All Forum Posts by: JC Wu

Why did nobody want that Hayward property? I'm under the impression that the demand for Bay Area properties is much higher than supply; the sale price is often higher than list price and bidding wars are common. 

I listened to a Podcast here on BP a while ago. It was an investor who found her niche of buying unwanted properties that come with liens attached or big defects (like foundation and structural issues) that put off most buyers. 

Do the auctioned properties on hubzu come with inspection contingency for the winner? 

Are the cash flowing properties you find in the Bay Area off-market deals? How do you find the deals? Do they come by often?

Yes, I bet there are too many things to learn in REI and there's always something new to learn even for pros.

@David Song The permitting issue wasn’t the only trigger. I mentioned other factors in some of my previous posts on this thread. Looking back, it was perfect timing and a wise decision to sell this FL property. Soon after I sold it, a wave of panic selling in that area started and its value has been plummeting. My end buyer had it listed for sale about 9 months ago after some quick light rehab - the price has been cut multiple times, the listing agent has changed three times and it’s still lingering on the market.

One piece of advice dispensed in many success stories is “aim for cash flow rather than appreciation if you have to pick one since appreciation is largely based on speculation.” Bay area properties don’t seem to cash flow, many even yield negative cash flow. If I want to strike a balance, I may consider investing in emerging markets like Austin, Seattle, Denver, LA, etc.

I remember listening to a Grant Cardone podcast here on BP. He said the most recession-proof rent is in the 800-1200/mo range. If I apply the 1% rule, the price of the properties falls in the 80K-120K range. The risks of getting tenants from hell and property damages are relatively high, but I try to find the cheap houses in decent communities to reduce that risk.

Plus, if I want to respect the “don’t put all eggs in one basket” principle, why not buy ten 100K properties across different locations instead of buying one 1M Bay Area property?

It’s very likely I have been applying conventional wisdom too rigidly. Please feel free to correct me. 

@Joel Florian Your assessment of Roofstock is pretty accurate. I’m glad you’ve come to realize Roofstock doesn’t always live up to the glowing promises their copywriters type up before you make a commitment with them. Many of the assertions and empty promises they make are, in my opinion, fraudulent misrepresentations. I chose to work with Roofstock exactly because they made more promises than their major competitors. I got lured in by those promises and trusted they’d live up to them. I think that false advertising practice is manipulative, unethical, dishonest and unfair to their competitors. I agree with @Account Closed that a good provider sets the right expectations, and Roofstock seems to intentionally do the opposite. I started this thread to mainly warn new investors. I don’t see why RE experts like you should be deterred by the negative reviews if you’re good at doing due diligence and spotting deals.

@Lazaro Dinh

------------------------------------------------------------------------------------------------------------------------------------------------------

@Tony Kim

-------------------------------------------------------------------------------------------------------------------------------------------------------

@Zach Evanish 

@James Wise @Ernesto Hernandez Funny how the Roofstock PR guy keeps emphasizing on several BP threads that Roofstock is a marketplace, not a turnkey provider. Yet when "Roofstock review" is searched on Google, among the top search results is an article on ListenMoneyMatters with the title "Roofstock Review 2019: Turnkey Single Family Rental Properties" - most likely Roofstock paid $$$ to have this positive review written since there's advertising disclosure. No wonder why people get confused. Many investors get "a platform where TK properties are sold" and "TK provider" mixed up. Btw not all properties sold on Roofstock are TK properties. 

"Roofstock certified property managers", LOL. From my painful personal experience, I can tell you that it doesn't take much to qualify. It appears that they don't even have to meet the standard of avoiding doing anything illegal. 

My story eerily mirrors @Alvin Lee 's. The Roofstock certified PM I worked with seems to have had over 750 fake reviews written to cover up 100+ complaints against them, including reviews from its own executive team and employees impostured as investors and renters. This practice is illegal and deceptive - it violates a slew of advertising laws and Section 5 of the Federal Trade Commission Act. 

I have yet to write about this part of my experience in detail on a BP thread I started https://www.biggerpockets.com/forums/92/topics/670569-roofstock-review-newbies-beware

There're also some informative Roofstock related discussions on my thread. 

I had to hunt down my portfolio manager from this PM company for any update and push her to take actions against the non-paying tenants from hell. She never first reached out to me about anything; I had to reach out to her about everything. She forgot to file eviction and I had to remind her later - during this time of delay, the tenants and the unauthorized occupants destroyed the property (>10K in damages) and the PM charged me management fee. 

Upon me firing this Roofstock certified PM, their operations manager(OM) lied in writing against her own words from a previous email to rip me off a cancellation fee. I complained to her about the portfolio manager a few months prior to firing them - the OM was all apologetic and admitted the portfolio manager made a mistake. The service never improved. When I sent them the Notice of Default after the eviction, the OM's attitude got nasty and suddenly turned around and denied the portfolio manager made any mistake. According to the management contract, they weren't supposed to charge me a cancellation if I canceled with cause.  

When I told Roofstock about the PM's shady practice, Roofstock kept it on their certified provider list. 

TO INVESTORS WHO'VE PURCHASED PROPERTIES FROM ROOFSTOCK IN 2014 - 2018: PLEASE SEE MY LAST POST WITH THE SMILEY LIONESS. DOESN'T MATTER WHEN YOU SEE THIS POST. 

 @Bryan Devitt Who's "they" and "their"?

@Jonathan Paul Shortt I’m 99% sure I wasn’t allowed to hire my own 3rd party inspector. I can’t disclose the legal terms here to avoid breach of contract. I can think of five possibilities to explain our different experiences. The truth may fall outside these speculations and hasn’t crossed my mind at all:

1. Roofstock used to prohibit buyers from ordering independent 3rd party inspections. But their policies changed recently and now they allow it.

2. Roofstock policies are state-specific. 

It’s been pointed out to me in private messaging that Roofstock behaves as a broker or a dual agent. The behavior of brokers prohibiting buyers from ordering independent inspections would result in a violation of agency laws in some states but not others.

3. By incorporating in another state, Roofstock can somehow go around certain rules that carefully regulate brokerage activities carried out by local brokers in some states. 

This reminds me of how the state of Florida prohibits RE agents from inserting Indemnity and Limitation of Liability clauses in the standard PSA but Roofstock can do so in the Terms&Conditions. I have no clue how this works and how enforceable they are. 

4. I received differential treatment. (unlikely)

5. Roofstock-drafted PSAs are negotiable - I didn't make any negotiation attempt. 

I imagine it will take multiple Roofstock buyers’ stories from different years (especially the earlier years) and different states to form an accurate picture. The reason why I kinda fixate on this topic is that many post-closing issues that arise between Roofstock and its buyers center around "surprises." 

@Zach Evanish (Roofstock’s PR guy on BP) is no longer with Roofstock. Too bad he doesn’t seem willing to provide answers and even if he wants to, he probably can’t.

I’m inserting random images to make this post stand out. 

To anyone who's purchased properties through Roofstock (Doesn't matter when you see this post, you're not late to the discussion. I'm very curious about how Roofstock's rules&policies evolve over time - I want to hear about it from investors, not Roofstock employees):

1. WERE YOU ALLOWED TO HIRE YOUR OWN 3RD PARTY INSPECTOR FOR THE PROPERTIES THAT ALREADY CAME WITH AN INSPECTION REPORT IN THE DILIGENCE VAULT PROVIDED BY ROOFSTOCK'S PARTNER INSPECTION COMPANY?

2. If so or if not, when did you buy the properties?

Thanks in advance. 

@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. 

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.

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.