1st SFH purchase with Roofstock - INVESTOR'S DELIGHT

Real Estate Deal Analysis & Advice
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1st SFH purchase with Roofstock - INVESTOR'S DELIGHT

Aj Parikh
Rental Property Investor · Centreville, VA · Member since 2019 · 1k+ posts · 799 votes

Investment Info:

Single-family residence buy & hold investment in Memphis.

Purchase price: $70,000
Cash invested: $17,500

3 Bedroom 1 Bathroom Single Family Residence in Class C neighborhood purchased through Roofstock

What made you interested in investing in this type of deal?

Roofstock is a very convenient platform for Investors for an out of state market in Single Family Homes. The ability to view inspection reports, ledgers, property valuation reports and make offers on a property makes this platform unique.

How did you find this deal and how did you negotiate it?

I had created a "roof" on roofstock.com and put my criteria in it which is below:

List Price: $50000 - $100,000
State: TN
Neighborhood: 2 stars and above
No Late payments by tenants
Built: After 1950

The property was listed for $78000 and I made my 1st offer on Roofstock website for $68000. They countered at $72,000. I made another offer at $70000 and they accepted.

How did you finance this deal?

I went with Conventional financing and put 25% down. Roofstock offered their lenders but I was able to get the rate of 3.1% from my lender and I even got some credits on closing costs.

How did you add value to the deal?

I used Roofstock's referral from another investor so I got a prepaid gift card of $1000. Additionally, since I am a Bigger Pockets PRO member, I was able to get $500 credit towards the purchase. I did not make any renovations because the property was already tenanted and the inspection report on Roofstock did not have any major renovation recommended.

What was the outcome?

I only had to pay $1000 towards closing cost because of all the credits from Roofstock

Lessons learned? Challenges?

I could have got an even better rate if I had called the Roofstock lender and asked them to match the rate. But I wanted to do business with my local lender.

The challenge is because I am an out of state investor, I will have to come up with Systems so that I am able to manage the property management and handle any major issues without losing my sleep.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I called the 4 property management companies that Roofstock recommended on their listing and they all were offering very similar benefits. I ended up working with Renshaw Property Management since they were managing that property previously. They onboarded me with their portal and explained all the details related to rent, maintenance and policies.

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Most Popular Reply

David Lutz
Granada Hills, CA · Member since 2019 · 100 posts · 313 votes
5y

As a random side note to the folks on this forum. I will back up that Roofstock has been good to me. I've picked up three properties, all of them have been a lot more attractive than the MLS. You just need to know how to identify the value there, because there's a lot of crap as well. There are some holes in how they project rents and property values, so you can find deals that are a lot better then they look on the surface. I'm not going to post them all here, but if anyone wants details feel free to PM me.

One thing I really like about them is that the transactional costs are legitimately waaaay lower than a traditional sale through realtors. It's not just the commission savings. They also have some sweet deals set up for escrow/title costs, etc.

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  • Ken Dillard
    Investor · Franklin, TN · Member since 2017 · 112 posts · 77 votes
    5y

    @Aj Parikh - Thanks for posting.  I have been lurking on Roofstock for a year or so.  My goal in 2021 is to buy 2 and I have decided roofstock may be the way to go.  Thanks for the tips on credits and pro member benefits.

    Did you have a cash on cash return or dollar per month you were targeting?

    0Reply
  • Aj Parikh
    OP
    Rental Property Investor · Centreville, VA · Member since 2019 · 1k+ posts · 799 votes
    5y

    @Ken Dillard I was looking at properties which would give me a monthly cash flow of $350 and higher and Memphis seemed like a good market where I could get that. 

    0Reply
  • Jordan Murrell
    Las Vegas, NV · Member since 2020 · 162 posts · 113 votes
    5y

    Congratulations on a great deal. I have been hearing a lot of good things about roofstock. I think it's time for me to get on there and take a look. What would you say the pros and cons would be about roofstock?

    0Reply
  • Aj Parikh
    OP
    Rental Property Investor · Centreville, VA · Member since 2019 · 1k+ posts · 799 votes
    5y

    @Jordan Murrell Roofstock is an investor's delight. The ease of analyzing the deal along with the inspection reports helps with the purchase. Check my article below on roofstock earlier this year that I wrote highlighting the pros of roofstock. Message me if you have any questions and I can walk you through my purchase process. 

    https://www.biggerpockets.com/...

    1Reply
  • Enrico Angella
    Rental Property Investor · Rome Italy · Member since 2020 · 42 posts · 19 votes
    5y

    @Aj Parikh

    Thanks for sharing your experience with Roofstock. I found your article very interesting.

    I’ve been looking at their properties for a while and although I’m not completely sold on the idea of a turnkey investment, I really like their business model.

    Cheers, happy new year!

    0Reply
  • Aj Parikh
    OP
    Rental Property Investor · Centreville, VA · Member since 2019 · 1k+ posts · 799 votes
    5y

    @Enrico Angella Roofstock is a semi-turnkey investment because you can explore out of state and the properties are already tenanted so you only have to figure out the financing and property management 

    0Reply
  • Enrico Angella
    Rental Property Investor · Rome Italy · Member since 2020 · 42 posts · 19 votes
    5y

    @Aj Parikh

    If you want to tell me, I’d be curious to know what is your expected cash on cash return of your investment with RS.

    Cheers

    0Reply
  • Aj Parikh
    OP
    Rental Property Investor · Centreville, VA · Member since 2019 · 1k+ posts · 799 votes
    5y

    @Enrico Angella Certainly. My monthly cash flow after all expenses is $331 and COC came out 18.49%. Message me if you want more details on the purchase process.

    1Reply
  • Enrico Angella
    Rental Property Investor · Rome Italy · Member since 2020 · 42 posts · 19 votes
    5y

    @Aj Parikh that's a solid CoC return for that type of investment!

    1Reply
  • Aj Parikh
    OP
    Rental Property Investor · Centreville, VA · Member since 2019 · 1k+ posts · 799 votes
    5y

    @Enrico Angella I was able to negotiate on the purchase price and I took advantage of the low interest rates lately

    1Reply
  • Quaid Cde Baca
    Los Angeles, CA · Member since 2017 · 31 posts · 8 votes
    5y

    What are you systems in place (if any) to manage this property/ the PM company when this arise?

    Will you scale this to other areas of the country or try and stick to that area and use the same PM for a few properties first before branching out?

    1Reply
  • Dmitriy Fomichenko
    Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
    5y

    @Aj Parikh congrats on your investment!

    0Reply
  • Aj Parikh
    OP
    Rental Property Investor · Centreville, VA · Member since 2019 · 1k+ posts · 799 votes
    5y

    Thanks @Dmitriy Fomichenko

    0Reply
  • Aj Parikh
    OP
    Rental Property Investor · Centreville, VA · Member since 2019 · 1k+ posts · 799 votes
    5y

    @Quaid Cde Baca 

    Sorry for the late response on this. Don't know how I missed this. 

    What are you systems in place (if any) to manage this property/ the PM company when this arise?

    Before I chose my property management, I talked to 4 other PMs in the area who could potentially manage my property and did a price comparison and services comparison. I decided to work with Renshaw Property Management and @Caleb Parr on that team has been amazing to work with. They always respond on time and walked me through their portal on how to manage the rental. Definitely recommend them. 

    Will you scale this to other areas of the country or try and stick to that area and use the same PM for a few properties first before branching out? 

    I would stick with the area and the the PM but I am far from purchasing another property for now. I exhausted all my funds last year so just chilling and collecting cash flow for now :) 

    1Reply
  • Daniella Steinberg
    Member since 2020 · 32 posts · 5 votes
    5y

    @Aj Parikh

    Thanks for this summary - super helpful, I am a big fan of roofstock. I was curious how you equate the star neighborhood rating on roofstock to A/B/C/D rating - i.e. is 2 stars = class C neighborhood?

    Thank you!

    1Reply
  • Aj Parikh
    OP
    Rental Property Investor · Centreville, VA · Member since 2019 · 1k+ posts · 799 votes
    5y

    @Daniella Steinberg I found that out after connecting with other investors who have purchased in that zip code. Obviously, the neighborhoods and rent change street by street from what I am gathering from the investors over there but this one definitely is a C. 

    0Reply
  • David Lutz
    Granada Hills, CA · Member since 2019 · 100 posts · 313 votes
    5y

    @Aj Parikh  Dude, stop telling roofstock that people are your referrals with out asking them, it's shady. Most people will say yes if you ask, but it's really poor form to do it without telling the other person.

    1Reply
  • Aj Parikh
    OP
    Rental Property Investor · Centreville, VA · Member since 2019 · 1k+ posts · 799 votes
    5y

    @David Lutz I am not sure what you are referring to but I thought you created an account using my link. See the email I got from Roofstock. If this is not you, then I apologize. I am not telling Roofstock without informing you. 

    0Reply
  • David Lutz
    Granada Hills, CA · Member since 2019 · 100 posts · 313 votes
    5y

    Something smells. That's me, but I set up my account with them and bought my first property back in 2020.  The first I saw your name was when you posted in another roofstock forum 2 months ago https://www.biggerpockets.com/....  Never heard of you before that. And I didn't give them your name. That was just after I bought my second house through them, and suddenly I'm getting a referral bonus when I buy my third now (I just entered escrow again).

    It turns out though that you can have roofstock add someone as your referral. My friend did forget to use my code when he set up his account, when we called they added it for us. Someone who isn't me clearly contacted them and said I had forgotten to include my referral code. I got a confirmation that looked just like that after we had it fixed.

    Like I said in the other forum. I'm all for getting a free $1,000. If you'd just asked if we could give it a shot I'd have said sure. It really rubs me the wrong way that you did it without asking.

    Maybe this is all some magical miss-understanding and it's a case of immaculate referral. If so I'll just say my thanks to the money gods. But strangely enough I don't think that's how it went down.

    1Reply
  • David Lutz
    Granada Hills, CA · Member since 2019 · 100 posts · 313 votes
    5y

    As a random side note to the folks on this forum. I will back up that Roofstock has been good to me. I've picked up three properties, all of them have been a lot more attractive than the MLS. You just need to know how to identify the value there, because there's a lot of crap as well. There are some holes in how they project rents and property values, so you can find deals that are a lot better then they look on the surface. I'm not going to post them all here, but if anyone wants details feel free to PM me.

    One thing I really like about them is that the transactional costs are legitimately waaaay lower than a traditional sale through realtors. It's not just the commission savings. They also have some sweet deals set up for escrow/title costs, etc.

    2Reply
  • Aj Parikh
    OP
    Rental Property Investor · Centreville, VA · Member since 2019 · 1k+ posts · 799 votes
    5y

    @David Lutz I am not sure what happened either. I just got this email from Roofstock that you created an account using my link. So I figured you used my link from my profile. Regardless, My intention was just to share this referral program and not to come in your way of business. 

    Congratulations on closing though!!! 

    0Reply
  • Aj Parikh
    OP
    Rental Property Investor · Centreville, VA · Member since 2019 · 1k+ posts · 799 votes
    5y

    Definitely agree with @David Lutz that there are a lot of crap properties on Roofstock and you need to still do your own due diligence. Especially in Memphis, TN, there's a lot of inventory in some not so good areas and the rents, rehab costs and list price is all wrong. So it's always good practice to get in touch with the local property manager to get an idea of the area and see if they even service it. 

    0Reply
  • Tyler Tapley
    Real Estate Agent · Memphis, TN. · Member since 2018 · 175 posts · 101 votes
    5y

    I have not been impressed lately with the quality of the properties on their platform...but that is also the same with what we are seeing in the MLS. Very lean times right now in terms of inventory.

    1Reply
  • David Lutz
    Granada Hills, CA · Member since 2019 · 100 posts · 313 votes
    5y

    @Tyler Tapley If you rewind 12 months I was seeing a lot of great opportunities on Roofstock without having to do any digging, They were just obvious good deals. I would agree with you that I'm not seeing those now - and that it's a universal challenge.

    That doesn't mean there aren't still good deals on Roofstock, though. I've gone into escrow on two with them in the last 3 months. One I had to negotiate a good price for with roofstock on a property they owned (they came $10K down their asking price and another $7K after inspection without any major issues besides upcoming capex). The other was just mispriced and worth a lot more than what it was listed for. In both cases it just took some extra work and market knowledge.

    0Reply
  • Aj Parikh
    OP
    Rental Property Investor · Centreville, VA · Member since 2019 · 1k+ posts · 799 votes
    5y

    @Tyler Tapley I agree. I have been primarily looking at properties that come up in Memphis, TN and they just seem over priced to me. But I have just been around for a year now, so I am still inexperienced as far as making a call on properties but definitely not what I was seeing back in July last year. 

    We should just pay @David Lutz to find us the deals. He sure knows what he is doing with Roofstock :) 

    0Reply
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