Roofstock Case Study (Summer 2018)
I purchased a SFH from Roofstock in August 2018. I did my own research, but the feedback from BP members who shared their previous experiences with the company informed me about what to expect and helped me greatly to prepare properly. I'd like to add my experience as well to help give back. I did not keep as detailed notes as some who have gone before, but I will do my best! I also know Roofstock reps come through these forums every now and then, so hopefully it will help them improve their service. Overall, there were no significant bumps in the road, bait-and-switches or any other mega-surprises, so I'd say it went pretty smoothly for an internet purchase of an out-of-state house that I had never actually seen.
THE HOUSE
2-bed 2-bath 1157 sq ft. townhouse in Memphis, TN
Rehab needs: dated interior, old roof, stairs to attic need to be replaced, shabby landscape, weathered siding, about 2 years left on HVAC
Tenant: on a 2-yr lease, ledger showed they had paid on-time every time for a little over a year.
This is my 3rd investment property (my 2nd LTR along with 1 STR), and my first out-of-state.
THE NUMBERS
Asking Price: 85,000
Sale Price: 83,800
Rent: $850
PM: 8%
Conventional financing 25% down @ 4.75%
After I ran my numbers, I don't know if I considered this a really good deal, or a really good deal...for Roofstock. Either way, almost nothing on Roofstock fits my numbers criteria, so the fact that this one did, and from what I could tell on Google Maps was in a decent part of Memphis, I bid on it. My numbers would have still been fine if I had gone higher, but I wasn't dying to have this property so I came in a little under the ask price. I was surprised when I received notice that my offer had been accepted.
THE PROCESS
If I'm being fair and honest, working with the Roofstock representative was cumbersome and a bit annoying. I feel the reason this deal got done in the end was my mortgage company did a lot of legwork for me and kept everyone else moving along. The fact that I thought I may be partially insane for buying an out-of-state property off the internet that I had never seen first-hand may have caused my annoyance threshold to be lower than normal, but here are a couple of reasons why I have lukewarm memories about working with the Roofstock rep:
- Immediately after your purchase goes through on the website, it asks you to fill out basic questions like what your plans are for insurance, funding, and property management. When I received a call from my rep, she asked me these questions all over again. Considering this was my first interaction with her, it was disconcerting that she was not informed. Where did my previous answers go? Was she supposed to have read them before contacting me? Does the left hand not know what the right hand is doing? Is this how the entire process is going to go? This whole thing is going to crash and burn, isn't it?!?!?
- Later on, I received further correspondence from her saying that she was going to link me with some insurance companies so I could get a quote (or something like that). The problem is that in the questionnaire, I said that I would be using my own insurance rep, and then I told her again on the phone when she called and asked me the question for the second time as well. Yet, right after that, she tells me she will get me the insurance referrals I asked for. Huh? Similarly, in the questionnaire, I said that I didn't need a lending referral and I was going to stick with the PM that was already attached to the property...yet, she kept asking me these things or forgetting what I had told her--inconsequential in the end, but annoying and unsettling.
Pleasant/Unpleasant Surprises
- Pleasant Surprise: It turns out the roof that I thought would eventually need to be replaced had actually already been replaced.
- Unpleasant Surprise: The listing said there was not an HOA. It turned out there is an HOA which affects my monthly bottom line. I brought this up to Roofstock who informed me in their generic legalese that they don't guarantee the information on the website and that the buyer must do their own diligence. A convenient catch-all that protects them from anything--how great for them. I don't think I was wrong to expect them to have correct something as basic as "Is there an HOA?" The response was off-putting but not a deal-breaker considering the new roof was a big money-saver.
The Closing and Onward
- The Closing was arranged by the mortgage company via a mobile notary. All went smoothly, and I ended up closing in the middle of August, about 25 days from when my offer was accepted.
- A few weeks after closing, I received a T-shirt in the mail from Roofstock thanking me for my $83000 purchase. The T-shirt was more likely to fit my 11-year old niece than a grown man, so I will be sure to send those middle-school real estate investors Roofstock's way.
- The property management has been fine--a little underwhelming--but that has nothing to do with Roofstock. I have been paid on-time for the 3 months since I closed, so that is clearly the most important part.
- In early November 2018, I made a trip to Memphis to "touch" the property and make sure it existed. (It does.) I was beyond relieved to find that my neighborhood research online aligned with what I saw in-person.
- I used the Roofstock portal throughout my purchase to reference the diligence vault materials, yet since the purchase, I have not been able to figure out how to access it again. I hope it wasn't deleted.
Of the Roofstock case studies I've seen on BP, mine would definitely be categorized as a net-positive experience. I've seen some other ones that I am relieved that the troubles they had did not happen to me, and almost dissuaded me enough to not pull the trigger on this purchase. It seems sometimes the troubles are caused by the buyer's misunderstanding of what Roofstock is (a marketplace) and what it isn't (a turnkey company), but sometimes they are things that seem to be no fault of the buyer.
I probably left out a lot of useful information, so if I did, whoops. If anyone has any questions about my experience with this purchase, or if I can help you while you are deciding, please let me know.