All Forum Posts by: Jason G.

Quote from @Sean Kirk:

I'm seeing what seems to be 10%+ cap rates on roofstock. Has anyone bought from the platform? Is their underwriting sound?

Plenty of roofstock reviews on BP. Recommend doing a search. But also be aware it appears their platform has changed in recent years. They used to offer exclusive properties but now it appears that they are pulling MLS listings and will connect you with an agent. Still can be very beneficial for a new investor but personally I think not as good as a service as they had with their exclusive listings where they had inspections already done, rent rolls available, and you can complete the entire offer/acceptance via their platform rather than being handed off to an agent.

Quote from @Antonio Reybol, Jr.:

Hey - I learned about Roofstock from this site but would love to hear from anyone who has purchased a property through their website/listings. This will be my first investment property.  

- how was your experience buying thru Roofstock?

- any tips/considerations you can share?

 There are quite a number of posts on BP about the experiences of investors buying from Roofstock.  Do a search for it in the search bar.

I just click report spammer for the text messages.  They are already labeled as suspected spammer when the call comes in by the carrier of my cell phone.  Not only do I get quite a few text messages a day, but also phone calls on both my home and cell phones.  I am curious though how successful the people that use these automated services are at getting good deals or are the services themselves the only ones really profiting from this annoyance.  

Originally posted by @Brandon Boyce:

Is paying for an established reputable investors mentorship or coaching program worth it? 

No.  No one is going to change my mind about it either.  I see people dropping 10-40k on programs for information they could obtain free online.  

My first step was getting pre-approved with a lender since I knew I was going to purchase a property in the Cleveland market, I just didn't know which one.  When a property is listed on Roofstock Select, you cannot give any offer amount you want.  You are restricted on a minimum, and that is the amount I submitted.  I paid the market place fee and then the next day was contacted by a local real estate agent who prepared the PSA.  The seller accepted my offer, which likely means that it was either fair or too high.  

After the PSA was executed the title company provided me with wiring instructions and I wired the EMD.

From there the agent sent me copies of the leases and began working towards scheduling the inspection.  Originally the closing date was 30 days, but ultimately we closed at almost 60 because my agent was having difficulty getting the inspection scheduled with the tenants.  The cost of the inspection was covered by Roofstock and it was a detailed a thorough inspection.  As a result of items found in the inspection report we negotiated a reduction in sale price.

Regarding property management companies they offered IIP Management, Rearden Property Management, and Hemlane as options.  I had attempted to purchase an investment property in that market once before and had chosen Allstar which Roofstock still had a relationship with.  I wanted to know more information regarding Rearden and if Allstar was an option and this was the exchange with Roofstock's Senior Transaction Coordinator.  

9/13/21 Me: "Rearden is listed as 9-15% of monthly rent collected.  For this property what would be the actual percentage?  Is Allstar also a preferred property manager option?  It isn't being listed for this property but I've seen it on others."

9/13/21 Roofstock: "I have looped in your agent to advice on your question regarding rental financials."

9/13/21 Me: "Wouldn't that be something you guys at Roofstock would be familiar with since Rearden and Allstar are your preferred property managers?"

9/13/21 Roofstock: This is a Select transaction that is owned by a local agent, in this transaction your agent is . . . who listed this property from MLS. You have full representation from the agent and they own all of the data uploaded from MLS including rental financials."

9/13/21 Me: "I'm not asking about rental financials.  He had already sent me copies of the tenant leases.  The Roofstock platform is asking me to choose a property management company to handle management of the property after we close.  This is what my questions are referring to and you keep referring [to the agent]."

9/13/21 Roofstock: "Apologies, I misunderstood what you were asking.  Reardon will need to provide you with the exact percentage for this property.  [The agent] will have the rental financials if needed for Reardon to Calculate.  I have inquired about Allstar for you.  Please do note this property is not limited to preferred management companies as there is no Roofstock Guarantees so there are no requirements to meet with management selection."

9/15/21 Roofstock: "Please . . . be advised Allstar is still a preferred management company with Roofstock."

9/28/21 Me: "Since no additional information on property management costs with Reardon have been provided and we are approaching closing we would like to select Allstar for management.  Please confirm receipt of this e-mail and please facilitate having the property setup with Allstate."

9/28/21 Roofstock: "I have updated your selection in our system.  You will need to connect with Allstar directly to initiate your management agreement with them."

9/28/21 Me: "What is their contact information nd point of contact?  In all my previous uses of Roofstock you guys have always facilitated this."

They then provided me with the contact information and I reached out and that was when I made that post above about not being happy with Roofstock.  This ticked me off.  Their Senior Transaction Coordinator had no idea what I was talking about when I was asking about property management companies and made no effort to find out what rate would apply to the property.  It just felt that she did not know what she was doing.  Yes, I could have reached out to any of the property management companies myself and inquired about fees, but the benefit of using Roofstock, or at least had been, was that they would make all the connections and reach out to everyone for that information.  Why am I paying them a fee to begin with if they aren't going to do anything except to pass me off to a local agent and more or less tell me I'm his problem now?  

I did receive a phone call from my assigned account manager from Roofstock after the Bigger Pockets post and he was  apologetic, explained that the involvement on Select properties should be the same as on the Exclusive ones from Roofstock and that this would be a learning moment for that Senior Transaction Coordinator.  But it really left a sour taste in my mouth.  After that the Senior Transaction Coordinator seemed to have been a little more proactive, at least with following up with the lender and agent on the scheduling of the appraisal. But then that was the last time I heard from her which was on 10/8 when she wanted to know when the new closing date and appraisal contingency date were to update her system.  We closed on 10/25 so that was it with any contact with Roofstock itself except for what looked like a system generate congratulations on the closing.  

Now granted, the entire thing wasn't THAT bad, and at this point this is my 6th property, so I'm no newbie.  But I can see that being extremely confusing and frustrating for anyone trying to get their first property under their belt and utilizing Roofstock to get it done.  I don't know if this experience is representative of how they are currently functioning overall, but then you have to also consider that the person I was working with had a "senior" title to their name, so that is a little concerning on what kind of quality you are getting.  I won't likely use them again for any other Ohio properties and just continue to use my property management company to expand the Georgia portfolio.  

My main takeaway was just how ignorant or uninformed I was about the industry from an agent perspective and how investors, especially oos investors are looked at, but this is why you've been a tremendous resource both on bigger pockets and on your YouTube channel with the information you provide investors.  I didn't put much thought into the commissions and how much that really turns out to be when you break it down like you did in that post.  All the properties I've purchased range from 81k-179k, so no one is getting rich off of being my agent, even if I used the same agent for every purchase.  And I did have that impression that by buying multiple properties that it somehow made me more appealing to work with, but at those commissions, it isn't like I'm buying apartment buildings here that make me some kind of great catch as a client.  That was really just one of those "aha posts" where as an investor I just read it and it really just made me realize that a portion my mindset was just off.  And while I did have some idea that agents deal with a lot of non serious people trying to be investors, just you breaking everything down really made me understand why you created the model you have with respect to taking on prospective investors.  Honestly, I wish I saw your post before even reaching out originally to you because I don't think I would have had as difficult a time considering asking you to perform a property analysis for me as I had coming from my mindset that I had prior to reading that post.  But in my investing journey I'm always trying to learn and grow so I thank you for taking the time in pointing me to that post and I hope that anyone following my thread takes a moment to read it also because it was really helpful.  

Originally posted by @James Wise:

If you spend any measurable amount of time browsing the BP forums you have probably come across a thread or two that was started by a new investor who's having a heck of a time getting a Realtor to work with them in an out of state market. As you can see by my post count under my dashingly handsome headshot, I've been on BP for quite some time, and I can tell you that I have personally read 100's of these types of threads.

So the question is, why is this? Why is it so hard for an out of state investor to create a mutually beneficial relationship with a Realtor in an out of state market? Is it because Realtors are bad at their jobs? Or is it because out of state investors are bad clients?

The simple answer is YES to both questions.

Yes it's hard for out of state investors to work with Realtors because Realtors suck at their jobs.

AND

Yes it's hard for out of state investors to work with Realtors because out of state investors are horrible clients.

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Now before all you out of state investors and Realtors start jumping down my throat, let me explain. Ya see this is not simply an opinion piece, I've got the data to back it up.

As for the Agents in the equation. Industry wide close to 9 out of 10 agents will leave the industry every single year. That's a nationwide statistic and it's been like that for decades. So if you are thinking it's the Agent's fault as to why investors and agents can't create a mutually beneficial relationship you'd be right about 90% of the time.

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Why do so many agents leave the business?

The 1st thing we need to look at is money. Most out of state investors are looking at properties in the "turnkey" space and the price points are sub $100k. Often times way less than that when investors want to do BRRRR deals and things of that nature. So if you're an investor and you are looking at doing these deals and are trying to connect with a Realtor to do them you've got to understand that the Realtor is looking at a commission that's going to fall anywhere in the $500 to $2,500 range. Myself I've sold over $200 Million worth of this type of property to investors and I can say the commission of an investor focused Realtor is roughly $1,250 when you average it all together. Having done 1,000's of sales I've got a good amount of data to say that's a very fair estimate.

Now as an investor you may be thinking that's a good chunk of money because you are going to buy several properties from this agent. You are probably thinking you are a heck of catch because of all that residual income they will be getting because you are a big bad investor. Surely if an agent meets you they will be the 1 out of 10 who are making good money and staying in the business. Right?

No. Not at all. In fact, you're probably the type of client who's going to earn them an hourly rage far below minimum wage. Burger flippers are actually going to pull down a much higher dollar per hour than agents working with out of state investors.

Many of you know that I run a show called The MLS Search & Analysis Show. What this is, is how I work with investor buyers to help them buy rentals from the MLS. This is a paid show. You must pay me up front to work with me. I will not work with you as an agent unless you pay up front. The reason behind this is simply math. I would not make enough money working with you if I didn't. This is why the agents working with investors often fall into the 90% that quit the industry.

Prior to this show I was selling investment properties but knew that the pay rate was not sustainable without an up front fee. With the show being a numbered episodic show it's become very easy for me to track the data and really hammer down exactly how little money these agents are making when they work with you guys.

Here is what the data says.

Over the last 10 months or so I have been hired by investors to analyze properties for them and submit an offer on said property if they were interested in buying it after my analysis answered all of the questions investors ask on everyone of these properties. Basic stuff but basic stuff that takes up an agents time to get to you such as current rent, market rent, mechanical ages and things like that.

Over the last 10 months gone over about 1,100 properties for investors. In going over 1,100 properties for these investors it's resulted in roughly 95 sales. With an average commission of $1,250 we are looking at $118,750 in gross commission or an average commission per property looked at of $107.96.

Now how long does it take to look at / go over a property with an investor? An hour? Two hours? Three? Are you an investor who wants to fly into town and drive around all day? If yes, let's call it 4 hours between 

• Driving to the house
• Touring the house
• Having "coffee" to get to know one another
• Writing the offer
• Negotiating the offer terms with the seller
• Setting up the appraisal
• Setting up the inspection
• Answering all the questions during escrow etc.
• Post closing questions and follow up etc.

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Effective Dollar Per Hour $26.99.

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Of course agents have to advertise to bring in clients. If nobody knows who you are how can they work with you after all? They can't. Lead generation is the most important part to an agent's success. So let's reinvest 20% of that revenue into lead generation. 

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New Effective Dollar Per Hour $21.60.

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But wait, we aren't done yet. No, ya see most Agents working with low commission properties like this haven't sold $200 Million in real estate. Most agents working these super low commission deals are new agents who have yet to move onto the high cost suburbs with owner occupants. Most agents don't have a sophisticated TV show with 10 Million+ views. Most agents aren't working with buyer's who are so committed to buying that they have paid money up front, many of their hours are spent combing through all of the tire kicker's endless questions so most agents working with investors aren't closing sales at the rate I am. They are probably at best able to close their deals at a about a third of the rate I am.

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New Effective Dollar Per Hour $7.20

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But wait, there is more. These agents are not business owners, no they are working for a Broker so guess what, they've got to pay a commission split. Let's call that 20%

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Final Effective Dollar Per Hour of an Investor Focused Agent is $5.76

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So there you have it folks. If you are wondering why you are having such a tough time getting an agent to be excited about working with an investor no you know why. You represent a pay rate of $5.76 an hour to these people. With an effective dollar per hour pay rate of $5.76 is it a surprise that 90% of the agents talking to investors are terrible at their jobs? What quality human being is going to work for $5.76 an hour? Working with you as an investor isn't this magical carrot that all of these agents are chasing. Nope, not even close.

Thank you James for pointing me to this thread.  It has been very eye opening and informative.

Originally posted by @Eddie L.:

@Jason G.

Jason thanks so much for the info. Investing that far out of state is so scary. Like the ones I looked are within 3 hour driving range. I'm sure there's much better opportunities further out but not sure how to build the confidence to invest somewhere without ever seeing in person. Since you have OOS properties that you've never seen in person, I assume they're fully managed by your PM? In terms of repairs & maintenance, do you typically work with the PM in finding vendors or do you just see the vendors proposed by the PM and do a little due diligence online to see which one seems most appropriate? Just wondering how hands off as an investor you are when investing OOS.

They are fully managed by property management companies.  They have relationships with different vendors and get me estimates.  Sometimes I ask for multiple estimates if it is a larger project or if I think the first one seems high and I approve the scope of work and they send before and after photos of the work completed.  With my first property I was very stressed out, but I just pushed forward past that discomfort and now four years later and six properties, I'm pretty comfortable with it.  

@eddie li 

1. As any real estate property, I think I should do the due diligence of actually driving over there and seeing the neighborhood. When surveying the neighborhood, what would you typically look for? Crime, restaurants, shopping, business districts, etc.?

I purchases 6 oos properties and have never seen any of them in person. Doesn't mean you can't or shouldn't, but it isnt a requirement.  You have websites that show crime information for specific areas, search news sites for articles on that town, look at forums for that area, search bigger pockets, do Google map walk through, etc.  

2. When observing the property from the outside and its surroundings, how would you evaluate it as a beginner with no construction or real estate experience? Like how can I judge if the roof looks good or anything else that may come at a hefty price to maintain or fix in the short term?

Since you are using Roofstock this is what inspections are for.  If you ultimately connect with an experienced agent that works with investors they could help you evaluate properties before putting an offer in.

3. In terms of deal analysis i.e. the numbers, based on all of roofstock's assumptions with a 20% down this seems like a great deal. How do you typically analyze the numbers here? It's positive cashflow ~$300/month even with 20% down so I think that's a good start. How do you confirm each of the assumptions made by roofstock?

Look at what properties in the area are being rented for and what the current listing amounts are for, check the current taxes.  Their insurance and mortgage interest rate may or may not be accurate depending on who you use and your own financial situation. 

1. 3% Annual Rent Growth - Is there a way to verify this? Ask for the ledger and see if the tenants were actually paying rent with a 3% increase in recent years?

Aside from that search bigger pockets see what investors are saying about the area.   You can also see posted rents on sites like zillion for a property and see how those listing changed over time.

2. 5% Vacancy Factor - There's no way to confirm this right? Besides... maybe asking if others here happen to invest in the same area and see how their vacancies are like?  

I believe the average is 7% but it can be location specific.  

3. Property Tax - Based on public records, the property tax is current assessed at a tax value of $121,800. Does that mean that if I pay the asking price of $175,000 then that becomes the new tax value and the property tax will be higher?

I dont know how NJ adjusts their taxes for new purchases. 

4. Property Management - This is just based on agreement with property management company hired for the property. Is there like a yelp kind of review website for property management companies to compare them?

Yes. Search yelp, bbb, Google reviews, Glassdoor, bigger pockets, etc. You will see reviews from tenants and landlords.  Not all PMs have a lot of reviews.  But I mostly focus on landlord reviews.

5. Repairs, Maintenance, and Capex - I feel like this is probably the hardest to analyze? How do you have a good estimate for how much you expect to pay or set aside for these?

There are average %s you can set aside each month and different items have different average life expectancies.  You will have years where there is only minor work done and others that just sucks.  I had 3 hvacs replaced this year plus I had to redo a driveway and have a septic tank pumped.  I spent a lot of money but that is why we put the money aside for when things do happen.

6. I'm sure this can vary company by company, but do property management companies typically manage the day to day repairs and maintenance as well? Just confused why roofstock show a separate expense for property management fee and repairs and maintenance. If not, how do you go about finding good local handymen in an out of state market?

Most PMs handle collecting rent, evictions, advertising and placing tenants and maintenance and repairs.  While they handle the maintenance and repairs you still pay for them. They will get estimates from vendors and coordinate with them for the work but you pay them for the work not the PM.  

Having now closed on the property I will provide an updated review of Roofstock and it will be a multi-post review.  I will first discuss how I ended up deciding to use Roofstock.  

Initially I was interested in connecting with Holton-Wise to invest in the Cleveland, OH market.  I had been following their YouTube channel for quite some time and found James Wise to be very knowledgably and informative and I appreciate that he is active on Bigger Pockets.  I went to their website and filled out a form for them to contact me and they got back to me pretty quickly.  Now everything I'm about to write is based upon what I understood their products and services to be, so I apologize in advance to Holton-Wise if anything isn't accurate and I encourage everyone interested in using them to contact them directly and not just rely on what I'm about to say.  

I had a brief conversation with someone from Holton-Wise and explained that I have five properties in the Atlanta market and was looking to purchase a property in the Cleveland market. They have MLS access feeds based upon specific criteria (e.g., by seller financing, by class, by SFH or multifamily, etc.) that they sell access to as well as an MLS search and video analysis which can be purchased individually or as a package. I have to admit I was very confused after that phone call. The properties I had purchased in Atlanta had been directly through Roofstock or I used my property management company who assigned me an agent who would help me find properties and work with me on purchases. I was more or less looking for an agent experience that I had with the property management company that manages my properties. I e-mailed Holton-Wise for some clarification asking if I purchased an MLS Access and saw a property I was interested in, was the next step ordering a property analysis or would they be able to provide thoughts on the property to me based upon the listing and their expertise, handle making an offer, and then ordering an inspection, etc. I received a response directly from James which informed me that the next step was to order an analysis and that they only write offers on properties that he analyzed.

While I respect their decision to handle representing buyers the way they do, that definitely wasn't for me.  I assume that given their large social media presence they must get inundated by people that are just not serious and would otherwise be wasting their time and resources which requiring them spending money to purchase an analysis would definitely cut down on those not serious and also bring in additional revenue.  But I was looking for more of a traditional buyer agent/investor relationship and while James clearly knows what he is talking about and doing, I just couldn't justify to myself at the time spending money on an analysis per property, so I decided to look elsewhere.  

As I was looking into property management companies and trying to figure out who I would contact next to discuss looking at potential properties I was also looking at Roofstock and came across a duplex that was listed. Now this was considered a "Select" property which means that it was actually listed on MLS and not exclusive to Roofstock. So the way that works is that if you choose to make an offer on their website they will provide you with an agent they work with in that market who will make the offer for you and work with you throughout the purchase. Roofstock still charges their marketplace fee if you go into contract, so thinking about this in hindsight, that cost me $832. Roofstock did handle the inspection, but in all honesty if I just contacted a random agent in the market I would have saved some money or I could have just went with James Wise at that point given asking him to do an analysis and then ordering an inspection on a property would likely have come out to be somewhere around the same, but sometimes you only realize these things after the fact.

Anyhow, I'm going to tag @James Wise in this post just so he can comment if he chooses to and I will write a follow-up post regarding my current thoughts and experience with Roofstock on this purchase and the purchase itself over the next week or so.