Roofstock Case Study

184 Replies

Originally posted by @Jason Pennacchio :

@Jason Gines makes another great point, you're paying a slight premium at times to have pre-vetted, pre-inspected (although at times questionable inspections), pre-researched homes. When I switched from roofstock to a property manager/agent I had one inspection come back horrendous and you have to really think in a tight margin environment how many times can you afford to spend $300-$400 just to find a home is not doable. Unfortunately the way to get around this as an out-of-state investor is to have a property manager do a walkthrough who is knowledgeable in eyeballing major issues, (structure, roof, hvac, electrical) so you can have a general idea as to whether to continue on to the inspection or run the other way. I bid on a home which the agent visited and said don't even bother, unless the seller wants to drop 20% of their asking or so off the bat. (ALWAYS have a due diligence clause), (most sellers know what shape their property is in and most likely won't come down in a competitive market unless they're old listings or repeatedly failing inspections).

@Kevin Charles I think you have the right idea but I will say this to you in no offensive manner, "you and everybody else". Roofstock definitely gives you an idea what's going on but any homes that look like a deal are being viewed by hundreds/thousands (assuming). To get an edge and find a true deal you're going to have to put some sweat-equity into researching homes more in depth and run your own numbers/analysis. When YOU see it as a deal and Roofstock doesn't give that impression you're more likely to get a good price. (Ex. Roofstock has a home listed as "2 star", 5% cap, ok neighborhood, but ur personal research reveals its actually 3 star, 7 cap, good neighborhood). I personally will reiterate the need to know the market where you're looking. Using general filter isn't good enough, you need to learn the neighborhoods and even streets if you can so you know what you're bidding on. You can do this from out-of-state with some extra effort, lots of it.

Couldn’t agree with you more @Jason Pennacchio. Thanks for the message and advice. There definitely are deals that are gone within a day. You also have to do your own due diligence because sometimes the numbers Roofstock uses may not be accurate and that 8 cap is really a 6. I guess my question for you and  @Jason Ginesis is more if do you wait patiently for those houses that fit that ideal criteria and make an offer immediately, focus on finding the coals that really are diamonds like the 2 star 5 caps that are really 3 star 7 caps as you mention, or focus on higher risk for higher returns? 

Originally posted by @Kevin Charles :
Originally posted by @Jason Pennacchio:

@Jason Gines makes another great point, you're paying a slight premium at times to have pre-vetted, pre-inspected (although at times questionable inspections), pre-researched homes. When I switched from roofstock to a property manager/agent I had one inspection come back horrendous and you have to really think in a tight margin environment how many times can you afford to spend $300-$400 just to find a home is not doable. Unfortunately the way to get around this as an out-of-state investor is to have a property manager do a walkthrough who is knowledgeable in eyeballing major issues, (structure, roof, hvac, electrical) so you can have a general idea as to whether to continue on to the inspection or run the other way. I bid on a home which the agent visited and said don't even bother, unless the seller wants to drop 20% of their asking or so off the bat. (ALWAYS have a due diligence clause), (most sellers know what shape their property is in and most likely won't come down in a competitive market unless they're old listings or repeatedly failing inspections).

@Kevin Charles I think you have the right idea but I will say this to you in no offensive manner, "you and everybody else". Roofstock definitely gives you an idea what's going on but any homes that look like a deal are being viewed by hundreds/thousands (assuming). To get an edge and find a true deal you're going to have to put some sweat-equity into researching homes more in depth and run your own numbers/analysis. When YOU see it as a deal and Roofstock doesn't give that impression you're more likely to get a good price. (Ex. Roofstock has a home listed as "2 star", 5% cap, ok neighborhood, but ur personal research reveals its actually 3 star, 7 cap, good neighborhood). I personally will reiterate the need to know the market where you're looking. Using general filter isn't good enough, you need to learn the neighborhoods and even streets if you can so you know what you're bidding on. You can do this from out-of-state with some extra effort, lots of it.

Couldn’t agree with you more @Jason Pennacchio. Thanks for the message and advice. There definitely are deals that are gone within a day. You also have to do your own due diligence because sometimes the numbers Roofstock uses may not be accurate and that 8 cap is really a 6. I guess my question for you and  @Jason Ginesis is more if do you wait patiently for those houses that fit that ideal criteria and make an offer immediately, focus on finding the coals that really are diamonds like the 2 star 5 caps that are really 3 star 7 caps as you mention, or focus on higher risk for higher returns? 

Every market is different and you have to know the market. What your long term investment strategy is also is very relevant. With the Atlanta Metro Market for SFH I'm looking at areas where there is appreciation in property value and rent and where I can cash flow 100-300 a month after all expenses with the intention of keeping that property until the day I keel over and die. So over time rent will increase and as should cash flow and over even more time mortgages will pay themselves off and cash flow will skyrocket and maybe with the appreciation I could sell a few to pay off others. Right now we are just in savings mode to purchase our next investment, hopefully later this year or early next. It takes time to save the down payments and in the mean time I am on sites like Roofstock and Zillow every day saving properties that would interest me so I can keep track of current price trends. We aren't sure right now if we want to pick up another SFH, duplex, or go bigger with a quad. Each having their pros and cons and different analysis. Everyone's number analysis should be tailored to their own needs. If the numbers aren't working then you might have to look at different markets. After you've bought a few properties in a market though you should know your numbers. You should know how much YOUR PM charges you (not a guestimate Roofstock or someone else is giving you), you should know approximately what YOUR insurance carrier will charge you for a premium, and you will know how much YOU plan on putting towards reserves. Just remember none of this is a get rich quick endeavor and will take many many years of slowly building a portfolio. If you want more bang for your buck you can always buy distressed properties and fix them up yourself. But if you are buying properties in very good shape in decent neighborhoods in hot markets your margins are going to likely be tight.

Disclosure: I am a Roofstock employee

@Jason Gines thanks for sharing this super in-depth account of your experience investing through Roofstock! Appreciate you being transparent about what you liked and what you thought could be improved. By the way, read your comments regarding tax rates being set a little too high. We typically try to be as conservative as possible with cost estimates to make sure we're not over promising/under delivering returns to potential investors. I think every investor should also run their own numbers too, just to see what that looks like as well. But on the product side, tax estimates is something our data science and underwriting teams continue to refine as we process more transactions in each market.

@Jason Gines

My PM ask me to fill out W9.I have no LLC yet.

so I am not sure How PM will handle my SSN on W9.I will ask W9 from them too.

1) How did you do with W9?

I choose realprotect for my rental insurance.

2) How you choose lower or higher deductible for your first property?

Thanks inadvance

Thiri

Originally posted by @Hnin Thiri :

@Jason Gines

My PM ask me to fill out W9.I have no LLC yet.

so I am not sure How PM will handle my SSN on W9.I will ask W9 from them too.

1) How did you do with W9?

I choose realprotect for my rental insurance.

2) How you choose lower or higher deductible for your first property?

Thanks inadvance

Thiri

I did not form an LLC. I have insurance and then an umbrella policy. So properties are in personal name and property management tax documents are in my personal name and social. I chose the lower deductible for insurance for all five properties. It is based on your comfort with varying levels of exposure.

 

Originally posted by @Antonio Cucciniello :

@Jason Gines Thanks so much for this, being in NYC I am looking to take my money elsewhere for cashflow.  I came across Roofstock and was skeptical.  Any update on how you feel abiut

I'm very happy with the properties.  Last year around this time on this thread I posted the numbers for each property owned for at least a full year.  As I prepare my documents for taxes I will do the same and do a side by side with the 2018 numbers so everyone can see for themselves the results, just laying out the numbers without any opinion mixed in.  So that should be up here probably sometime in February.  

 

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