Roofstock Case Study

193 Replies

@Jason Gines - I have to say this has been informative. I have been reading, listening to podcasts and running numbers for awhile in anticipation of buying my first buy and hold single family rental, the profits are not always there on roofstock but run the numbers do diligence and see what numbers can make it work, sometimes it's about appreciation instead of cash flow, which alot of ppl will argue is not a good way to go but for a few it might be what they're looking for, Roofstock seems to be aware though that cash flow is more desired among b & h investors especially the bigger pockets crowd. One thing I've learned that although the metrics on Roofstock is impressive, I love their interface and ways to manipulate the numbers, the neighborhood ratings do not account for crime rates, I'm not faulting them, I believe Zach has said that in podcasts and props to him for so proactively keeping up on these forum threads. But something us new ppl want to take into account. Now if only a property I'm comfortable with would come along with decent enough numbers that I can bid on but not get outbid, and in a market I like (NC, GA, Austin, etc)  that would be grand... lol

Originally posted by @Jason Pennacchio :

@Jason Gines - I have to say this has been informative. I have been reading, listening to podcasts and running numbers for awhile in anticipation of buying my first buy and hold single family rental, the profits are not always there on roofstock but run the numbers do diligence and see what numbers can make it work, sometimes it's about appreciation instead of cash flow, which alot of ppl will argue is not a good way to go but for a few it might be what they're looking for, Roofstock seems to be aware though that cash flow is more desired among b & h investors especially the bigger pockets crowd. One thing I've learned that although the metrics on Roofstock is impressive, I love their interface and ways to manipulate the numbers, the neighborhood ratings do not account for crime rates, I'm not faulting them, I believe Zach has said that in podcasts and props to him for so proactively keeping up on these forum threads. But something us new ppl want to take into account. Now if only a property I'm comfortable with would come along with decent enough numbers that I can bid on but not get outbid, and in a market I like (NC, GA, Austin, etc)  that would be grand... lol

 Couldn't have said it better myself...

So a short update on the properties. Any repairs/rehab work required on the three properties have all been completed. The first Roofstock property located in Lithonia, GA has on time paying tenants and things are moving smoothly. The first property purchased using the property management company, Excalibur Homes, located in Canton, GA, also has on time paying tenants and things are moving smoothly. After closing the law firm who handled the closing had some sort of issue with the postal pickups which caused issues w/ payments being made to the insurance carrier and HOA from the closing disbursements, but that was ultimately resolved. The leases for Villa Rica and Canton are expiring this month, so back in the beginning of November I asked my property manager what the process was. She told me that they typically review leases 90 days out and give any recommendations on rent increases. Instead of giving me any recommendations they sent a proposed lease to the Villa Rica tenants last week without discussing any rent increases with me or even sending me a copy of the lease they sent them for review. The original lease from the prior owner had a built in rent increase. I've asked several times for a copy of the lease to review and nothing. Very poor communication on this front and I conveyed that to the property manager today that it was unacceptable. Also they didn't issue any payments to me in November. I think the property manager messed up some setting on the reserve amount which I need to talk to her about. On the purchasing new properties front, Roofstock pickings for Georgia have been slim to none these last few months. They just haven't been getting properties in. We did go into contract on a property in Loganville, GA last week through our agent but walked after the inspection report and contractors came back with estimates of over 25k in repairs when the property was expected to need very little work.

@Jason Gines   I have been to their Oakland main offices.. this is a for real company with funding and legs.. I am now recommending all my team members that I fund to use them to sell their properties so you will soon be seeing a lot more inventory at different price points and many with the higher % returns the BP members like to get.. I wanted to eye ball them in person before I recommended them.

the feedback I get from my vendors is that many of the brokering companies out there just don't do the follow up like roofstock does so I see them as a real competitor to the established turn key resale brokers that we all know..

@Jason Gines fantastic post! Thanks so much for taking the time to share your experience with the BP community. You give a fellow New Yorker confidence that buying your first rental property out of state can be done!

@Jason Gines , solid case study. This discussion is full of some gems. Overall, it seems like RoofStock's pro-forma financials have a decent amount of conservatism built in. 

Though it's probably too early to say with much certainty, could you comment on their forecast vs your actual results?

@Jason Gines - really appreciate the detailed review of your experience with Roofstock so far!

My wife and I are starting to look at buying our first rental property, and I had been looking at Roofstock, Home Union and Memphis Invest which I know you said you looked at as well. I was just curious if there was something in particular that led you to purchase a second property from Roofstock instead of Home Union or Memphis Invest.

Congrats on the purchases - love the mentality of saving your bonuses, refunds, etc to buy rental properties.

Originally posted by @Chris Barrett :

@Jason Gines - really appreciate the detailed review of your experience with Roofstock so far!

My wife and I are starting to look at buying our first rental property, and I had been looking at Roofstock, Home Union and Memphis Invest which I know you said you looked at as well. I was just curious if there was something in particular that led you to purchase a second property from Roofstock instead of Home Union or Memphis Invest.

We passed on Home Union because of the fees. Their listings are all MLS. It is significantly more cost effective to just use a local investor friendly real estate agent and property manager than to utilize Home Union. I believe Memphis Invest is Memphis only? I can be wrong about that but I don't recall them operating in GA and we weren't looking to do renovation projects. Whether through a local agent we are using or purchasing through Roofstock we do not want to have to put in more than 5k for renovations or rehab after purchase so turnkey providers where you buy wrecked properties and then rehab them is not our strategy.

Originally posted by @Jason Gines :

So a short update on the properties. Any repairs/rehab work required on the three properties have all been completed. The first Roofstock property located in Lithonia, GA has on time paying tenants and things are moving smoothly. The first property purchased using the property management company, Excalibur Homes, located in Canton, GA, also has on time paying tenants and things are moving smoothly. After closing the law firm who handled the closing had some sort of issue with the postal pickups which caused issues w/ payments being made to the insurance carrier and HOA from the closing disbursements, but that was ultimately resolved. The leases for Villa Rica and Canton are expiring this month, so back in the beginning of November I asked my property manager what the process was. She told me that they typically review leases 90 days out and give any recommendations on rent increases. Instead of giving me any recommendations they sent a proposed lease to the Villa Rica tenants last week without discussing any rent increases with me or even sending me a copy of the lease they sent them for review. The original lease from the prior owner had a built in rent increase. I've asked several times for a copy of the lease to review and nothing. Very poor communication on this front and I conveyed that to the property manager today that it was unacceptable. Also they didn't issue any payments to me in November. I think the property manager messed up some setting on the reserve amount which I need to talk to her about. On the purchasing new properties front, Roofstock pickings for Georgia have been slim to none these last few months. They just haven't been getting properties in. We did go into contract on a property in Loganville, GA last week through our agent but walked after the inspection report and contractors came back with estimates of over 25k in repairs when the property was expected to need very little work.

@Jason Gines , Was Loganville, GA property Roofstock certified ? 

Originally posted by @Naveen A. :
Originally posted by @Jason Gines:

So a short update on the properties. Any repairs/rehab work required on the three properties have all been completed. The first Roofstock property located in Lithonia, GA has on time paying tenants and things are moving smoothly. The first property purchased using the property management company, Excalibur Homes, located in Canton, GA, also has on time paying tenants and things are moving smoothly. After closing the law firm who handled the closing had some sort of issue with the postal pickups which caused issues w/ payments being made to the insurance carrier and HOA from the closing disbursements, but that was ultimately resolved. The leases for Villa Rica and Canton are expiring this month, so back in the beginning of November I asked my property manager what the process was. She told me that they typically review leases 90 days out and give any recommendations on rent increases. Instead of giving me any recommendations they sent a proposed lease to the Villa Rica tenants last week without discussing any rent increases with me or even sending me a copy of the lease they sent them for review. The original lease from the prior owner had a built in rent increase. I've asked several times for a copy of the lease to review and nothing. Very poor communication on this front and I conveyed that to the property manager today that it was unacceptable. Also they didn't issue any payments to me in November. I think the property manager messed up some setting on the reserve amount which I need to talk to her about. On the purchasing new properties front, Roofstock pickings for Georgia have been slim to none these last few months. They just haven't been getting properties in. We did go into contract on a property in Loganville, GA last week through our agent but walked after the inspection report and contractors came back with estimates of over 25k in repairs when the property was expected to need very little work.

@Jason Gines , Was Loganville, GA property Roofstock certified ? 

The Loganville property was through MLS, not roofstock.

Originally posted by @Jim Frye :

@Jason Gines, solid case study. This discussion is full of some gems. Overall, it seems like RoofStock's pro-forma financials have a decent amount of conservatism built in. 

Though it's probably too early to say with much certainty, could you comment on their forecast vs your actual results?

I'm very happy to date. I didn't rely on Roofstock's financials, but instead did the math myself to make sure the rents would cover the PITI, PM, and Maintenance and leave money left over to put towards future investments. There were no surprises except for the HOA for the Canton property going up $20 a month in January, though an HOA increasing fees should never be that big of a surprise. The tenants have all renewed their leases and have been paying on time. I'm all set to purchase a fourth property, just need to find the right one. We went into contract on two different properties since closing on our third property and both of those deals fell through due to abysmal inspections.

That's great to hear! I always run numbers myself. I feel like I'm not being TOOO conservative (5% vacancy, 8% repair, 5% cap ex) but the profit margins wind up to be very slim. Do you find your profits (after expenses) to be in line with your initial estimate? Less? More? Also I had a deal fall through after I got the inspection report back which hurt, $400 down the drain... has anyone found a way as an out of state investor to prevent this? Its hard to just get a feel from listings alone

Originally posted by @Jason Pennacchio :

That's great to hear! I always run numbers myself. I feel like I'm not being TOOO conservative (5% vacancy, 8% repair, 5% cap ex) but the profit margins wind up to be very slim. Do you find your profits (after expenses) to be in line with your initial estimate? Less? More? Also I had a deal fall through after I got the inspection report back which hurt, $400 down the drain... has anyone found a way as an out of state investor to prevent this? Its hard to just get a feel from listings alone

Unfortunately the cost of the inspections are just part of the cost of doing business.  In the end they save you the headache of buying a money pit.  The sad thing is that both properties that fell through, they looked fantastic on the listings and the pictures, with the second one my agent visited the property and told me everything looked great and would only need an HVAC tuneup, but then the inspection came back and everything under the sun, from severe structural issues, leaks, electrical issues, and even signs of rodent infestation, all things that you wouldn't necessarily notice unless you did a real detailed inspection and not just a cursory walk through.  

Jason, thanks for detailed review on Roofstock. This is very helpful. My question is about the electrical issues that were identified during second inspection. Not sure if I missed this in the article but how were these issues resolved? Did they end up to be seller's responsibility or yours? Did you get any further discounts for that? Thanks again.

Originally posted by @Balagardash Sultanov :

Jason, thanks for detailed review on Roofstock. This is very helpful. My question is about the electrical issues that were identified during second inspection. Not sure if I missed this in the article but how were these issues resolved? Did they end up to be seller's responsibility or yours? Did you get any further discounts for that? Thanks again.

 I discuss it somewhere on this thread.  The electrical issues were found by the appraiser.  Roofstock paid for a second inspection to review the electrical issue and provide a recommendation.  The recommendation was to replace either all or some of the electrical outlets (I cannot recall off the top of my head).  After closing I went ahead and had an electrician replace those outlets at my own expense. 

Originally posted by @Jason Gines :
Originally posted by @Balagardash Sultanov:

Jason, thanks for detailed review on Roofstock. This is very helpful. My question is about the electrical issues that were identified during second inspection. Not sure if I missed this in the article but how were these issues resolved? Did they end up to be seller's responsibility or yours? Did you get any further discounts for that? Thanks again.

 I discuss it somewhere on this thread.  The electrical issues were found by the appraiser.  Roofstock paid for a second inspection to review the electrical issue and provide a recommendation.  The recommendation was to replace either all or some of the electrical outlets (I cannot recall off the top of my head).  After closing I went ahead and had an electrician replace those outlets at my own expense. 

 Thanks. Yes you did mention all those in the original post except the part that you fixed them at your own expense I think. If you don't mind me asking, how much did those fixes ended up costing? Did you have to tear up any walls? Did you have a chance at that point to back away since these were issues that weren't identified when you started the process?

Originally posted by @Balagardash Sultanov :
Originally posted by @Jason Gines:
Originally posted by @Balagardash Sultanov:

Jason, thanks for detailed review on Roofstock. This is very helpful. My question is about the electrical issues that were identified during second inspection. Not sure if I missed this in the article but how were these issues resolved? Did they end up to be seller's responsibility or yours? Did you get any further discounts for that? Thanks again.

 I discuss it somewhere on this thread.  The electrical issues were found by the appraiser.  Roofstock paid for a second inspection to review the electrical issue and provide a recommendation.  The recommendation was to replace either all or some of the electrical outlets (I cannot recall off the top of my head).  After closing I went ahead and had an electrician replace those outlets at my own expense. 

 Thanks. Yes you did mention all those in the original post except the part that you fixed them at your own expense I think. If you don't mind me asking, how much did those fixes ended up costing? Did you have to tear up any walls? Did you have a chance at that point to back away since these were issues that weren't identified when you started the process?

 $225.  Did not have to open up any walls.  There is no inspection contingency when purchasing a recently pre-inspected Roofstock listing.

Originally posted by @Jason Gines :
Originally posted by @Balagardash Sultanov:
Originally posted by @Jason Gines:
Originally posted by @Balagardash Sultanov:

Jason, thanks for detailed review on Roofstock. This is very helpful. My question is about the electrical issues that were identified during second inspection. Not sure if I missed this in the article but how were these issues resolved? Did they end up to be seller's responsibility or yours? Did you get any further discounts for that? Thanks again.

 I discuss it somewhere on this thread.  The electrical issues were found by the appraiser.  Roofstock paid for a second inspection to review the electrical issue and provide a recommendation.  The recommendation was to replace either all or some of the electrical outlets (I cannot recall off the top of my head).  After closing I went ahead and had an electrician replace those outlets at my own expense. 

 Thanks. Yes you did mention all those in the original post except the part that you fixed them at your own expense I think. If you don't mind me asking, how much did those fixes ended up costing? Did you have to tear up any walls? Did you have a chance at that point to back away since these were issues that weren't identified when you started the process?

 $225.  Did not have to open up any walls.  There is no inspection contingency when purchasing a recently pre-inspected Roofstock listing.

 Great!!! Thanks for all the detailed information.

Originally posted by @Balagardash Sultanov :
Originally posted by @Jason Gines:
Originally posted by @Balagardash Sultanov:
Originally posted by @Jason Gines:
Originally posted by @Balagardash Sultanov:

Jason, thanks for detailed review on Roofstock. This is very helpful. My question is about the electrical issues that were identified during second inspection. Not sure if I missed this in the article but how were these issues resolved? Did they end up to be seller's responsibility or yours? Did you get any further discounts for that? Thanks again.

 I discuss it somewhere on this thread.  The electrical issues were found by the appraiser.  Roofstock paid for a second inspection to review the electrical issue and provide a recommendation.  The recommendation was to replace either all or some of the electrical outlets (I cannot recall off the top of my head).  After closing I went ahead and had an electrician replace those outlets at my own expense. 

 Thanks. Yes you did mention all those in the original post except the part that you fixed them at your own expense I think. If you don't mind me asking, how much did those fixes ended up costing? Did you have to tear up any walls? Did you have a chance at that point to back away since these were issues that weren't identified when you started the process?

 $225.  Did not have to open up any walls.  There is no inspection contingency when purchasing a recently pre-inspected Roofstock listing.

 Great!!! Thanks for all the detailed information.

Glad I could help. That had been the only issue I had w/ respect to Roofstock. The second property went forward with no issues and now we are in the process of purchasing a fourth SFH, our third through Roofstock. I highly recommend them if considering purchasing out of state. I had grown frustrated after a couple of properties we entered into contract on outside of Roofstock fell through after failed inspections. Roofstock can add some cost to the purchase of a property (market place fee and no seller credits), but the ease of purchasing a property through them makes up for the added cost. We are still actively looking for properties through our agent outside of Roofstock, but Roofstock can definitely be a very beneficial tool for building a portfolio.

Originally posted by @Jason Gines :
Originally posted by @Balagardash Sultanov:
Originally posted by @Jason Gines:
Originally posted by @Balagardash Sultanov:
Originally posted by @Jason Gines:
Originally posted by @Balagardash Sultanov:

Jason, thanks for detailed review on Roofstock. This is very helpful. My question is about the electrical issues that were identified during second inspection. Not sure if I missed this in the article but how were these issues resolved? Did they end up to be seller's responsibility or yours? Did you get any further discounts for that? Thanks again.

 I discuss it somewhere on this thread.  The electrical issues were found by the appraiser.  Roofstock paid for a second inspection to review the electrical issue and provide a recommendation.  The recommendation was to replace either all or some of the electrical outlets (I cannot recall off the top of my head).  After closing I went ahead and had an electrician replace those outlets at my own expense. 

 Thanks. Yes you did mention all those in the original post except the part that you fixed them at your own expense I think. If you don't mind me asking, how much did those fixes ended up costing? Did you have to tear up any walls? Did you have a chance at that point to back away since these were issues that weren't identified when you started the process?

 $225.  Did not have to open up any walls.  There is no inspection contingency when purchasing a recently pre-inspected Roofstock listing.

 Great!!! Thanks for all the detailed information.

Glad I could help. That had been the only issue I had w/ respect to Roofstock. The second property went forward with no issues and now we are in the process of purchasing a fourth SFH, our third through Roofstock. I highly recommend them if considering purchasing out of state. I had grown frustrated after a couple of properties we entered into contract on outside of Roofstock fell through after failed inspections. Roofstock can add some cost to the purchase of a property (market place fee and no seller credits), but the ease of purchasing a property through them makes up for the added cost. We are still actively looking for properties through our agent outside of Roofstock, but Roofstock can definitely be a very beneficial tool for building a portfolio.

 I completely agree. Definitely see a great value on Roofstock. I was briefly in touch with them and saw how responsive, customer oriented and professional they are. Just wanted to find some actual customers and see their experiences where your article came in as a great help. Will definitely look into purchasing an investment property with them. Thanks for your help.

Thanks for this detailed review! I currently own a few property rentals locally, but have been considering roofstock for some out of state rentals. I have some questions (and they might be silly, so bear with me.

1. How far in the process does roofstock stay involved? If you're having issues a year or two down the road, will they help?

2. I have never dealt with a property manager. When issues arise, like maintenance or emergency issues that need fixed right away, do you have some kind of fund they pull it from? Do they always contact you for approval? 

3. Is the property management completely hands off, as in they take care of everything?

4. Why do I see properties on rootstock that have late rent listed? Are these tenets no good? Why would anyone want to deal with that?

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