All Forum Posts by: Jason S.

I live and invest in San Antonio and I would advise not putting any stock in the number the county comes up with on its appraisal. They are all over the place. Use comps for a more accurate picture of a home's true market value. As far as "dealing" with the high property taxes, I'm not sure what you are looking for. The taxes are what the taxes are. If you do end up purchasing, you can protest the taxes every year and hopefully stem the tide.

As with any business, cash flow is developed by increasing income or reducing expenses. If the rents (income) don't work for your purchase, can you reduce expenses somewhere? The only place I have been able to reduce my expenses are through more competitive insurance quotes, property managers or maintenance vendors.

I think we have a pattern! :) For me, it was just annoying as it cut into my cash flow, but not enough to kill the deal. Also, finding out about it the day before closing made me even more unwilling to back out. I did try to find an HOA before we even got to that point, but I had come up empty.

I agree wholeheartedly. The STR regulations for San Antonio were just a rumble when I bought my home to Airbnb. However, I always had in mind "if this doesn't work out, would this still work as a normal rental?" And the answer was yes. Luckily, I finally recouped my start-up costs, and now that the regulations finally came through, the hurdles weren't enough to drive me off. My risk worked out, but the Plan B was there just in case.

A discussion about the proposals? It looks like that link is just to explain the ordinance that passed November 1, 2018. I went to a meeting with the city before it was passed and a special event hosted by Airbnb to explain the changes. The key right here for most people is to be grandfathered in so that the density restrictions won't apply to you. If you are within the city limits, there will only be allowed 1 out of every 8 houses on a block-face to be a STR--unless you're grandfathered in. In order to be grandfathered, you have to be up-to-date on your Hotel Taxes (including all PAST DUE taxes) and already applied for a permit by the time the grace period is over. After the grace period, they will be hunting people down and fining them several hundred dollars per day if not in compliance.

There's a lot more ins and outs, but that is the gist of what was passed. The only change I made was I got caught up on my hotel taxes :) And now by bottom line is a little less, but it's fine.

@Brandon Sturgill Roofstock gets a flat fee from the buyers (mine was $500 and that's it), and I'm sure they get a cut from the sellers, but I don't know how much. Also, they have arrangements with property managers, lenders, and insurance companies that they most likely get a commission for referrals--maybe that's why they kept "forgetting" I didn't need a referral. -___-

Every analogy I can think of for what Roofstock is comes out flawed, so I'll just be direct. A seller can sell a property on the website (I assume for a fee), and Roofstock will do some of the analysis/legwork for buyers--comps, neighborhood ratings, inspections, tenant ledgers, title checks. The buyer submits an offer that sellers can either accept or reject. If accepted, a rep from Roofstock will walk the buyer through all the process until closing. The biggest interest for Roofstock is that their legwork/analysis is legit and unbiased so that buyers can trust the process. However, as with any real estate deal, the seller wants to sell and, in this case, Roofstock wants them to sell too, so it may be slightly biased no matter what. I believe there are some sellers on BP somewhere who may be able to inform more about what they have to pay Roofstock.

@Jason G. I was informed about the HOA the day before we closed, as the Title Company found out that there was an HOA. I have found most of my documents in my email and remembered that the disclosures were signed by the seller, but mostly left blank. In hindsight, I should have balked at that. The owner was an investment company that had only bought the property a few months before, so I figured they probably didn't even know the answers to most of the items since it had not been vacant since their purchase.

I was always confused about the roof, because the inspection said it was good, but the diligence vault came with an estimate from a roofing company to fix the roof. The property manager told me the roof was new when I met with them last month, and it looked good to me when I visited the property.

I had the property as a saved property, but no links could be clicked. And then, while trying to figure it out, I unsaved it....so gone for good! I emailed support, so maybe they can help.

I purchased a SFH from Roofstock in August 2018. I did my own research, but the feedback from BP members who shared their previous experiences with the company informed me about what to expect and helped me greatly to prepare properly. I'd like to add my experience as well to help give back. I did not keep as detailed notes as some who have gone before, but I will do my best! I also know Roofstock reps come through these forums every now and then, so hopefully it will help them improve their service. Overall, there were no significant bumps in the road, bait-and-switches or any other mega-surprises, so I'd say it went pretty smoothly for an internet purchase of an out-of-state house that I had never actually seen.

THE HOUSE

2-bed 2-bath 1157 sq ft. townhouse in Memphis, TN

Rehab needs:  dated interior, old roof, stairs to attic need to be replaced, shabby landscape, weathered siding, about 2 years left on HVAC

Tenant:  on a 2-yr lease, ledger showed they had paid on-time every time for a little over a year.

This is my 3rd investment property (my 2nd LTR along with 1 STR), and my first out-of-state.

THE NUMBERS

Asking Price:  85,000

Sale Price:  83,800

Rent:  $850

PM:  8%

Conventional financing 25% down @ 4.75%

After I ran my numbers, I don't know if I considered this a really good deal, or a really good deal...for Roofstock. Either way, almost nothing on Roofstock fits my numbers criteria, so the fact that this one did, and from what I could tell on Google Maps was in a decent part of Memphis, I bid on it. My numbers would have still been fine if I had gone higher, but I wasn't dying to have this property so I came in a little under the ask price. I was surprised when I received notice that my offer had been accepted.

THE PROCESS

If I'm being fair and honest, working with the Roofstock representative was cumbersome and a bit annoying. I feel the reason this deal got done in the end was my mortgage company did a lot of legwork for me and kept everyone else moving along. The fact that I thought I may be partially insane for buying an out-of-state property off the internet that I had never seen first-hand may have caused my annoyance threshold to be lower than normal, but here are a couple of reasons why I have lukewarm memories about working with the Roofstock rep:

• Immediately after your purchase goes through on the website, it asks you to fill out basic questions like what your plans are for insurance, funding, and property management. When I received a call from my rep, she asked me these questions all over again. Considering this was my first interaction with her, it was disconcerting that she was not informed. Where did my previous answers go? Was she supposed to have read them before contacting me? Does the left hand not know what the right hand is doing? Is this how the entire process is going to go? This whole thing is going to crash and burn, isn't it?!?!?
• Later on, I received further correspondence from her saying that she was going to link me with some insurance companies so I could get a quote (or something like that). The problem is that in the questionnaire, I said that I would be using my own insurance rep, and then I told her again on the phone when she called and asked me the question for the second time as well. Yet, right after that, she tells me she will get me the insurance referrals I asked for. Huh? Similarly, in the questionnaire, I said that I didn't need a lending referral and I was going to stick with the PM that was already attached to the property...yet, she kept asking me these things or forgetting what I had told her--inconsequential in the end, but annoying and unsettling. 

Pleasant/Unpleasant Surprises

• Pleasant Surprise: It turns out the roof that I thought would eventually need to be replaced had actually already been replaced.
• Unpleasant Surprise: The listing said there was not an HOA. It turned out there is an HOA which affects my monthly bottom line. I brought this up to Roofstock who informed me in their generic legalese that they don't guarantee the information on the website and that the buyer must do their own diligence. A convenient catch-all that protects them from anything--how great for them. I don't think I was wrong to expect them to have correct something as basic as "Is there an HOA?" The response was off-putting but not a deal-breaker considering the new roof was a big money-saver.

The Closing and Onward

• The Closing was arranged by the mortgage company via a mobile notary. All went smoothly, and I ended up closing in the middle of August, about 25 days from when my offer was accepted.
• A few weeks after closing, I received a T-shirt in the mail from Roofstock thanking me for my $83000 purchase. The T-shirt was more likely to fit my 11-year old niece than a grown man, so I will be sure to send those middle-school real estate investors Roofstock's way.
• The property management has been fine--a little underwhelming--but that has nothing to do with Roofstock. I have been paid on-time for the 3 months since I closed, so that is clearly the most important part.
• In early November 2018, I made a trip to Memphis to "touch" the property and make sure it existed. (It does.) I was beyond relieved to find that my neighborhood research online aligned with what I saw in-person.
• I used the Roofstock portal throughout my purchase to reference the diligence vault materials, yet since the purchase, I have not been able to figure out how to access it again. I hope it wasn't deleted.

Of the Roofstock case studies I've seen on BP, mine would definitely be categorized as a net-positive experience. I've seen some other ones that I am relieved that the troubles they had did not happen to me, and almost dissuaded me enough to not pull the trigger on this purchase. It seems sometimes the troubles are caused by the buyer's misunderstanding of what Roofstock is (a marketplace) and what it isn't (a turnkey company), but sometimes they are things that seem to be no fault of the buyer.

I probably left out a lot of useful information, so if I did, whoops. If anyone has any questions about my experience with this purchase, or if I can help you while you are deciding, please let me know.

Hi Andrew,

There are several case studies/reviews in the forums which you may find through a search. I completed a purchase in August and will be posting a review soon as well.

Here is a very thorough one:

https://www.biggerpockets.com/forums/92/topics/468...

Clearly only speaking from my own experience in SA, my rental normally is rented within 2-3 weeks on a turn (I've had 2 turns with my current PM). Part of that includes the inspection and make-ready, but I feel 2-3 weeks is "quick." On the other hand, the house next to my homestead was on the market for 7 weeks in the middle of summer, which I found to be odd. I tried finding that house online when it first went on the market, but couldn't find it. The houses are in 2-different parts of town--the one that was on the market long is in a nice area, but it is flooded with rental homes.

Based on your story, your PM doesn't sound terrible, but they don't sound like superstars either. I don't think there are many superstar PMs in SA tbh--just my opinion--so I am happy with one that I don't have to constantly call and prompt to do their job. It could also be timing as the summer rush has died down?

Also, my PM replies almost within the hour by email which is fantastic. But my out-of-state PM won't reply unless I call them directly. It really is hit-or-miss.

I don't have much to add to what others have said, but going forward, I think your insurance is much higher than I've ever paid in SA and you can find a PM for 8% instead of 10% (ask around to make sure they don't just make up for it with unnecessary "maintenance"). Adjusting both of those factors will help your SA cash flow in the future.