Roofstock review. NEWBIES BEWARE!!

[JC Wu]

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. 

[Jason G.]

Originally posted by @Tony Kim:

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.

I am not aware of Roofstock having such a horrible reputation that your post implies they have. First you say there are no good deals on it but then contradict yourself and say you can get similar numbers through the turnkey providers you listed. There is nothing stopping a potential purchaser from looking up the seller/owner of the property. I am not sure what you mean by the seller making life difficult. While Roofstock provides options for property management they do not require you to use them and there is nothing stopping anyone from seeing if they have a presence or reviews on BP or online in general. The PM I went with had a very strong online presence with plenty of reviews on multiple platforms. I am very happy with them and they've assisted me in purchasing a SFH. Not everyone wants to go through the process of purchasing a turnkey, but if that is your strategy then all the more power to you.

[Engelo Rumora]

Originally posted by @Tony Kim:

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.

Thanks for the mention Tony,

I'm glad to hear that you are happy with our teams performance :)

Speak soon mate 

[Tony Kim]

Originally posted by @Jason G.:

Originally posted by @Tony Kim:

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.

I am not aware of Roofstock having such a horrible reputation that your post implies they have. First you say there are no good deals on it but then contradict yourself and say you can get similar numbers through the turnkey providers you listed. There is nothing stopping a potential purchaser from looking up the seller/owner of the property. I am not sure what you mean by the seller making life difficult. While Roofstock provides options for property management they do not require you to use them and there is nothing stopping anyone from seeing if they have a presence or reviews on BP or online in general. The PM I went with had a very strong online presence with plenty of reviews on multiple platforms. I am very happy with them and they've assisted me in purchasing a SFH. Not everyone wants to go through the process of purchasing a turnkey, but if that is your strategy then all the more power to you.

"looking up the seller/owner of the property"?  LOL, yeah that'll do a lot.

It's obvious you have completely misunderstood my point so I'll make it very simple for you. The figures you get from deals on Rootstock vs. the TK providers here are very comparable. So instead of having to deal with the unknown of Roofstock (as evidenced by the spotty reviews here), why not just buy from a Turnkey company that has built up a good reputation here on BP.  I would much rather get a nicely rehabbed property from someone trusted here on BP than a place like Roofstock where you're dealing with the unknown. I'm pretty sure the OP of this thread wouldn't have gone through the crap she did had she avoided Roofstock and instead gone with a reputable TK company. Again, not blaming Roofstock because it's not necessarily their fault... it's just the nature of their marketplace and so many unknown element that can lead to things like this. If you can't see this, then I don't know what else to tell you. Hope you have continued success buying properties on Roofstock.

[Jason G.]

Originally posted by @Tony Kim:

Originally posted by @Jason G.:

Originally posted by @Tony Kim:

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.

I am not aware of Roofstock having such a horrible reputation that your post implies they have. First you say there are no good deals on it but then contradict yourself and say you can get similar numbers through the turnkey providers you listed. There is nothing stopping a potential purchaser from looking up the seller/owner of the property. I am not sure what you mean by the seller making life difficult. While Roofstock provides options for property management they do not require you to use them and there is nothing stopping anyone from seeing if they have a presence or reviews on BP or online in general. The PM I went with had a very strong online presence with plenty of reviews on multiple platforms. I am very happy with them and they've assisted me in purchasing a SFH. Not everyone wants to go through the process of purchasing a turnkey, but if that is your strategy then all the more power to you.

"looking up the seller/owner of the property"?  LOL, yeah that'll do a lot.

It's obvious you have completely misunderstood my point so I'll make it very simple for you. The figures you get from deals on Rootstock vs. the TK providers here are very comparable. So instead of having to deal with the unknown of Roofstock (as evidenced by the spotty reviews here), why not just buy from a Turnkey company that has built up a good reputation here on BP.  I would much rather get a nicely rehabbed property from someone trusted here on BP than a place like Roofstock where you're dealing with the unknown. I'm pretty sure the OP of this thread wouldn't have gone through the crap she did had she avoided Roofstock and instead gone with a reputable TK company. Again, not blaming Roofstock because it's not necessarily their fault... it's just the nature of their marketplace and so many unknown element that can lead to things like this. If you can't see this, then I don't know what else to tell you. Hope you have continued success buying properties on Roofstock.

I understand what you are saying.  I think this fear of utilizing Roofstock is misplaced, but in the end if the strategy you are using to acquire properties works for you, then that is what matters most.  Whenever I am ready to purchase a new property I have my property management company start searching for suitable investments and I begin to actively look at the Roofstock listings.  I am in no way wed to Roofstock but if what I think is a good deal for me comes up on Roofstock I am going to take it and I couldn't imagine why you wouldnt do the same but what can I tell you.  I just dont have any desire to deal with the turn key process. It's a personal preference. Just want to pick up a property that may just need a fresh coat of paint and place a tenant in there.

[Jay Hinrichs]

Originally posted by @Tony Kim:

Originally posted by @Jason G.:

Originally posted by @Tony Kim:

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@Cody DeLong@William Keasling@Nina M.@Dustin Thoms@Kat Kan@Jeremy Z.@Susan Little@Lee Nestlerode@Jay Hinrichs@Ned Carey@Jack Bobeck@Engelo Rumora@Natalie Schanne@Charles Kao@Guy Gimenez@Maurice George@Orv Randolph@Michael R.@Ian Ippolito

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.

I am not aware of Roofstock having such a horrible reputation that your post implies they have. First you say there are no good deals on it but then contradict yourself and say you can get similar numbers through the turnkey providers you listed. There is nothing stopping a potential purchaser from looking up the seller/owner of the property. I am not sure what you mean by the seller making life difficult. While Roofstock provides options for property management they do not require you to use them and there is nothing stopping anyone from seeing if they have a presence or reviews on BP or online in general. The PM I went with had a very strong online presence with plenty of reviews on multiple platforms. I am very happy with them and they've assisted me in purchasing a SFH. Not everyone wants to go through the process of purchasing a turnkey, but if that is your strategy then all the more power to you.

"looking up the seller/owner of the property"?  LOL, yeah that'll do a lot.

It's obvious you have completely misunderstood my point so I'll make it very simple for you. The figures you get from deals on Rootstock vs. the TK providers here are very comparable. So instead of having to deal with the unknown of Roofstock (as evidenced by the spotty reviews here), why not just buy from a Turnkey company that has built up a good reputation here on BP.  I would much rather get a nicely rehabbed property from someone trusted here on BP than a place like Roofstock where you're dealing with the unknown. I'm pretty sure the OP of this thread wouldn't have gone through the crap she did had she avoided Roofstock and instead gone with a reputable TK company. Again, not blaming Roofstock because it's not necessarily their fault... it's just the nature of their marketplace and so many unknown element that can lead to things like this. If you can't see this, then I don't know what else to tell you. Hope you have continued success buying properties on Roofstock.

keep in mind many TK operators list their properties on Roofstock as well. 

[JC Wu]

I’m just gonna consolidate my replies in one single post here:

@Account Closed Super helpful info. Thanks so much. The amount of due diligence your company does is very extensive and is a good amount of work for sure. There’re many check items on your list that I’ve never thought of checking. For this Florida property, I had to go with the inspection report Roofstock provided. The PSA prohibited me from picking my own inspection company and perform a 3rd party inspection.

The critical problem newbies face is they don’t know what they don’t know. If they know what they don’t know, I bet they have ways to find out.

I checked out your website. Very interesting. Never heard of your company before. Are you guys just starting out? Does your company do extensive screening on all the properties that you match investors with based off that checklist? What markets are you in? I don’t see any properties on your website.

I got in touch with HomeUnion before. They gathered similar information that your company gathers from investors like investing goals, financing plans, risk tolerance, ROI, price point, etc. The guy I spoke with tried to match me with properties that he thought would be a good fit. The problem is he called every 2-3 days. I felt rushed to make offers. It felt like he would keep calling too frequently until I buy a property from them. That drove me away - I prefer to shop around at my own pace. They list available properties on their website. I had the same email and phone call bombardment problem with Mashvisor.

@Tim B. The checklist that Elliot provided here should be very helpful to you. I’ll answer the rest of your questions in private messaging.

@Jason G. @Heshel Mangel Guys. Check out this article:

https://techcrunch.com/2017/10/04/roofstock-a-marketplace-for-single-family-homes-with-tenants-just-closed-on-35-million-in-new-funding/

At the bottom, it says “While there are certainly exception, properties that sell typically go under contract within 30 days of being listed on the site. During the second quarter of this year, 44 percent of the homes sold went under contract within 14 days. Some particularly popular homes are sometimes snatched up by investors within minutes of hitting the site.”

Based on this, and the common practice that most sellers give it a couple of weeks before start reducing list price, I believe the 97% is of ORIGINAL list price, but only Zach from Roofstock can confirm since he’s the one who gave Jason that figure. 

I bought this Florida property from Roofstock at the list price (95K) hours after it hit the site; bought the NC property at 97% (95K) of the original list price (98K). I was a first time home buyer when I bought the Florida property. It looks like I fit that typical Roofstock investor profile. I know 98K was the original list price because when I first saw it on the site I wasn’t allowed to make offers. Like Jason wrote in another post of his that all new properties posted on the site can only be purchased for list price during the initial three days it is listed. After that, those properties where the seller is willing to take offers under the list price will then have an option to do so.

Jason. Overpriced properties can still cashflow. Vice versa, an investor buys a property that cashflows doesn’t mean it was fair priced or a good deal. Those are two different concepts.

Some investors think that since sellers pay less commission on Roofstock compared to the MLS, they'd be more generous with a discount to the buyers, which may not be the case.

@Tony Kim@Engelo Rumora I believe a lot of people buy properties from Roofstock could simply be they’ve never heard of the turnkeys you listed. I had only heard about Roofstock, HomeUnion and Mashvisor before I decided to go ahead with Roofstock. A common feature those companies share is relatively aggressive marketing. Roofstock put out ads on Google, YouTube, Facebook, etc. Their ads pop up all the time when I surf the internet. They’ve also got quite a few sites to publish review articles that rank high on search index. All of that cost $$$.

I asked a guy from Norada why their website looks crappy - doesn’t make a good first impression on potential clients. He said they don’t have a tall pile of VC $$$ to sit on like Roofstock does and they can’t spare 150K a year to hire a front end engineer.

Also, a company’s profile is drastically elevated when it’s backed by VC money.

Roofstock executive team’s elite university educational background helps.

Roofstock makes more assertions on their site than some other sites and some investors buy into them. Many are misrepresentations in my personal opinion.

Roofstock operates in more markets than most other companies. Some investors take that as a sign of popularity and competency.

@Brian Ploszay Thanks for the encouragement. Do you mind sharing the links to the posts you mentioned about those “turnkey properties”? You’ve contributed to thousands of threads on countless topics. It's a little hard to sift through them to find those posts. There’s been some discussion centering on this topic on this thread this morning. If not, no problem at all, I’ll respect your privacy.

[Chris Clothier]

Originally posted by @Marco Santarelli:

@JC Wu — Hi JC. I just want to update you on the website comment. We are actually about to launch our brand new website later this month. It’s completely rebuilt from scratch and a large improvement from the current one.

Continued success!

HA!  I was wondering how long that reply was going to take!?  I wasn't even through reading her comment before your reply popped up.

I can't comment on your company or HomeUnion or other companies that bring buyers to TK companies because I am no longer familiar with your processes and I am sure you have grown and changed, but compared to Roofstock I think you guys do one thing completely different and far better.  Roofstock wants to give the impression that they have handled everything for you and they are the experts.  Going so far as, at one time, not allowing buyers to hire a 3rd party inspection.  You had to take their word for it and they had "boots on the ground" who handled everything.  At one point in Memphis, the boots on the ground guy was the same person who had the most listings available.  To make it worse, I had never even heard of him and we were the biggest buyer and seller of property in Memphis.  So, not a good look.

I do like that you guys encourage due diligence and 3rd party inspections to insure work is done properly.  That is the best advice an out of state, passive investor can get.  3rd party inspections are for their specific benefit!  There is a massive misconception, in my opinion, with exactly what Roofstock is providing.  I have to say that it was been over a year since I last spoke with Roofstock, but I'm not under the impression that much has changed.

[Marco Santarelli]

Hey @Chris Clothier!

That’s funny. I had to jump on that comment because I couldn’t let it go. ;-)

Yeah, we will NOT work with any investor if they don’t order a third-party inspection. It’s a liability for everyone!

Keep on being a shining example of quality, Chris.

Continued success!

[Zach Evanish]

@Chris Clothier The inspections on Roofstock are done by a third party. This has actually always been the case.

[Chris Clothier]

Originally posted by @Zach Evanish:

@Chris Clothier The inspections on Roofstock are done by a third party. This has actually always been the case.

Zach,

Not trying to be negative toward Roofstock.  It's pretty clear that there are plenty of investors out there who value the service Roofstock provides and it sure looks like it is growing in popularity.  I read the article this past weekend that featured Roofstock about Millenials being priced out of the market and turning to investing instead.  It's clear there is a demand for your service.  My comments were geared toward the protections provided an investor after going under contract and prior to closing.  I didn't note it very well in my above comments, but a couple of years ago when reviewing Roofstock to see if we wanted to list properties there, investors were not allowed inspection contingencies.  

Roofstock had something about a proprietary(?) inspection system that each property went through, but that was done prior to it being listed.  Not sure if that is still the case or not.  So, here are the questions I had and the reasons I give a company like Norada props for the way they advise clients.   They want investors to hire their own 3rd party inspector and negotiate based on work the needs to be done.  The entire Turnkey industry is slowly moving toward this where it is becoming standard for passive investors to expect this and companies to address issues.  At least the best companies in the industry have moved to expecting investors to hire inspectors and they expect to fix the issues. 

So for Roofstock, who does the 3rd party inspector ultimately work for? Who is hiring them?  Roofstock, the property owner or the property buyer?  And can a buyer negotiate with a seller and back out of a contract without losing any $$$ if the property fails an inspection or an owner refuses to do work.

I noticed that it looks like Roofstock gives the seller a 15%  buffer.  I read that as meaning that a $100,000 property can have $15,000 of deferred maintenance as long as its not immediate roof work, outdated wiring, mold or water issues.  And, the buyer cannot hire their own 3rd party inspector to determine those issues.  Can a buyer review that inspection before buying, but not negotiate based on it? Just trying to make sure my comments earlier were clear, I think companies like Norada would advise an investor not to accept $15,000 in future expenditures.  I look forward to understanding better from you how that works.

Best, chris

[Marco Santarelli]

Yes, that is a true statement, Chris.

Best regards.

[JC Wu]

Originally posted by @Marco Santarelli:

@JC Wu — Hi JC. I just want to update you on the website comment. We are actually about to launch our brand new website later this month. It’s completely rebuilt from scratch and a large improvement from the current one.

Continued success!

Marco. It’s clear that Norada has been put to the test of time (been around for over 15 years, ~10 years longer than Roofstock) and are trusted by many busy professionals who want to create passive income for themselves.

What I meant by “crappy website” is that it’s not particularly visually appealing. Your site has got all the essential features and functionalities alright. “Crappy” is a poor word choice and quite harsh now I think about it. Sorry about that. I shouldn’t judge a book by its cover. The quality of service is definitely much more important than a pretty website. But having a sleek cover design helps attract business.

One other thing I noticed as soon as I checked out Norada site was that the list price of most properties is above estimates by Redfin, Zillow, Realtor, etc. After talking with one of the Norada guys, this is what I learned:

Several years ago, most properties were renovated, delivered rent-ready, with a screened, qualified tenant in place by the time of closing. As inventory levels have tightened and competition for turnkey homes increased, more investors are willing to purchase properties in the middle of rehab (such as the majority of Roofstock listings sold as-is). That's the market climate today in about 85% of markets. There are only a handful of properties in each market that are being delivered rent-ready (Norada listings). The pricing on Norada properties reflects the ARV (post-renovation) which tends to come in at market value. The pricing data on Zillow, Redfin, etc. likely doesn't reflect properties that have been recently updated or rehabbed.

You might wanna remind your potential clients to keep this in consideration because some investors might just assume your properties are overpriced without bothering to look deeper into it.

[Marco Santarelli]

Thank you @JC Wu — I truly appreciate you clearing that up. :-)

A quick comment about property prices: We cannot go by “estimates” regardless of who generates those estimates. Properties are valued at, and appraise for whatever the fair market value is.

Most of our properties are priced at or slightly below their fair market value in today market climate. So if they happen to appraise for less for whatever reason, it’s back to the table to resolve or negotiate that price difference.

What we don’t want to see is our investors paying more than the fair market value of any property.

Thanks again for clarifying JC.

Continued success!

[Zach Evanish]

@Chris Clothier Thanks for the questions. More than happy to provide some clarity. At the end of the day I think we all want to help investors build wealth through real estate. I think it’s important to remember Roofstock is a marketplace, and while we do have turnkey properties, we are not a turnkey provider.

1) Every property sold through Roofstock goes through our certification process through which the home, tenant, title, and lease are all reviewed. This process is either done prior to listing or during escrow. If the home does not pass the certification process it does not make it on to our marketplace.

2) Every property comes with an inspection done by a third party inspection company. This has always been the case. Roofstock will pay to have an inspection done by a third party that we have vetted or the buyer can hire their own inspector and pay for the inspection themselves. We offer this service to reduce the costs for the buyer and so they don’t have to spend the time finding a local inspector. Again, if they want to hire their own inspector they can do so. We do not restrict buyers from conducting their own diligence.

3) Upon receipt of the inspection report the buyer can ask the seller to make repairs or reduce the price. If buyer and seller cannot come to terms the buyer will receive 100% of their funds back (as long as it’s done within the timeline in the contract). 

4) Financed properties come with an appraisal contingency. If the property does not appraise the buyer has the right to ask for a price reduction or cancel the contract. We do not recommend investors pay above the appraised value.

5) Prior to a home being published on our site the property value is reviewed by our internal team of former appraisers to help ensure the home is priced appropriately. This is not an exact science but we do our best to help buyers determine the "value," of the property. Buyer also have the appraisal contingency.

6) Roofstock Provides a 30 day money back guarantee and 12 month rent guarantee for properties purchase through our marketplace.

[Chris Clothier]

@Zach Evanish

I appreciate your taking the time to answer any questions.  I also appreciate the time you took to call me and help me understand better how Roofstock operates today as opposed to some of my understanding about the company.  I am always open to learning about other companies/entrepreneurs and how we are all trying to create better opportunities for investors.  It was good to hear directly and it certainly comes across differently when we are on the phone as opposed to the two-dimensional way websites can read.

I gave advice to another investor on BP earlier today that I will echo again right here.  Spend some time learning and doing due diligence.  Ask questions and don't be afraid to dig in.  If you think one way and are wrong, then you may miss out on a good opportunity because you didn't understand.  I did spend time earlier today on the Roofstock site which is where I asked some of my questions from.  We had looked into listing on Roofstock early on and haven't revisited the idea which really led me to have some outdated ideas about how they operated.  So, the chance to talk to someone from Roofstock was good.  It helped me to hear a bit more about their platform and details of how they operate and it certainly changed some of my perceptions that were incorrect.

[Account Closed]

@JC Wu We've bought a lot of properties lol.. and we've learned (the hard way) to look into all of the due diligence items on the list in my previous message.

Thanks for checking out the site! It needs a bit of work. We're relatively new, and have been in business for about 3 years. That checklist I made for you is every step we take before even offering a property to our investors. We're pretty boutique & niche in what type of property we pursue, and sell everything pretty quietly to a small list of relationship clients whose criteria and preferences we know very well. Most of the folks we work with seek to repeat purchase and don't have the volume or reach of a company like roofstock, so we've got to be extremely hands on and malleable to the situations that arise in each transaction. 

I don't think there's anything wrong with using someone else's 3rd party inspector, provided its a reputable inspection company, you're able to receive the inspection report directly from the 3rd party inspection company (and not the seller themselves). I think it's great to work with a company that provides resources to aid in your due diligence, but the burden of due diligence is still upon the buyer. If a seller doesn't grant you the ability to perform due diligence as necessary, maybe move along to a different opportunity unless you're extremely experienced & confident in the opportunity in front of you.

Additionally- execution of the due diligence process varies from market to market. I'd recommend you pick a few that meet certain standards, and really start to sink your roots in where you can attain proficiency in making sound purchase decisions

[JC Wu]

Welcome to the thread, @Zach Evanish. It’s nice to finally have someone from Roofstock to provide clarity on some topics being discussed here.

Regarding your comment “Roofstock will pay to have an inspection done by a third party that we have vetted or the buyer can hire their own inspector and pay for the inspection themselves. We offer this service to reduce the costs for the buyer and so they don’t have to spend the time finding a local inspector. Again, if they want to hire their own inspector they can do so. We do not restrict buyers from conducting their own diligence”, is this a new thing or has it always been the case? I was pretty sure I had to specifically waive any right to inspect the property and go with the one Roofstock provided.

Hey@Jason G.@Nina M.@Heshel Mangel@Orv Randolph, were you allowed to hire your own 3rd party inspection for your Roofstock properties that came with an inspection report in the diligence vault provided by Roofstock’s partner inspection company?

I agree with @Account Closed that there’s nothing wrong with using someone else’s 3rd party inspector provided it’s a reputable inspection company. But the thing is, the quality of service from some of the 3rd party inspection companies that Roofstock has vetted is questionable. Roofstock Director of Customer Success should know all about it since she seems to be the one who deals with customer complaints.

@Zach EvanishAre the terms on Roofstock drafted PSAs negotiable?

When you told Jason most of Roofstock properties are sold for 97% of list price, do you mean 97% of ORIGINAL list price?

@Chris Clothier This section from your comment “At one point in Memphis, the boots on the ground guy was the same person who had the most listings available. To make it worse, I had never even heard of him and we were the biggest buyer and seller of property in Memphis. So, not a good look.” reminds me of something on Roofstock site. On the page about “Become A Preferred Property Manager”, it says, “Achieve preferred status, Reap the benefits, Boost your revenue, Retain more management contracts. 100% of Roofstock buyers are investors, and 85-90% stay with the current property manager.” Btw, I believe the word “preferred” used to be “certified”.

Many sellers on Roofstock are full service real estate companies that sell, buy, manage, flip, lease, maintain, renovate properties; as @Jay Hinrichs mentioned, including some turnkey operators. A lot of times, the properties they list on Roofstock for sale are under their own management. I believe what the figure means is 85-90% Roofstock buyers choose to hire their sellers as their property managers. In that way, Roofstock sellers continue to profit from their buyers after selling the properties. This is one of the main reasons why I rated Roofstock 5 star for sellers @Baris Keser.

As you can see, this is a strong incentive for those types of companies to work with Roofstock. On the other hand, those companies often provide a rich and steady inventory for Roofstock, and Roofstock makes commission (2.5% from the seller) & marketplace fee (0.5% from the buyer) from each sale. Just follow the $$$ and the dynamic becomes clear.

For this very reason, I’m not surprised Roofstock’s “boots on the ground” in your area aren’t the top performers with the best reputation, but the ones with the most available properties to sell.

Unfortunately, I was part of the 85-90% statistic. So I got screwed over by the same shady company twice and this company profited off of me twice - screwed from the first day I owned this Florida property to the last day I owned it. And it appears that this company is continuing to screw over other investors since it’s still on Roofstock’s certified provider list, still selling their properties on Roofstock, and the number of ppl who put out complaints on them grows week by week.

Hopefully, Forcalor and the Florida attorney general kick its *** to Uranus and back.

[Maurice George]

Originally posted by @JC Wu:

Marco. It’s clear that Norada has been put to the test of time (been around for over 15 years, ~10 years longer than Roofstock) and are trusted by many busy professionals who want to create passive income for themselves.

What I meant by “crappy website” is that it’s not particularly visually appealing. Your site has got all the essential features and functionalities alright. “Crappy” is a poor word choice and quite harsh now I think about it. Sorry about that. I shouldn’t judge a book by its cover. The quality of service is definitely much more important than a pretty website. But having a sleek cover design helps attract business.

One other thing I noticed as soon as I checked out Norada site was that the list price of most properties is above estimates by Redfin, Zillow, Realtor, etc. After talking with one of the Norada guys, this is what I learned:

Several years ago, most properties were renovated, delivered rent-ready, with a screened, qualified tenant in place by the time of closing. As inventory levels have tightened and competition for turnkey homes increased, more investors are willing to purchase properties in the middle of rehab (such as the majority of Roofstock listings sold as-is). That's the market climate today in about 85% of markets. There are only a handful of properties in each market that are being delivered rent-ready (Norada listings). The pricing on Norada properties reflects the ARV (post-renovation) which tends to come in at market value. The pricing data on Zillow, Redfin, etc. likely doesn't reflect properties that have been recently updated or rehabbed.

You might wanna remind your potential clients to keep this in consideration because some investors might just assume your properties are overpriced without bothering to look deeper into it.

 JC, for yourself and that Israeli investor, it is not a great idea to put money thousands of miles away. He was even careless on his money by putting money in a project thousands of miles away. 

However, on the other side, it is great to sell the property on roofstock. I may want to do it later.. 

[Account Closed]

@JC Wu I'm pretty sure any good inspector warranties the results they give for some period of time- usually 90 days is what I see. So even if roofstock picks an inspection company that is a bit less detailed than the best, I would imagine they still abide by this standard.

Now I have no idea what this kind of warranty would be like in the event you have to use it. Is it covered by some bonding or insurance the inspection company holds? If so, I would recommend the buyer do their due diligence on the limitations of the inspection company's insurance policies.  Maybe the inspection company uses a 3rd party warranty service. I would seek to understand this if you're really being nitpicky.

Inspection companies may not be obligated or qualified to tell you that a property has possible code violations- they may just report what they see. 

It's important that the investor take responsibility for possessing the knowledge to make sound purchase decisions without relying on the opinion of other parties. Instead, the investor should use the information provided by other parties to formulate their own opinion. Know the major risk factors for the type of opportunity you are pursuing, and the minor ones. Focus more effort on making sure the major factors aren't present, and worry less about the little stuff. Don't be the nitpicky investor that asks a million questions about a few missing GFCI outlets and asks for credits over them- nobody will want to work with that kind of buyer. 

We all should understand that investing in real estate has inherent risk that can be REDUCED but not completely eliminated, like any other type of investment. I think this is something the very detailed new investor struggles with often.

[Tom Ott]

Originally posted by @Tony Kim:

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.

Hey, Thanks for the shout out! Yeah, I do not know much about them. I thought they were like an Amazon for properties. You just list them on there. Nothing really Turnkey about that! 

[JC Wu]

I agree with @Account Closed that the investor should use the information provided by other parties to formulate their own opinion. The problem is the stuff that Roofstock puts out on their site might give investors the impression that they’ve done enough due diligence for them, or at least on the “major risk factors”. For instance, here’s a line from Roofstock site: “Rigorous certification means you can focus on your investment strategy rather than due diligence.” Now I realize the amount of due diligence they do barely scratches the surface, especially after seeing the extensive checklist Elliot provided.

To experienced investors, they can tell the advertisement talk when they see it. To newbies, not so clear.

What some others have said echos this impression of mine:

Chris Clothier:“Roofstock wants to give the impression that they have handled everything for you and they are the experts.”

A screenshot from a private message sent to me (identity concealed):

Another screenshot from another investor's (let's call him/her Anonymous2) private message:

What Anonymous2 wrote at the end of this screenshot reminds me of @Tony Kim 's comment that Roofstock isn't ideal for investors who want to play a very passive role in the purchase. 

I doubt the 90 day warranty Elliot mentioned would be very helpful to Roofstock investors (and perhaps also applies to many turnkey investors):

The majority of properties sold on Roofstock are tenant occupied, the majority of Roofstock investors have never seen the properties with their own eyes, the majority of investors probably go with the inspection reports Roofstock provides if there’s one available (this one is my guess). The only time investors notice discrepancies, omissions or misrepresentations on the inspection reports is likely when something breaks down that requires repair, or during makeover in between tenancy - a lot of times, 90 days have way passed by then. In addition, long enough time can bury certain types of discrepancies, especially when factoring in wear and tear & disrespectful tenants.

This section from @Chris Clothier 's comment “I noticed that it looks like Roofstock gives the seller a 15% buffer. I read that as meaning that a $100,000 property can have $15,000 of deferred maintenance as long as its not immediate roof work, outdated wiring, mold or water issues.” brings to mind other private messages from anonymous2:

The 30% figure from Anonymous2's story coincides with that from @Baris Keser 's comment about him discovering for sale homes about 30% discount of the house that is listed on roofstock in Georgia 31097 zip code. Anonymous2's story also leads me to believe the 97% figure @Zach Evanish is of the ORIGINAL list price.

Btw, Roofstock refunded Anonymous2 the fees in the end. I blotted out some info so Anonymous2's identity can’t be traced from the story alone.

Zach, you don’t have to answer my questions if you don’t want to. Less than perfect answers can backfire. My motive of starting this thread isn’t to embarrass Roofstock, but is to provide valuable info to other newbies so they don’t go through the same crap I went through. PS, I’m always willing to apologize if there’s anything I write is untrue. Also, I believe the investors who private messaged me told the truth as they have no reason to lie to me.

[Account Closed]

@JC Wu 

“Rigorous certification means you can focus on your investment strategy rather than due diligence." sounds like a pretty bad advertising plan IMO. But who am I compared to roofstock's crew of attorneys, I'm sure they have appropriate language in their contracts that protect their due diligence. And excellent E&O insurance. And contracts with the 3rd parties they work with redistributing liability from them to the third parties.

I've heard in certain situations that roofstock customers have had certain issues post-closing rectified by roofstock, but I won't say much here because my experience is limited. 

I would say a good provider sets the right expectations. A concept I always push to investors is that investing in rental property is not truly passive. Activity level across different types of investments is a spectrum, not an on/off switch. Rental properties may be more passive than some other investments... but remember this: You're running a small business. You have suppliers (roofstock), employees (property manager), and customers (your tenants). If you want your little business to operate well, you've gotta understand your role and execute! 

[Zach Evanish]

@JC Wu We’re sorry to hear that there was an issue with the property that you feel the seller failed to disclose. Our goal is to bring transparency to the investment process, which is why we provide as much upfront diligence as possible for each property on the website. I understand our team has worked extensively with you in the past and reached a mutually agreeable solution, but if things have changed, we encourage you to reach out to us directly. We are committed to ensuring a positive experience for all of our customers

[JC Wu]

@Zach Evanish 

The only thing that has changed on my part is I gave up bugging Roofstock about holding that shady Jacksonville PM company accountable, after learning that Roofstock had no interest in dealing with the matter.

I’ve honored whatever mutually agreeable solutions we had reached in the past. Those were separate issues from what’s being disclosed here.

It’s impossible to prove with 100% certainty that the seller intentionally concealed the unpermitted work - I’m not inside his head. It was also impossible to know exactly what other work was unpermitted besides the roof unless I had invasive things done to the property.

I presented plenty of hard evidence when I brought the PM issue to Roofstock’s attention and Roofstock denied responsibility. There wasn’t nearly as much hard evidence for the permitting issue, so I deduced that Roofstock would again brush me off.

I honestly don’t know where to start or what to say. But if there’s anything on your mind that you’d like to discuss, please feel free to reach out to me. Don't call. 

[Bryan Devitt]

Originally posted by @Account Closed:

@JC Wu I'm pretty sure any good inspector warranties the results they give for some period of time- usually 90 days is what I see. So even if roofstock picks an inspection company that is a bit less detailed than the best, I would imagine they still abide by this standard.

Now I have no idea what this kind of warranty would be like in the event you have to use it. Is it covered by some bonding or insurance the inspection company holds? If so, I would recommend the buyer do their due diligence on the limitations of the inspection company's insurance policies.  Maybe the inspection company uses a 3rd party warranty service. I would seek to understand this if you're really being nitpicky.

Inspection companies may not be obligated or qualified to tell you that a property has possible code violations- they may just report what they see. 

It's important that the investor take responsibility for possessing the knowledge to make sound purchase decisions without relying on the opinion of other parties. Instead, the investor should use the information provided by other parties to formulate their own opinion. Know the major risk factors for the type of opportunity you are pursuing, and the minor ones. Focus more effort on making sure the major factors aren't present, and worry less about the little stuff. Don't be the nitpicky investor that asks a million questions about a few missing GFCI outlets and asks for credits over them- nobody will want to work with that kind of buyer. 

We all should understand that investing in real estate has inherent risk that can be REDUCED but not completely eliminated, like any other type of investment. I think this is something the very detailed new investor struggles with often.

I am dealing with a rot repair right now that their warranty is only for 14 days! The inspector missed improper deck flashing and studs missing (not like they weren't installed, they are half gone from rot) in an exposed basement wall and now they're paying a few grand to fix it. I was shocked to find out that there was a 14 day window, why bother even giving a warranty in the first place if it is for that short of a window.