Roofstock or morris invest?

47 Replies

Hello. I have recently been looking at properties through Roofstock.com or morris invest?Can any investors give me some feedback on your experiences with them and the acquisition process. I know they are a bit different in business models but it looks like both companies do a good job of streamlining the buying process for out of state investors which intrigues me. I want to make sure that people have had good experiences with the property management companies they have in place! Any feedback is greatly appreciated.

I haven't heard anything about Roofstock but I have heard good things about Morris Invest.

@Jeff Hallenbeck , I wrote a case study on Roofstock and I believe there has been at least three done on Morris Invest as well as countless other posts on them.  Do a search on Bigger Pockets, you should get a tremendous amount of material that will aid you in making a decision.

I need to check out roofstock. never heard of them. Are they exclusively Indianapolis areas? I 've been talking to Morris Invest currently. There has to be a lot of trust there because when they get properties, they sell fast to buyers. Therefore the pictures you receive are run down but the trust is that they have vetted out everything in advance so the closing price is after it's all fixed up. However, the way I understand it is that you do not know the full rehab work until closing and there is at least a 6-10 week wait time for rehabs to be completed. Their value is that you trust their teams that the major rehab work takes care of all major stuff of a home for the next 10-15 years. But again, you get the rehab details at closing from my understanding. Which is after you agree and wire a 3rd of your money to them to get going. I'm personally not sure if their deals are so far over the top great for me to wait or have that much trust. My thought is that I pay 10k more and know for sure what I get.....IDK yet. If I am wrong here from anyone's experience...please reply. Morris Invest does seem very solid and reputable.
I'd check out the free turnkey review site by one of the most experienced investors on BP. Google it and you will see. From what I've seen on BP you should check out Spartan and Memphis Invest if you're looking for turnkey providers.

Disclosure: Turnkey Provider

Originally posted by @Jeff Hallenbeck :

Hello. I have recently been looking at properties through Roofstock.com or morris invest?Can any investors give me some feedback on your experiences with them and the acquisition process. I know they are a bit different in business models but it looks like both companies do a good job of streamlining the buying process for out of state investors which intrigues me. I want to make sure that people have had good experiences with the property management companies they have in place! Any feedback is greatly appreciated.

 I have received very limited information about both of these. I always suggest the same thing, do your research! You want to make sure you are prepared before you invest. Always make sure the Turnkey Company is a true turnkey company and they are not just it in name. They should own, renovate, and manage the property all in house and not use any third parties (that includes management)

Maybe check out:

The Best Types of Markets for Profitable Turnkey Properties

and

What to Ask When Working With a Turnkey Provider

Using Roofstock, a friend bought a 68k property in Atlanta. So far so good. There were quite a few low cost (sometimes all cash), high cap properties earlier this year but these seem to have pretty much vanished. 

@Jeff Hallenbeck Those are both very white glove, quality services. The inherent truth about that is that you do pay a little bit more to have the work done for you, the property pre-vetted, etc...

My biggest recommendation would be to have your own pro-forma and run their numbers against yours like such:

1. Make sure the value of the property is correct. Look for nearby comparable sales online to verify.

2. Make sure the rents they are advertising are rents that could be had without a long vacancy period when it comes time to renew the lease. Try using rentometer.com to do so, or look at other property listed for rent nearby.

3. Verify the property taxes. See what % you're taxed at as a non-owner occupant in that area and confirm the tax assessed value so you can subtract this from your monthly rents. 

4. Make sure the management cost is factored it. I often see TK companies offer "1st year of management free"- a very clever way of removing the management fee from their 1 year pro-forma which temporarily boosts your ROI. After 1 year passes, now you're paying that fee. That reflects your ROI.

5. Cost of insurance. It's usually cheap, but make sure it's included at accurate.

6. Is there a maintenance/cap ex reserve? I usually use 10% for a property in excellent condition, 15% for one that isn't "brand new" for the most part.

7. Is there a vacancy reserve? 5% to 8% depending on the quality of neighborhood, quality of your property, and rental demand in that market. Also, rent being priced right plays a big role in this. Some providers will place a tenant who pays too much to show you a better pro-forma, but this results in (usually) a crappy tenant and higher vacancy since the property is above market rental value.

Those are the major considerations I would factor in when making a purchase decision from a turnkey service!

there is no comparison in the business models. Roofstock is a Brokerage on Steriods..

Morris from the product I see them try to sell .. is moving D class to maybe C class low end rentals.

Roofstock is working for owners and working on small reasonable fee's  Morris is making bigger mark ups that are not disclosed , which is OK no flipper discloses what they are making.

But the two models could not be farther apart..

I just spent the day last week at Roofstock headquarters.. this is a game changer company.. Pretty cool really and run by very experienced real estate folks.. Morris is a tech guy running on internet fame LOL not real estate experience.. and those buying his low end product no doubt will under stand the difference's over time in buy  A and B class ( most of Roofstock) to buying D and maybe C  ( most of Morris).

@Jay Hinrichs , thanks for the feedback...i definitely believe that Roofstock's platform is going to be a game changer as well. Their growth into new markets is really what is intriguing to me.  Out of state investing is something i am leaning toward more and more since Washington State is becoming incredibly expensive. I love all the detail insights on markets, neighborhoods  and analytical information as well as the streamlined buying/management process that Roofstock seems to provide...definitely a company i will be looking into as in the near future.

@Jeff Hallenbeck   Keep in mind that Roofstock is pretty cutting edge in the brokerage of investment properties.. its still up to you to pick the right ones.. and what Roofstock does is allows compared to say Morris..is you get to search multiple markets and multiple price points and qualifty of assets.. as to opposed to what Morris is selling which is only their own inventory.. 

however at the end of the day does not matter who you buy from through or use as a broker. you need to vette the deals and make sure as an OOS investor your buying something that is appropriate and mitigate management risks which are quite real in the low end low price assets.. ESPECIALLY anything under 50k in most of the big mid western market places.

Just think of it logically... price has a direct correlation to the quality of the neighborhood and it changes a bunch when you go from 35 to 50k and jump up to 65 to 75k.. as strange as that would sound to us West coast folks .. but its reality in those markets.

@Jay Hinrichs really nailed some thoughts that I have as well. Vette your deals yourself, if for nothing but practice and mistakes cost $$$!

@Jeff Hallenbeck @Marty Summers I am actually having RS sell my turnkey properties. They seem to have a lot of marketing behind them and their customers are unsophisticated turnkey buyers. Yup there is a reason they are selling mine.

So here is he deal you can get a broker and do it on your own. But at what costs.

@lane kawaoka...Can I ask why are you selling them?

@Jeff Hallenbeck - Neither.  Companies like Roofstock are MARKETING companies.  They peddle TK's for others that have done the work, and take a hefty markup for that.  If you look at the Cap rates on their properties, that markup will be very evident.  Re Morris Invest (or any other TK), find one that does their own work (is not a sales arm for someone else), who you can trust, and get good deals from.  Develop a solid working relationship with them...make sure they are a good fit for the kinds of properties you're looking for, and get after it.

@Jeff Schechter thanks for the response and wisdom...i looked on your website and i will be subscribing to your podcast...how do you feel your company is different from other TK companies...the Indianapolis market interests me in terms of passive income opportunities...the Puget sound has been a great market for us to buy a couple homes as far as appreciation but i would like to explore a more passive rental portfolio in a more affordable market. The thing that concerns me most is obviously...owning from out of state...so I really want to look at a company that can help assist with this process.

@Jeff Schechter   Roof stock does not take huge mark ups in fact its the complete opposite.. they are the most cost effective marketing company out there..

they are going to be game changers in that space for sure.

out of state regardless of who you buy from squarely rests in the price point in a given metro area.

the issue with Morris is they are selling low end or cheapest homes in  the MSA.. these are the toughest to run and manage over time and especially for OOS folks.

and in Indy particularly low end duplex's which look fantastic on paper are fraught with tenant issues as well I have had many of my clients beg and plead to sell those things.

if you get into the 75 to 125k SFR space in Indy and or over in Bates or fountain square.. your doing pretty good in Indy as well as outside the belt way.. inner city 40k TK are HIGHLY risky for OOS investors.. experience dictates that.. why else would homes be that price if they were so sought after the locals would snap them all up.. the locals don't and wont out of state do because they know no better and are sold a line of sales pitch.. from many all over the country.. its the same if you go into Frazier in Memphis or WEst Jackson or Ferguson etc etc.

AS for our friend that lives in Puget sound if they think their WEst coast tenant experinces can be duplicated at the 40k to 50k range in the mid west they are going to have a stiff learning curve to go through.

It seems like both companies have been heavily advertising their services, especially on social media. 

@Jay Hinrichs Do you know if roof stock charges TK companies as well for their listing? Looks like they charge 0.5% to the buyer if a bid is won. 

What other reputable brokerage/marketing companies have you seen out there? 

@Lane Kawaoka - Will wait for your updates  down the road. Unfortunately Broker or yourself  don't have buyers pool buying  digital or paper. Your agent brings second or third prospective buyer to your house for showing , tenant will leave next month and rest is a history.

You can't sell same property at half the price that dream merchants can sell at 20-30% premium. Bottom line, it goes back to same pool where it came from.

Good Luck

Vivek

@Lane Kawaoka why are you selling your TKs? Weren't you championing this business model to other BP members?

Is it not "simple passive cash flow" as you originally thought? Not trolling, just curious.

@Jay Hinrichs Curious to know more about Roofstock's model.  If they charge $5500 for their services, how is that not a markup?  From the standpoint of $40-70K products in Indy, we're crushing it.  In EVERY case, that's been due to 1) Proper rehab, which gets a good tenant.  2) Awesome management, which keeps a good tenant.  I live here in Indy, and the locals ARE buying these properties.  They're getting harder and harder to come by.  And yes, Fountain Square / Bates Hendricks are great, but already WAY overpriced comparatively.  It's difficult to get any real rental cash flow in those areas, so it's just filled with flippers.

@Jeff Schechter My Wife and I have about 30-50K in capital to start this SFR passive income model. We live in Newburgh, IN. I am so confused which way to get started. WITH ABSOLUTELY NO DEBT NOW! Yahhhh!!! I wasn't born with a silver spoon in my mouth like other friends I know that had their first home given to them by their parents....... We own TWO homes and primary and one my son lives in. We want to replace our coporate job income quickly..... ;)

1.) I am looking through the MLS for local properties and can't seem to make sense of a good buy.

2.) I can't seem to get over the properties I think are decent buys but are in bad areas.  Or the property is priced low but needs tons or rehab.  I don't have those skill as in understanding what it costs with contractors. I am not one to swing a hammer.....yet.

3.) I am researching buying off the MLS on a higher priced home 80-90k so that we feel comfortable that the asset is sellable in the future and I can get higher rent and people will more likely to pay each month.

4.) I can't seem to take the plunge.  I am researching Alpine Turnkey properties in Indianapolis.. and going to their bus tour tomorrow.  

5.) SO much confusion for me to to get started and understand which direction we want to go. SFR? Duplex? Leverage 50% down on 50K? Turnkey or do it myself? MLS of find a home for sale by owner?

6.)  I have tried to network locally, these guys down here do not seem to care to follow up. 

Any help is appreciated.... I am a little overwhelmed right now.  It seems that the Real-Estate market is peaking.  I am scared to death of that!!!  Everyone and their brother is jumping into this now AGAIN like 2006.  Either people have lots of cash laying around or they are getting financing real easy from the banks.   Just don't want to get burned.  That is the reason I want to have less leverage as possible.

Thanks,

-Marty

@Jeff Schechter   not sure where your getting your info but Roofstock does not charge a flat fee.  the other marketing companies all do though your correct and the average commish to them is 6k a door these days is what I am seeing on the HUDs..

and I know the 40k to 60k market is hot.. Aaron has been doing it since I started funding him back in the mid 2000's.. its just a much tougher tenant base and so on and so forth.. NO ONE can convince me otherwise.. its OK for locals who are there.. but OOS folks get hammered I KNOW I FUND this stuff and have been for 20 years majority of the sellers are some CA LLC... with a sprinkle of foreigners and maybe a few locals.. these are failed landlords.. so someone is getting hosed .. And of course your crushing it.. your selling them and pocketing flipper profits.. I see those all day long too its a great bizzness that's why I fund them.. I am crushing it too... :) I just worry about these west coast folks buying one 40k rental in the mid west not really understanding the tenant demographic etc.. now Granted INdy is safer than say a 40k rental in Memphis that I agree with .. but its just a degree of safety . Many of the west coast folks simply can't compute how this tenant class lives and works..

You can hit 1% rule in Bates no problem my guys have done a bunch of them. .

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