. I have purchased four properties through Roofstock, but I do not think anyone at Roofstock has treated me any differently than they would any other customer. There was a property priced very well in the Atlanta Market just a couple of months ago which was located a few houses down from one I currently own which I wish I was able to get, but someone outbid me by a few grand. Good deals do come up, but it requires setting alerts and checking the site. It is just another resource investors can use to get started and grow their portfolio. I don't think I would have investment properties now if I didn't come across Roofstock.
They don't say properties sell at 97% of original list price, they say 97% of list price. I can list a property for 120,000, get no offers, so they push me to lower it and lower it until the price is 100k, and then it sells for 97k - they will call that 97% of list price (even though it is 80% of original list price).
Does that make sense, and make it more reasonable?
Are we just making assumptions because of the absence of the word original or do we have a source that supports your view it is based on the final list price?
Originally posted by @Jason G.:
Originally posted by @Heshel Mangel:
Originally posted by @Jason G.:
Originally posted by @JC Wu:
It’s been months since I started this thread. Since then, many people have shared their opinions and insights, both privately and publicly. Piecing together what they/you told me, what I read, what I experienced, and some interesting new developments, you might find this post very intriguing, perhaps a little disturbing.
@Baris Keser concluded that most of the listings on roofstock are overpriced compared to all the homes that are sold/for sale in the area and also current rental income and market rental income is about 10-15% over the comps as well. He has done his study for Georgia 31097 zip code and found for sale homes about 30% discount of the house that is listed on roofstock.
@Tony Kim mentioned that Roofstock listings aren’t exactly what he would call good deals.
@Brian Ploszay wrote that Roofstock properties in his market are overpriced.
Here’s what I find very interesting:
In another BP thread that @Jason G. started (the same Jason who wrote Roofstock a long ravishing review and posed those good questions I used as template on this thread), he wrote that he was told most of Roofstock properties are sold for 97% of list price. I don’t know who told him that. I presume it was somebody from Roofstock given the seemingly good relationship he has with Roofstock. Here’s the link https://www.biggerpockets.com/forums/92/topics/468304-roofstock-case-study
In an article, Roofstock CEO said that roughly 93 percent of investors on the platform are buying out of state and 75 percent are first-time buyers. Here’s the link https://www.curbed.com/2019/9/10/20852849/millennial-buy-a-home-homeownership-remote
If what they say is true, it seems that there are too many naive and inexperienced newbies like myself overpaying for the properties listed on Roofstock, while being unaware of the depth of the water.
However, I’d like to point out that buyers are free to offer less than the list price and it’s up to sellers to accept or decline the offers.
A very interesting new development:
The Roofstock certified property management company in Florida that ripped me off and screwed me over appears to have had hundreds of fake positive reviews written on multiple review sites. Yelp issued consumer alert on them. It seems that even their CFO impostures as investor to write themselves five-star reviews and the employees compliment themselves and each other.
I complained about this company and pointed out their shady conduct to Roofstock. To my disappointment, Roofstock kept it on their certified provider list. This PM company has also been an active seller on Roofstock.
I filed a complaint with the Florida Attorney General along with the evidence I had analyzed and compiled, reminding them of the legal precedent of the NY attorney general imposing fines as high as 350K on a number of companies that wrote fake reviews and how a scammer behind hundreds of fake reviews on TripAdvisor received prison sentence last year. The attorney general office scanned all the hard copy pages I mailed, attached the PDF file to an email they sent me, saying that they are sharing my correspondence with their Consumer Protection Division. I don’t know whether they’ll eventually bring enforcement actions upon this PM company or not, but I doubt they’d bother to take the time to scan all 21 pages if they don’t plan to do anything about it.
I also brought it to Better Business Bureau’s attention that this PM company might be writing fake reviews on BBB. BBB took down their page a couple of weeks later. My guess is their BBB accreditation will be revoked.
Another interesting new development:
I sold this Florida property through a local wholesaler to an investor located in Israel, so the end buyer is not just an out-of-state investor, but an out-of-country investor.
The end buyer did some light rehab on the property and listed it for sale on the MLS. It has been sitting on the market for 186 days and the list price has been reduced multiple times. Zillow shows 1256 views but only 41 saves since listing. This investor will lose money for sure.
The biggest winner in this whole thing is the local wholesaler who made a quick 10K assignment fee. Myself and the investor after me (both unfamiliar with the local market) are the losers.
Last but not least, I’d like to point out that you don’t know if an investment is good or bad until you fully exit. It’s especially true for RE investments. You could be making 10K/yr of rent from one property for 10 years straight.
But if, say, there’s an undisclosed material fact or omission on the inspection report, polybutylene piping for instance (I’m just giving out a random example off the top of my head, not implying anything), those pipes suddenly burst 10 years after you buy the property and floods the house, the water damages could easily exceed the sum of the profits you’d made for the past ten years. Most investors who buy rentals from online platforms (not just Roofstock) out of state keep them as buy-and-hold. Many of those platforms are too new for certain types of “ticking time bombs” to explode. It’d be interesting to see how that plays out in the next few years. In the meantime, ignorance is bliss.
It looks like most ppl on BP only read the first page of any thread. The more interesting stuff is on the later pages really. I assume people who’ve contributed to this discussion are interested to know more and many people only check posts they’ve been @ed in. Sorry to disturb you if you don’t want to be @ed. Please don’t feel pressured to reply.
@Heshel Mangel@Account Closed
The 97% figure came form @Zach Evanish in an e-mail to me back in July of 2017 when we were having an e-mail exchange regarding the pricing of one of the properties on Roofstock. I do not know the accuracy of that figure or if it is what the average is presently. I do agree that many properties on the site simply cannot work for an investor seeking cashflow. I have purchased four properties through Roofstock, but I do not think anyone at Roofstock has treated me any differently than they would any other customer. There was a property priced very well in the Atlanta Market just a couple of months ago which was located a few houses down from one I currently own which I wish I was able to get, but someone outbid me by a few grand. Good deals do come up, but it requires setting alerts and checking the site. It is just another resource investors can use to get started and grow their portfolio. I don't think I would have investment properties now if I didn't come across Roofstock.
They don't say properties sell at 97% of original list price, they say 97% of list price. I can list a property for 120,000, get no offers, so they push me to lower it and lower it until the price is 100k, and then it sells for 97k - they will call that 97% of list price (even though it is 80% of original list price).
Does that make sense, and make it more reasonable?
Are we just making assumptions because of the absence of the word original or do we have a source that supports your view it is based on the final list price?
I don't think I have a source for this that I recall, I last spoke to Roofstock probably 7-8 months ago. It is just common sense, and a bit of a window into how just about all realtors market their leads and sales.
Originally posted by @Jason G.:
Originally posted by @JC Wu:
It’s been months since I started this thread. Since then, many people have shared their opinions and insights, both privately and publicly. Piecing together what they/you told me, what I read, what I experienced, and some interesting new developments, you might find this post very intriguing, perhaps a little disturbing.
@Baris Keser concluded that most of the listings on roofstock are overpriced compared to all the homes that are sold/for sale in the area and also current rental income and market rental income is about 10-15% over the comps as well. He has done his study for Georgia 31097 zip code and found for sale homes about 30% discount of the house that is listed on roofstock.
@Tony Kim mentioned that Roofstock listings aren’t exactly what he would call good deals.
@Brian Ploszay wrote that Roofstock properties in his market are overpriced.
Here’s what I find very interesting:
In another BP thread that @Jason G. started (the same Jason who wrote Roofstock a long ravishing review and posed those good questions I used as template on this thread), he wrote that he was told most of Roofstock properties are sold for 97% of list price. I don’t know who told him that. I presume it was somebody from Roofstock given the seemingly good relationship he has with Roofstock. Here’s the link https://www.biggerpockets.com/forums/92/topics/468304-roofstock-case-study
In an article, Roofstock CEO said that roughly 93 percent of investors on the platform are buying out of state and 75 percent are first-time buyers. Here’s the link https://www.curbed.com/2019/9/10/20852849/millennial-buy-a-home-homeownership-remote
If what they say is true, it seems that there are too many naive and inexperienced newbies like myself overpaying for the properties listed on Roofstock, while being unaware of the depth of the water.
However, I’d like to point out that buyers are free to offer less than the list price and it’s up to sellers to accept or decline the offers.
A very interesting new development:
The Roofstock certified property management company in Florida that ripped me off and screwed me over appears to have had hundreds of fake positive reviews written on multiple review sites. Yelp issued consumer alert on them. It seems that even their CFO impostures as investor to write themselves five-star reviews and the employees compliment themselves and each other.
I complained about this company and pointed out their shady conduct to Roofstock. To my disappointment, Roofstock kept it on their certified provider list. This PM company has also been an active seller on Roofstock.
I filed a complaint with the Florida Attorney General along with the evidence I had analyzed and compiled, reminding them of the legal precedent of the NY attorney general imposing fines as high as 350K on a number of companies that wrote fake reviews and how a scammer behind hundreds of fake reviews on TripAdvisor received prison sentence last year. The attorney general office scanned all the hard copy pages I mailed, attached the PDF file to an email they sent me, saying that they are sharing my correspondence with their Consumer Protection Division. I don’t know whether they’ll eventually bring enforcement actions upon this PM company or not, but I doubt they’d bother to take the time to scan all 21 pages if they don’t plan to do anything about it.
I also brought it to Better Business Bureau’s attention that this PM company might be writing fake reviews on BBB. BBB took down their page a couple of weeks later. My guess is their BBB accreditation will be revoked.
Another interesting new development:
I sold this Florida property through a local wholesaler to an investor located in Israel, so the end buyer is not just an out-of-state investor, but an out-of-country investor.
The end buyer did some light rehab on the property and listed it for sale on the MLS. It has been sitting on the market for 186 days and the list price has been reduced multiple times. Zillow shows 1256 views but only 41 saves since listing. This investor will lose money for sure.
The biggest winner in this whole thing is the local wholesaler who made a quick 10K assignment fee. Myself and the investor after me (both unfamiliar with the local market) are the losers.
Last but not least, I’d like to point out that you don’t know if an investment is good or bad until you fully exit. It’s especially true for RE investments. You could be making 10K/yr of rent from one property for 10 years straight.
But if, say, there’s an undisclosed material fact or omission on the inspection report, polybutylene piping for instance (I’m just giving out a random example off the top of my head, not implying anything), those pipes suddenly burst 10 years after you buy the property and floods the house, the water damages could easily exceed the sum of the profits you’d made for the past ten years. Most investors who buy rentals from online platforms (not just Roofstock) out of state keep them as buy-and-hold. Many of those platforms are too new for certain types of “ticking time bombs” to explode. It’d be interesting to see how that plays out in the next few years. In the meantime, ignorance is bliss.
It looks like most ppl on BP only read the first page of any thread. The more interesting stuff is on the later pages really. I assume people who’ve contributed to this discussion are interested to know more and many people only check posts they’ve been @ed in. Sorry to disturb you if you don’t want to be @ed. Please don’t feel pressured to reply.
@Heshel Mangel@Account Closed
The 97% figure came form @Zach Evanish in an e-mail to me back in July of 2017 when we were having an e-mail exchange regarding the pricing of one of the properties on Roofstock. I do not know the accuracy of that figure or if it is what the average is presently. I do agree that many properties on the site simply cannot work for an investor seeking cashflow. I have purchased four properties through Roofstock, but I do not think anyone at Roofstock has treated me any differently than they would any other customer. There was a property priced very well in the Atlanta Market just a couple of months ago which was located a few houses down from one I currently own which I wish I was able to get, but someone outbid me by a few grand. Good deals do come up, but it requires setting alerts and checking the site. It is just another resource investors can use to get started and grow their portfolio. I don't think I would have investment properties now if I didn't come across Roofstock.
There was a good deal a few months ago? OK, that's nice.
There aren't any good deals on Roofstock. An investor who goes through the process of listing her property on Roofstock is not going to advertise a property that would entice me at all. I just don't understand why anyone would go through Rootstock when you can purchase from a very reputable turnkey provider like Smartland, Spartan, Ace Properties, Ohio Cash Flow, Memphis Turnkey. As far as I can see, the numbers for properties on Roofstock are similar, but you will forego the opportunity to deal with someone who has built up a very good reputation here on BP. I bought from Ohio Cash Flow... it was about as close to "set it and forget it" as you could imagine....and their PM is best in class. They turned around a vacancy and found a new tenant for me in two weeks. I'd be willing to bet that the other providers here are very competent as well.
I understand that Roofstock is somewhat involved in the sale process, but you are still dealing with an unknown seller who can easily make life difficult for you if they choose to. You'd also be putting your trust in a PM that you have no idea about. TK providers that post here on BP on the other hand have a vested interest in making you happy and providing very good PM services.