Roofstock review. NEWBIES BEWARE!!

151 Replies

Disclosure: I am an employee of Roofstock

@JC Wu  We’re sorry to hear that there was an issue with the property that you feel the seller failed to disclose. Our goal is to bring transparency to the investment process, which is why we provide as much upfront diligence as possible for each property on the website. I understand our team has worked extensively with you in the past and reached a mutually agreeable solution, but if things have changed, we encourage you to reach out to us directly. We are committed to ensuring a positive experience for all of our customers

@Zach Evanish  

The only thing that has changed on my part is I gave up bugging Roofstock about holding that shady Jacksonville PM company accountable, after learning that Roofstock had no interest in dealing with the matter.

I’ve honored whatever mutually agreeable solutions we had reached in the past. Those were separate issues from what’s being disclosed here.

It’s impossible to prove with 100% certainty that the seller intentionally concealed the unpermitted work - I’m not inside his head. It was also impossible to know exactly what other work was unpermitted besides the roof unless I had invasive things done to the property.

I presented plenty of hard evidence when I brought the PM issue to Roofstock’s attention and Roofstock denied responsibility. There wasn’t nearly as much hard evidence for the permitting issue, so I deduced that Roofstock would again brush me off.

I honestly don’t know where to start or what to say. But if there’s anything on your mind that you’d like to discuss, please feel free to reach out to me. Don't call. 



Originally posted by @Elliott Elkhoury :

@JC Wu I'm pretty sure any good inspector warranties the results they give for some period of time- usually 90 days is what I see. So even if roofstock picks an inspection company that is a bit less detailed than the best, I would imagine they still abide by this standard.

Now I have no idea what this kind of warranty would be like in the event you have to use it. Is it covered by some bonding or insurance the inspection company holds? If so, I would recommend the buyer do their due diligence on the limitations of the inspection company's insurance policies.  Maybe the inspection company uses a 3rd party warranty service. I would seek to understand this if you're really being nitpicky.

Inspection companies may not be obligated or qualified to tell you that a property has possible code violations- they may just report what they see. 

It's important that the investor take responsibility for possessing the knowledge to make sound purchase decisions without relying on the opinion of other parties. Instead, the investor should use the information provided by other parties to formulate their own opinion. Know the major risk factors for the type of opportunity you are pursuing, and the minor ones. Focus more effort on making sure the major factors aren't present, and worry less about the little stuff. Don't be the nitpicky investor that asks a million questions about a few missing GFCI outlets and asks for credits over them- nobody will want to work with that kind of buyer. 

We all should understand that investing in real estate has inherent risk that can be REDUCED but not completely eliminated, like any other type of investment. I think this is something the very detailed new investor struggles with often.

I am dealing with a rot repair right now that their warranty is only for 14 days! The inspector missed improper deck flashing and studs missing (not like they weren't installed, they are half gone from rot) in an exposed basement wall and now they're paying a few grand to fix it. I was shocked to find out that there was a 14 day window, why bother even giving a warranty in the first place if it is for that short of a window. 

 


I am dealing with a rot repair right now that their warranty is only for 14 days! The inspector missed improper deck flashing and studs missing (not like they weren't installed, they are half gone from rot) in an exposed basement wall and now they're paying a few grand to fix it. I was shocked to find out that there was a 14 day window, why bother even giving a warranty in the first place if it is for that short of a window. 

 

That's a very short warranty window. The inspection company I work with in high volume offers a 90 day warranty. Seems like it's pretty important to find a quality inspection company, huh?

 

To anyone who's purchased properties through Roofstock (Doesn't matter when you see this post, you're not late to the discussion. I'm very curious about how Roofstock's rules&policies evolve over time - I want to hear about it from investors, not Roofstock employees):

1. WERE YOU ALLOWED TO HIRE YOUR OWN 3RD PARTY INSPECTOR FOR THE PROPERTIES THAT ALREADY CAME WITH AN INSPECTION REPORT IN THE DILIGENCE VAULT PROVIDED BY ROOFSTOCK'S PARTNER INSPECTION COMPANY?

2. If so or if not, when did you buy the properties?


Thanks in advance. 

Hi JC, just closed on a property from roofstock last week. My property did have an inspection report attached to it but I did also order my own inspection for peace of mind. I don't see how Roofstock could forbid you from ordering your own inspection.

@Jason Gines  Do you not believe in this statement from Roofstock: “Rigorous certification means you can focus on your investment strategy rather than due diligence.” 

@Jay Hinrichs thanks for pointing out that TKs are selling their properties via Roofstock. What do you think - is it a better platform for the sellers or the buyers? By the way, have you bought or sold properties via Roofstock?

Originally posted by @Tushar Prasad :

@Jason Gines Do you not believe in this statement from Roofstock: “Rigorous certification means you can focus on your investment strategy rather than due diligence.” 

@Jay Hinrichs thanks for pointing out that TKs are selling their properties via Roofstock. What do you think - is it a better platform for the sellers or the buyers? By the way, have you bought or sold properties via Roofstock?

I do not know if that is a statement made by Roofstock, but regardless of who made it, it isnt something I agree with.  Investors are responsible for their own due diligence 

 

TO INVESTORS WHO'VE PURCHASED PROPERTIES FROM ROOFSTOCK IN 2014 - 2018: PLEASE SEE MY LAST POST WITH THE SMILEY LIONESS. DOESN'T MATTER WHEN YOU SEE THIS POST. 

 @Bryan Devitt  Who's "they" and "their"?

@Jonathan Paul Shortt  I’m 99% sure I wasn’t allowed to hire my own 3rd party inspector. I can’t disclose the legal terms here to avoid breach of contract. I can think of five possibilities to explain our different experiences. The truth may fall outside these speculations and hasn’t crossed my mind at all:

1. Roofstock used to prohibit buyers from ordering independent 3rd party inspections. But their policies changed recently and now they allow it.

2. Roofstock policies are state-specific. 

It’s been pointed out to me in private messaging that Roofstock behaves as a broker or a dual agent. The behavior of brokers prohibiting buyers from ordering independent inspections would result in a violation of agency laws in some states but not others.

3. By incorporating in another state, Roofstock can somehow go around certain rules that carefully regulate brokerage activities carried out by local brokers in some states. 

This reminds me of how the state of Florida prohibits RE agents from inserting Indemnity and Limitation of Liability clauses in the standard PSA but Roofstock can do so in the Terms&Conditions. I have no clue how this works and how enforceable they are. 

4. I received differential treatment. (unlikely)

5. Roofstock-drafted PSAs are negotiable - I didn't make any negotiation attempt. 

    I imagine it will take multiple Roofstock buyers’ stories from different years (especially the earlier years) and different states to form an accurate picture. The reason why I kinda fixate on this topic is that many post-closing issues that arise between Roofstock and its buyers center around "surprises." 

    @Zach Evanish  (Roofstock’s PR guy on BP) is no longer with Roofstock. Too bad he doesn’t seem willing to provide answers and even if he wants to, he probably can’t.

    I’m inserting random images to make this post stand out. 

    I purchased a property on roofstock about 9 months ago, and figured I'd share the gist of what I dealt with on this thread. I had a number of small issues arise, but to their credit, roofstock (after some emails and finally tweeting) did make things right. 

    I was signed up with a point person, and it quickly became clear that there were some talking points they were not going to deviate from. The 97% of the asking price being one of them. There seem to be a lot of exceptions to that one here on biggerpockets, and I eventually got my house for 14% lower than the asking price. 

    Really, I guess you have to go in with your eyes open, which makes this a very valuable thread. Roofstock is not a turnkey provider, and shouldn't be viewed as one. When your agent pushes back against your requests, don't take it. You can get another inspection if you want, as much as they like to tell you that you can't. It just slows the process, which they really don't like. They have the lease on file, and you should be able to see it with any sensitive information blacked out, they just don't like to give it to you. If you want something from them, push them for it, and keep the email records to show them later. 

    Basically I dealt with a number of people who gave me contradictory information, and yes, the inability to communicate did cause problems. But again, Roofstock stepped up when it was necessary and rectified most of the self imposed issues. It also helps to send out a strategic tweet when the communication slows to a drip.

    As for the information provided on the website; as many have said before DO YOUR OWN RESEARCH. You cannot rely on their appraisal, don't feel beholden to their "certified PM's", and don't trust their rent estimates. They are all basically arbitrary. If you are not comfortable about something, don't do the deal, even if "your" roofstock representative will get annoyed by your inability to commit. I lost a deal because I was not willing to sign a PSA without any seller disclosures, none of the sellers manage the property themselves and therefore cannot sign "NO" to any disclosures. But alas, some do. You just have to find the one that checks all your boxes.

     

    There was no reason to panic and lose 30k, unless  I missed something, no one was asking you to fix any permitting issues. I used Roofstock top buy and sell and both times I had a good experience. On the sale side a lotttttt of due diligence on their part. I was annoyed by the amount of paperwork they asked from it was kind of repetitive and burdensome. But then again you are in San Francisco California where nothing Real estate makes sense anymore, so if the Real estate was there 30k is easy to lose.

    Originally posted by @Lazaro Dinh :

    There was no reason to panic and lose 30k, unless  I missed something, no one was asking you to fix any permitting issues. I used Roofstock top buy and sell and both times I had a good experience. On the sale side a lotttttt of due diligence on their part. I was annoyed by the amount of paperwork they asked from it was kind of repetitive and burdensome. But then again you are in San Francisco California where nothing Real estate makes sense anymore, so if the Real estate was there 30k is easy to lose.


    Yeah, it's obvious you missed plenty. First of all, I didn't hear any panic in her posts....just reporting the facts as she saw them. And if you'd have bothered to even read half of the first page, you'd realize that the property was not in SF (Does Roofstock even have anything in SF? Doubt it). The property was actually in the same state as where you're located. I find it quite disingenuous and borderline insulting for someone to say that there was no reason to lose 30K and just attribute that all to her "panicking". If you want to contribute to this thread, perhaps you should spend some time and actually read everything she wrote first.

    @Lazaro Dinh

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    @Tony Kim

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    @Zach Evanish  

    @JC Wu  

    Thank you for this thread and your detailed explanation.   I just discovered roofstock and was considering purchasing a property from them.  Ironically,  many of the seemingly negative comments about roofstock don't put me off. (any more than seeing a car wreck stops me from driving -- car wrecks do remind me to keep my eyes on the road while driving.)

    I have learned some valuable things about Roofstock:

    1.  They are a brokerage, not a turnkey company.  As such, their focus is to sell as quickly as possible for as much as possible and tell the buyer as little as possible.   The fact that the houses are rented or have the potential to be rentals just adds to the appeal for their niche of investors (not owner occupants).

    2.  They are in multiple states under different rules and using different PM's so investor experience could vary from area to area.

    3.  Roofstock seems to be trying to serve but they don't always live up to the glowing promises their copywriters type up.  Apparently Roofstock has modified some policies -- probably in response to complaints.

    4.  Roofstock has a few customers that are happy enough to vouch for them. (There is a possibility may be paid reviews.)

    5.  Roofstock is not offering an FDC-guaranteed savings account with 10% interest.  When I invest through Roofstock, I will become a landlord with the associated risks and responsibilities.   I will be ultimately responsible for code compliance,local ordnances, repairs and maintenance, vetting tenants (or selecting a PM).  If I use a PM, the PM will take a percentage of my rents and may not market or maintain the property to my standards.

    6.  Roofstock might be a great place to sell income properties

    7.  Roofstock might also be an option for small 1031 tax exchanges if they can close quickly enough.

    @David Song  The permitting issue wasn’t the only trigger. I mentioned other factors in some of my previous posts on this thread. Looking back, it was perfect timing and a wise decision to sell this FL property. Soon after I sold it, a wave of panic selling in that area started and its value has been plummeting. My end buyer had it listed for sale about 9 months ago after some quick light rehab - the price has been cut multiple times, the listing agent has changed three times and it’s still lingering on the market.

    One piece of advice dispensed in many success stories is “aim for cash flow rather than appreciation if you have to pick one since appreciation is largely based on speculation.” Bay area properties don’t seem to cash flow, many even yield negative cash flow. If I want to strike a balance, I may consider investing in emerging markets like Austin, Seattle, Denver, LA, etc.

    I remember listening to a Grant Cardone podcast here on BP. He said the most recession-proof rent is in the 800-1200/mo range. If I apply the 1% rule, the price of the properties falls in the 80K-120K range. The risks of getting tenants from hell and property damages are relatively high, but I try to find the cheap houses in decent communities to reduce that risk.

    Plus, if I want to respect the “don’t put all eggs in one basket” principle, why not buy ten 100K properties across different locations instead of buying one 1M Bay Area property?

    It’s very likely I have been applying conventional wisdom too rigidly. Please feel free to correct me. 

    @Joel Florian  Your assessment of Roofstock is pretty accurate. I’m glad you’ve come to realize Roofstock doesn’t always live up to the glowing promises their copywriters type up before you make a commitment with them. Many of the assertions and empty promises they make are, in my opinion, fraudulent misrepresentations. I chose to work with Roofstock exactly because they made more promises than their major competitors. I got lured in by those promises and trusted they’d live up to them. I think that false advertising practice is manipulative, unethical, dishonest and unfair to their competitors. I agree with @Elliott Elkhoury that a good provider sets the right expectations, and Roofstock seems to intentionally do the opposite. I started this thread to mainly warn new investors. I don’t see why RE experts like you should be deterred by the negative reviews if you’re good at doing due diligence and spotting deals.


    @JC Wu I don't know if I'd say roofstock does the opposite. It's not really up to them to decide where you like to set your risk profile. I do think it's prudent to be conservative, but their business is not one of relationships and advisory. They provide a defined service, and I would imagine they are consistent in providing the service level they promise. 

    What companies like roofstock (and my own to some degree) do is make investing in real estate feel simplified and accessible.. and it can be! This is a good thing. Increasing awareness of investing in an asset class that perpetuates wealth at a higher rate than so many others is truly a contribution to the community. A side effect of the simplicity of their process is that buyers may feel a bit euphoric about rental property investing, and in this euphoria lighten their focus on the inherent risks of buying and holding real estate. They didn't influence you or any other investor to feel this way.. and what are they going to do? Push customers away via excessive biases towards conservatism?

    I set expectations because my company is still boutique and has one on one relationships with clients. I'll be upfront- the nature of our interaction with our clients will also become more scale-friendly as we grow. It's already happening a little bit. It's a tricky balance, but the nature of a business that is growing.

    I think you would have made mistakes of similar magnitude if you went and purchased through a different acquisition vehicle. I still make mistakes... and I've bought over 100 properties. It's part of the process. I call it "tuition". The lesson here is focus on what you as an investor can do to bear the burden of due diligence. Delegate work & tedium, but do not delegate your judgement to any service provider! 

    @JC Wu

    In terms of Bay Area has no cash flow, that is simply wrong.

    The correct term is amateurs can not find cash flowing properties in Bay Area.

    Bought a SFR in Hayward early this year, for 425k, 50k Reno. Rent 4150/ month.

    Under contract for SFR in SSF for 1.03m. Projected rent $7000/ mo. Closing end of November.

    Preparing an offer on Hayward 3 units. Projected return around 9 percent.

    You are a good writer. Unfortunately, there are too many things to learn in REI.

    @JC Wu “why not buy ten 100K properties across different locations instead of buying one 1M Bay Area property?”

    property 

    management 

    nightmare 

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    3words

    Originally posted by @David Song :

    @JC Wu

    In terms of Bay Area has no cash flow, that is simply wrong.

    The correct term is amateurs can not find cash flowing properties in Bay Area.

    Bought a SFR in Hayward early this year, for 425k, 50k Reno. Rent 4150/ month.

    Under contract for SFR in SSF for 1.03m. Projected rent $7000/ mo. Closing end of November.

    Preparing an offer on Hayward 3 units. Projected return around 9 percent.

    You are a good writer. Unfortunately, there are too many things to learn in REI.

    Are the cash flowing properties you find in the Bay Area off-market deals? How do you find the deals? Do they come by often?

    Yes, I bet there are too many things to learn in REI and there's always something new to learn even for pros.

    Originally posted by @JC Wu :
    Originally posted by @David Song:

    @JC Wu

    In terms of Bay Area has no cash flow, that is simply wrong.

    The correct term is amateurs can not find cash flowing properties in Bay Area.

    Bought a SFR in Hayward early this year, for 425k, 50k Reno. Rent 4150/ month.

    Under contract for SFR in SSF for 1.03m. Projected rent $7000/ mo. Closing end of November.

    Preparing an offer on Hayward 3 units. Projected return around 9 percent.

    You are a good writer. Unfortunately, there are too many things to learn in REI.

    Are the cash flowing properties you find in the Bay Area off-market deals? How do you find the deals? Do they come by often?

    Yes, I bet there are too many things to learn in REI and there's always something new to learn even for pros.

    They are open market MLS deals.

    The first hayward property was on the market for a long time, nobody wants it. Initially listed at 599k, dropped to 500k, bought at 425k.

    The SSF property is a hubzu auction.

    If you follow what majority of people are saying, you will be a loser for sure. Since everyone already know before you know about  it. You have to have your niche that nobody else knows.

    I am against OOS TK. I strongly believe that is a much worse strategy than local investing. Furthermore, if you can not find deals locally, why do you believe you can find deals remotely? Just a higher return on paper does not mean that is a better investment.

    There is no shortcut or easy way out in REI. TK promoter on this website tries to tell people that OOS TK is easy and better than CA investing. That is ********, repeated a million times here on BiggerPockets.

     

    Originally posted by @David Song :
    Originally posted by @JC Wu:
    Originally posted by @David Song:

    @JC Wu

    In terms of Bay Area has no cash flow, that is simply wrong.

    The correct term is amateurs can not find cash flowing properties in Bay Area.

    Bought a SFR in Hayward early this year, for 425k, 50k Reno. Rent 4150/ month.

    Under contract for SFR in SSF for 1.03m. Projected rent $7000/ mo. Closing end of November.

    Preparing an offer on Hayward 3 units. Projected return around 9 percent.

    You are a good writer. Unfortunately, there are too many things to learn in REI.

    Are the cash flowing properties you find in the Bay Area off-market deals? How do you find the deals? Do they come by often?

    Yes, I bet there are too many things to learn in REI and there's always something new to learn even for pros.

    They are open market MLS deals.

    The first hayward property was on the market for a long time, nobody wants it. Initially listed at 599k, dropped to 500k, bought at 425k.

    The SSF property is a hubzu auction.

    If you follow what majority of people are saying, you will be a loser for sure. Since everyone already know before you know about  it. You have to have your niche that nobody else knows.

    I am against OOS TK. I strongly believe that is a much worse strategy than local investing. Furthermore, if you can not find deals locally, why do you believe you can find deals remotely? Just a higher return on paper does not mean that is a better investment.

    There is no shortcut or easy way out in REI. TK promoter on this website tries to tell people that OOS TK is easy and better than CA investing. That is ********, repeated a million times here on BiggerPockets.

     

    Why did nobody want that Hayward property? I'm under the impression that the demand for Bay Area properties is much higher than supply; the sale price is often higher than list price and bidding wars are common. 

    I listened to a Podcast here on BP a while ago. It was an investor who found her niche of buying unwanted properties that come with liens attached or big defects (like foundation and structural issues) that put off most buyers. 

    Do the auctioned properties on hubzu come with inspection contingency for the winner? 

     

    @JC Wu

    San Francisco, Hawaii, Los Angeles, Seattle, Boston are examples of primary markets unless you are going to a Class D area then you will not find cashflow. Its a discussion that divides most people... you can't really get appreciation and cashflow (starting out).

    The hayward property is pretty big but with significant structural issues, sloping foundation, garage about to fall, etc. Requires a complete renovation.

    The hubzu auction does not have any inspection contingency. Furthermore, they do not allow buyer to turn on water service. Therefore, you have to know what you are doing to bid on those.

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