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Roofstock Review

Roofstock Review: Turnkey Single-Family Rental Properties

Roofstock is an online single-family home marketplace for real estate investors. Listed properties are independently screened, appraised, and certified so that the investor has a full picture of what they are buying. Properties also have tenants in place so that investments can cash-flow from day one.
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Does Roofstock live up to their promises? In our Roofstock review, we dig into their selection of turn key rental properties and put our money on the line to find out.

I’ll admit, I’ve been obsessed with rental properties for a few months now. It took me about that long to wrap my brain around it all. There is so much to think about and consider – the topic of turn key real estate investing is littered with “rabbit holes.”

Now, before we jump in you may be wondering, “why would I ever want to get into rental properties?” If so you should probably start here: The Case for Real Estate Investment Properties.

Eventually, after much research, Laura and I decided that we were going to get rental properties far away from the NYC area. In starting our search for turn key rentals, here were some of the biggest sticking points for us:

  1. How could you possibly purchase a property sight unseen? Is the internet full of crazies?
  2. How do I find properties in my price range that aren’t in a war zone and produce a respectable cash flow? I’m not exactly a well-connected real estate professional.
  3. How can I be sure that I’m not being sold hot garbage by an “expert”? Is there any way to undo it all if I wake up the next morning in a cold sweat regretting my decision?
  4. How do I evaluate and track the profitability of these properties? There are a lot of moving pieces in turn key real estate investing.
  5. How do I make sure I don’t get stuck with “the worst property management company ever” and wind up with more work/stress than I bargained for? Few people say they love their management company, and that scares me.
  6. How can I set it up such that I do the least amount of work possible, today and in the future? Simply put, I ain’t got time for that shit.
  7. Does my ass need to be the only one on the line? Is there anyone that will stake their reputation on my continued success?

In this review, we’re going to cover the above questions and go into extraordinary detail of our experience with Roofstock.

After speaking with their CEO and many others on the team, we decided to go ahead and make a turnkey real estate investment with them.

Twice.

Roofstock #winning

What is Roofstock and what do they bring to the table?

Roofstock is a turnkey rental property marketplace. A core requirement for properties to be listed on their marketplace is that a property needs to be occupied by tenants who meet Roofstock’s strict screening guidelines. Since we’re investors and not real estate professionals, we only look at turnkey solutions.

This is the target market for Roofstock, busy professionals who want high yielding successful rental properties without the time commitment or the need to put work in themselves.

Unlike most places you’d go to find turnkey rental properties, Roofstock does not own any of the properties listed in their marketplace. Instead, their expertise is in evaluating, negotiating and closing property transactions. So they aren’t trying to sell you anything but instead are looking to add value to an existing and usually convoluted process.

What originally got me excited about Roofstock was their inventory. It’s probably what gets everyone excited.

selection of Roofstock's turn key rental properties

Currently, there are over 100 properties available for sale, 20 awaiting listing and 75 with a sale pending. This dwarfs the size of any other turnkey seller Laura and I looked at. Most turnkey places have little to no inventory, so you’re forced to wait and when you are next in line on a renovation, often feel the pressure just to take what you’re given. We did that once, and we’ll never do it again.

However, the beauty of Roofstock’s inventory isn’t in its size. The beauty is in their categorization, pricing, and impartialness.

Roofstock is currently in 10 markets, and they’re expanding them pretty rapidly (two new ones just this month): Atlanta, Greater Tampa, Jacksonville, Las Vegas, Miami, North Carolina, Orlando, Riverside – San Bernardino, San Francisco – East Bay and Southwest Florida.

In each market, they give you the lay of the land, core fundamentals to watch out for when making a turnkey real estate investment and key local/national statistics. At the time Laura and I felt that Atlanta best represented our goals although with the addition of North Carolina I think we could potentially expand there as well.

The Roofstock Atlanta Market

Their market analysis helped us choose where we wanted to start, but it also helped us compare turn key rental properties in different locations. What sort of value do you get for a place in Jacksonville vs. Atlanta? This information helped us pick up something we wanted, not something that we were willing to accept. A big difference.

They also break properties down by high yield, high appreciation, great schools and so on so you can focus on the features you’re looking for. We’re high yielders so filtering out 38 properties from 100 was a great first step.

We went over pricing in How to Calculate Rental Yield, so we won’t go too deep on that here. I do however want to bring up the 1% rule.

The 1% rule is a general barometer on pricing for rental properties. It says that a month’s rent should be at least 1% of the purchase price. You’ll find a large share of properties listed in Roofstock exceed this. That is because the Roofstock team pre-negotiates pricing before properties get listed.

Where do they find their properties?

Roofstock’s core team has years of experience building and managing large real estate holding companies and have stuck to what they know.

Real Estate Investment Trusts (or REITs) need to buy and manage hundreds of not thousands of properties. Some of the biggest REITs have valuations measured in the tens of billions of dollars.

In addition to buying, rehabbing and renting properties, REITs often need to sell properties. Reasons can range from the need for fund liquidity, required selling after a certain holding period or even the inability to “reach scale” in a particular market.

Selling properties is usually time-consuming and costly, even for large REITs. That in addition to selling their homes mostly to investors makes it even more challenging for them to sell properties when needed.

Roofstock works directly with larger holding companies to certify, document and competitively price these properties removing much of the overhead for the funds. They also charge a much smaller fee than would typically be charged by realtors. Because Roofstock can sell a property quickly and for less, properties can be listed for less, and those savings are passed on to the investor.

Unpacking the Roofstock Certification

Buying a property on the other side of the country without stepping inside takes a lot of trust. Roofstock apparently does not take your trust lightly.

To help you be confident in your purchase, they strive to provide as much information as possible on the property before you decide to buy. All of this information, coupled with quality standards make up the Roofstock Certification.

These are the base requirements as per their website:

  • A property inspection conducted by an experienced national inspection firm
  • Property valuation and rental market analysis to ensure properties are priced fairly
  • An estimate of the cost of major and minor repairs along with a bid from a local vendor to complete the work at the quoted price
  • Full title report with no uninsurable encumbrances or liens and preliminary title commitments, where applicable
  • Full review and summary of lease terms to ensure lease complies with market standards and key terms are disclosed, including term, monthly rent, and utility responsibility
  • Full review and summary of the tenant to ensure tenant is current on rent and met background and credit qualifications
  • Roofstock 3D Virtual Tour of the property, which allows you to virtually tour the property and provides a unique tool for re-leasing the property
  • Home disclosure reports that summarize any local risks including natural hazards and local crime rates
  • Certified property managers, vetted by Roofstock, which are experts in the local area
  • A professional property floor plan and professional marketing photos of the property

In addition to the above, Roofstock provides all purchases with a 30-day money back guarantee. Even though they don’t own the properties, they are so confident in their analysis that if you don’t get what you expected, they will buy the property back from you and eat the cost.

It’s also worth noting that they occasionally run deals. For example, this August/September they are running a One-Year Rent Guarantee. I’m sorry but that’s insane – it removes an enormous amount of risk from the buyer.

How do you eat a Full Property Analysis? One bite at a time.

An essential part of the Roofstock Certification is their Full Property Analysis. There are three main pieces to this analysis.

  1. Pricing Appraisal
  2. Title Report
  3. Inspection

The first two on the list are pretty straightforward and support the listing price. The inspection is where the magic is.

This inspection report goes into extreme detail on all the major components of the property. The first page of the report looks like this:

Roofstock Property Inspection

The full report tends to be about 12 – 15 pages and goes into detail on each area of the above summary. It includes pictures and where necessary, descriptions. The goal is that you know the exact state of the property before purchase, and this is a major piece of the 30-day money back guarantee.

Roofstock doesn’t want there to be any surprises with the property. They make money when you make money and are clearly trying to cultivate a savvy client base.

The Roofstock Process: Be an Investor, not a Manager

The biggest value-add to the whole process is the Roofstock Team. Our experience with them was the single largest reason we came back for a second property.

On our first property purchase, we selected a property that had a fixed price. The first business day after we clicked “buy now,” we were called by Lizzy and inducted into the Roofstock process.

She spent nearly an hour with us on the phone explaining how things work, asking us questions about our experience and helping us understand how the whole purchase process would unfold. Lizzy recommended lenders and insurance agents to us. The deals we were presented were pretty clearly awesome, so we just accepted her finds and moved on. It was hilariously easy; Laura and I went out to dinner that night to celebrate doing nothing.

A few days later Zach called, he’s the director of client services. He wanted to congratulate us on our purchase and see if we had any questions. Little did he know how many questions I would have – I had him on the phone for nearly two hours. I asked pretty much everything I could come up with down to their business model and the extent to which people can negotiate prices on the “make an offer” properties.

After Lizzy had teed up the property, Rebecca took over. She took “white glove service” to a whole new level. After sending my lender proof of my finances, I did almost nothing. Rebecca coordinated with everyone and, in 30 days a notary scheduled an appointment at our house for our remote closing. It was too easy. If you’ve ever purchased a home, you know how much work closing on a property is. This was as far from that as you could imagine.

I was cc’d on key emails and occasionally asked for my preference on random details. Probably the most work I did was digitizing everything in Evernote. Ever digitize 50+ pages in one sitting? You’ll need a good beer for that, trust me.

There’s safety in numbers, and they’re already negotiated for you

It was phenomenal to have someone else should sweat the small stuff during the purchase. That’s not even the best part of the whole process.

A week or so after the transaction I get an email from Rebecca asking how everything is going. Did the property transition ok? Did I collect my first month’s rent yet? And, of course, was I ok dealing with the property manager going forward or did I want the Roofstock team to handle that?

Wait, what? Did I want Roofstock to deal with my property managers for me? Apparently, for no additional fee, Roofstock will willingly place themselves in between you and your property manager further insulating you from the dramatics of day to day operations. My mind was blown. There’s a huge difference in treating me poorly vs. the company whose clients manage the majority of their properties.

All of a sudden, Laura and I, proud owners of three rental properties gained the negotiation power of a small REIT. Who better to negotiate repairs and handle shitty situations than people who have years of experience doing just that?

In Georgia, our properties are managed by Excalibur Homes. They seem awesome and expect they will be. That said, I don’t need any more emails in my inbox than I already have. I want to invest, not babysit.  So, while I have every intention of working directly with my property managers, if things get out of control I’m just going to pass it off. Who’s got time for that, amirite?

Also, because I went through Roofstock, I’m only paying 6% of rent a month to my property manager. #humblebrag. Seriously, put anything into our real estate analyzer and then mark down the property management from 10% to 6%. And you thought you were cash flowing well before.

Evaluate, Track and Compare Properties – Automatically

You certainly need a strong team if you purchase a rental property. However, the most important part of the process is evaluating the deal. Is the purchase price too high? Do property taxes destroy your cash flow? How do two similarly priced properties stack up side by side?

These are all questions that I struggled with, and I wound up with a freakishly complicated spreadsheet that took me hours to build and far too much time to maintain.

A real estate deal is constantly evolving as new information becomes available and to be successful, you will need to rerun calculations quickly and frequently. Since all the existing tools out there are shamefully bad; I decided to make my own.

Rental Property Analyzer

Right now the tool is free, and we’ve gotten tremendous (see what I did there) feedback on it. Not only does it automatically pull in pricing data for your properties and help you calculate key numbers, but it also allows you to save your evaluations in Property Groups so you can track properties you already own and the ones you’re looking to buy.

To check it out, head over to Listen Money Matters Pro.

Key Roofstock Features

Here I’ve attempted to distil all that Roofstock is into a classic feature table. How novel.

FeesOne time 0.50% fee per property purchase. First fee is waived.
TurnkeyYes; Roofstock goes out of their way to make sure you need to handle as little logistics as possible.
REITsYes; While you can purchase an investment property directly from Roofstock, you can also invest in a REIT.
MarketsAtlanta, Greater Tampa, Jacksonville, Las Vegas, Miami, North Carolina, Orlando, Riverside - San Bernardino, San Francisco - East Bay and Southwest Florida.

Our chat with their Founder and CEO Gary Beasley

We have a bit of a habit interviewing CEOs (especially famous ones). Coincidentally, all of them have also been the founders of their company as well. I don’t think that’s much of a coincidence; great vision needs to come from the top.

Roofstock is no different, and while we spoke with many of the team, we wanted to hear it from the one steering the ship.

It was a ton of fun chatting with Gary, and he shared a lot of the inner workings of the company. Even if you’re not in the market for turnkey rental properties at this time, we think you’ll find the conversation interesting.

Apparently, Gary’s office is hidden behind a bookcase because damn, who doesn’t want a hidden secret office? Did I mention it has a bar?

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36 responses to “Roofstock Review: Turnkey Single-Family Rental Properties”

  1. Steve Parker says:

    Very enjoyable and informative episode, nice job.

  2. Andrew says:

    Very interesting topic. Living in the NYC area, I felt the same way…had to invest somewhere more affordable. I’ve also been really interested in “turnkey” out of state investing and actually bought one a year ago. Listened to the podcast and Roofstock seems interesting. When I checked out their website many of the list prices of the houses were also way higher than Zillow estimates…though I understand those are not necessarily accurate. Did your properties appraise for the price you paid? Pretty cool that they will deal with the PM also for free…though I don’t see how offering that service will be sustainable when they only charge a half a percent fee while a similar platform (HomeUnion) that I’ve read but never used, charges a higher initial fee plus an annual fee. Just curious, why you didn’t just go directly with a turnkey provider? I do see the value of having a 3rd party vet and certify the property but would it be better to cut out the middle man and do your own due diligence? Great episode, I will definitely be looking into their site for more info.

    • Hey Andrew, cool name ;)

      All of my properties appraised for higher than the purchase price and two of them have “zillow appreciated” in the months after purchase. I put it in quotes because the price is highly subjective and largely bullshit. It’s only worth that if someone is willing to buy it for that. Plus, the name of the game isn’t appreciation, for that you DO need to buy in a hot market like NYC. For cash flow, as long as you’re getting a strong deal with a solid return you should be happy. Buy and hold my friend.

      They don’t only charge half a percent fee, that’s all we see as investors. When you sell a property real estate agents take a monstrous share of the purchase price. What Roofstock has done is create an investor marketplace so these properties will sell quickly, easily AND they take a smaller fee than a normal real estate agent. I think the fee is around 2% that Roofstock makes so on my property that I bought for $110k they made at least $2,200. The big difference is, I didn’t pay for it, the seller did

      Now, if they sell solid properties and did a good job vetting the property manager than they really don’t have much work to do. Pretty much all of their incentives are aligned to make sure every transaction is a strong one. Plus, they have a reputation to protect.

      To answer your last question, I did go with another turnkey provider, that was my first property. It certainly wasn’t a bad experience but Roofstock’s was worlds better AND there is a real company with tons of funding that exists and will stand behind the properties they sell. Let’s not understate the risk involved in REI. Having a strong team behind you can’t be overlooked.

  3. Anthony Navarro says:

    AWESOME PODCAST! I have always been motivated to invest in real estate (mainly for the cash flow)* but living in the Bay Area I didn’t know how the numbers could make sense without waiting for another recession or investing in the Central Valley (Stockton, Fresno, Bakersfield). This has really intrigued me to other possibilities. Andrew, does it make your nervous that you did not visit the house or neighborhood before investing? The numbers look great and the cash on cash return is AMAZING!! I really want to take the next step but I’m still a nervous being a California native and investing in the areas I have never been. Also, just want to say thank you for all your great content keep up the awesome work!

    • Thanks Anthony, appreciate it!

      For my first property, yes. I’m confident in our property choice but it was through a single individual that only provided a 90 day break fix warranty. For our second and third properties I’m not nervous – mostly because Roofstock is involved. Gary and his team stand behind their certification and they make themselves continually available to help you manage your properties – he said as much during the interview. That’s huge. They’ve basically taken the biggest risk off the table.

      In the next few weeks I’ll be writing detailed accounts of our two purchases and how everything was handled. There was even a minor error ($100/yr) that Roofstock initially missed and their overcompensation and handling of it was above and beyond the call of duty. It was actually that experience that convinced us to purchase the second property. The details will be published soon – promise! Subscribe to our email list and you’ll be the first to know ;)

  4. Paul Rotstein says:

    Love the podcast and this new REI series! Are you concerned about squatters or generally shitty tenants? I know several people including family members that have owned rental properties and haven’t come across one without a tenant horror story. I know there are background checks with roofstock but it’s a subject I’ve been surprised hasn’t come up in any episodes. I’d love to get your take on it.

    • Thanks Paul!

      Definitely not concerned about squatters or deadbeats, we purchased in areas with laws that highly favor Landlords (Georgia, Indianapolis). As for other random things a tenant can do to us, we plan for that with our reserve account.

      Ideally, nothing happens but if it does we planned for it before we even purchased the property. The tool (https://pro.listenmoneymatters.com) we built does it for you and explains the math behind it.

      • Paul Rotstein says:

        Hey Andrew,

        Thanks for getting back to me! I just listened to the new episode where you went over all of that stuff so I feel a lot better about it.

  5. Hannah Pellett says:

    I’ve been listening to the show since last spring and have almost caught up on all the episodes (there’s a lot!)

    My husband and I had been talking about getting a rental property for sometime and this episode and roofstock made us finally take the leap. We’re in the early process of closing now. One of the main reasons we wanted to get into real estate is for the tax advantages. Some of your past shows on tax deductions have been more small business centered. Have you considered doing a show on real estate tax benefits now that you are a real estate investor. You mentioned the tax free wealth… I am definitely going to check that out.

    Thanks for all you do. I’ve always been a good saver and love debt free but prior to listening to your show I had 40k sitting in savings!! :0 (smh) Now that we moved it to betterment, fundrise and this investment property I feel like our money is finally working for us to make money.

    • Hannah, that’s awesome! You should email us :)

      Glad to hear you guys took the leap, we were on the fence for months but sometimes you just need to go for it.

      We will absolutely be covering REI taxes on the podcast and integrating them into Pro. It’s actually specifically what I’m studying – taxes and how it plays into things like AMT.

  6. Dave W says:

    Before you can accept cashflow as income, do you need to deduct taxes for it and set that aside? Is that within your LLC?

    • Your LLC will default to a pass-through entity until some time in the distance when you have many properties or overcomplicate your setup.

      So, you earn and have it deposited in your LLC account and then withdraw it to your own. That’s it. At the end of the year when you do your taxes you’ll factor in depreciation and mortgage interest.

      Once you have REI income and the accompanying LLC, having a tax expert on your team is worth its weight in gold ;)

  7. Stephen Kawaguchi says:

    This was super-informative. Thanks for this!

    I’m curious to hear from users how your experience has been so far. Are you planning a follow-up episode to update your listeners / readers?

  8. Clay says:

    Hello,

    I am a new listener to your channel and so far so good! I enjoy the conversations while I am at work helps keep my mind of the work at hand.

    I currently live in Southern California were the cost to buy a home is through the roof compared to other states. I am currently renting a 1 bed room apt. When its all said and done its about $1900 a month. Currently I can afford to put down about 3-5% down on a house in my area. With just learning about Roofstock my question is: Do I look into buying a investment property that I can easily afford to put 20% down? OR do I work towards getting my first house?

    My main concern with go for my first house is my money will be sitting stagnate in my bank account. And going for the investment property sounds great but seems wrong to own property but still be renting myself…

    Any thoughts?

    • @disqus_eTF5uMR7W0:disqus The real estate investor who inspired me, Allison, has a great article on this: https://www.listenmoneymatters.com/will-your-home-be-a-good-investment/

      Essentially, owning a home and living in it is not an investment, it’s almost purely an expense. Swap the word “rent” with “mortgage” and the situations are eerily similar. There are however a lot of downsides to owning – you’re responsible for things that break and you can only deduct your mortgage interest.

      With a rental you will be putting your downpayment to work, earning a profit. You’ll also be able to deduct building depreciation and all expenses related to the property. Often you’ll be declaring a loss on your property which, depending on your income level, can reduce your overall tax bill – not just your rental property.

      I personally view owning the home you live in a luxury, not a necessity. It’s also a great way to shackle yourself with a long term commitment to a specific location. Want to move? You’re gonna have a bad time. Want to quit your job and travel the world keeping expenses low? The property is going to get in your way.

      If it were me, I’d invest. Hell, I was a hard core investor for the first 7 years of my career before I even considered buying a property to live in and only then I did it because of a huge price drop due to Hurricane Sandy.

      Hope that helps!

      • Steve Killingsworth says:

        Owning a home allows you to deduct property taxes and pmi in addition to interest.

        • Yes, you’re right on Property Taxes – sorry for leaving that out. PMI on the other hand, I honestly hope that nobody is paying PMI as it’s essentially a tax on impatience.

          • Steve Killingsworth says:

            Thank you for the follow up. Agreed on the PMI. Good write up and very informative. I have been trying to figure out how to invest in real estate in another state and this appears to be a very viable option.

          • @stevekillingsworth:disqus Absolutely, happy to help! This article will probably grow/evolve as I’ve had quite a bit more experience with Roofstock since this was written.

            If you have any questions, email us and, if you need help on the valuation end, check out our data-driven tool: https://simplewealth.co

          • Steve Killingsworth says:

            Hi Andrew, I have relatively new personal finance blog and I am putting the finishing touches on a post (post #2 of 3 investing in real estate). I added a section giving a shout out to listen money matters and was going to add a link to your Roofstock review for my readers. Do you have a preferred method of other bloggers sharing/referring to your work?..We (Dollabuzz) are following you on twitter.

          • @stevekillingsworth:disqus Wow, that’s really awesome of you AND grats for getting started on a PF blog of your own. Hardest part is getting started and then not giving up when things get challenging ;)

            A link to this review would be huge. Beyond that I don’t really have a preferred method of sharing as I’m a bit of a “social media” noob. If people are finding stuff that inspires them and getting educated than it works for me.

  9. Eric Pan says:

    You mentioned you spoke to Zach in regards to what extent you can negotiate on “make an offer”. I would love to know more about this

    • Eric, at the end of the day you can “make an offer” on anything – if it’s accepted that’s another story. Imagine you’re in the mall and you see a pair of pants, it looks like they are slightly damaged. You can absolutely pay full price but you can also ask for a discount – 9/10 times you’ll get it. I generally think it’s good practice to negotiate when it makes sense.

      If the property is priced well (use pro.listenmoneymatters.com) then take it, if it looks a bit expensive, try negotiating. You’ve got nothing to lose. The prices on all three of my properties were negotiated but that’s only because their starting prices were way high so people avoided them, they sat there, I attacked ;)

  10. Yes and, long story short, you can always make an offer via email. I’d wager that it works less often than properties that say “make an offer” but IMHO it’s worth a try. It’s worked for me and Roofstock doesn’t treat me different because of LMM. I know because I’ve tried ;)

    We’re going to have Zach on soon to go into more detail on things like this so stay tuned!

  11. Michael Montero says:

    Here is a quick question Andrew (great pod by the way) –
    I am looking at rental properties mostly due to your enthusiasm and ability to diversify.

    How did you handle the process to get an LLC out of state?
    Currently it appears I need a registered agent in the state of operations

    Also how did you go about getting the LLC out of state and when within the process to buy a home should this take place if at all?

    • Ok, there seems to be two ways to go about it and from my understanding they both require about the same amount of money/paperwork. First is my approach, second is my understanding of the alternative:

      1. Register an LLC in your state with you as the registered agent. Then register in the state of your property as a “foreign entity”. Requires two forms and two fees.
      2. Register in the state of your property, hire a registered agent. May be necessary to file in your local state (unsure, not a lawyer/tax guy). If that is not the case then it’s one form, two fees.

      At the end of the day, I have a tax guy (highly HIGHLY recommended) so I don’t fill out the forms thus I don’t care all that much.

  12. Andrew thier says:

    Hi Andrew,

    Question for you, after signing up for your llc and then registering it as a foreign entity in the states you wanted to buy houses, how hard was it to find a bank to loan you the money and allow you to transfer it to your llc? I’ve read it’s hard to find banks that allow the transfer? So how did it work for you, and who did you use for the loan? And does roofstock use banks that allow the transfer to happen?

    Thanks for all the information!

    • Hey Andrew, it’s actually not hard. I personally use Northpointe Bank and they operate in all the states I would be interested in. They checked all my boxes of:
      1. Digital reporting
      2. QCD support to an LLC
      3. Operate in my target markets
      4. Competitive rates
      5. A mortgage team who actually gives a shit about me and my business.

      I’m unsure if Roofstock’s mortgage companies do but honestly I’d be surprised if they don’t an LLC transfer. Best bet is to just call or email then.

      As to the foreign entity bullshit, I usually do it after I close a deal, never want to get overly committed to any one deal.

      Hope that helps!

  13. Jake says:

    Hey Andew,
    When you purchase a property with roofstock, do you still need (or recommend) a traditional home inspection or home appraisal?
    Thank you,
    -Jake

    • @disqus_i0fHG33HRY:disqus I personally don’t think it’s necessary as they have a pretty detailed and comprehensive certification process for all of their main properties. Roofstock Rack, while not passing all of their certifications still details where the potential issues might be.

      If you have doubts I would first call Roofstock and get more detailed information on the property which, if they have, will provide for free. Additionally, you can reach out to one of the potential management companies and see what the estimated price might be for fixes if there are any known fixes.

      You could always order an appraisal on your own but it sort of defeats the value-add that Roofstock brings to the table. They stick their neck out for their clients and especially people who have come through this site.

      I don’t know of a single issue where someone acquired something in bad faith and, if it did happen in the future, I would hold Roofstock’s feet to the fire over it. We don’t take recommendations lightly and we’ve got a bit of group negotiation power going on ;)

      My best recommendation is to email them, their responsiveness has been pretty damn impressive.

  14. Will says:

    Hi Andrew! Stumbled onto this thread because I am looking for info on Roofstock. This appears as a good way to invest in RE since southern California is so expensive. From reading through this thread, it looks like you bought a property through Roofstock about a year ago. Can you share what the year has been like so far?

    • @disqus_EgVt3NFtZW:disqus I actually own two now. I’ve done a few updates on the podcast but I’ll give you a very brief summary:

      – No major issues, my experience with Excal Homes has been phenomenal, especially compared to my prior property management company experiences.
      – A tree got hit by lightening, had to have a major branch removed and then shortly after I had to have the whole tree removed. Nature sucks. Soup to nuts it’s cost ~ $650. Positive cash flow on that property is a little over $540 so no issues and still running a nice excess on reserves here.
      – Second property had one of the gutters fall off due to a literal insane amount of leaf/pine needle buildup. Again, nature sucks. Cost ~ $250 and property cash flows a little over $510 so again, no real issue here as I’ve planned for much more in the way of break fixes. Lesson I picked up here is to catalog all possible maintenance work and schedule it out with my management company in advance as well as set chaser reminders for myself to follow up.

      Aside from the above I just get monthly checks and I’ve spent close to zero time thinking about the properties so I’m very happy. I *just* quit my job so we took a bit of a break on property buying to make that happen and Laura and I are currently discussing picking up another property before EOY.

  15. Marat Beasley says:

    Andrew, man thanks for all the advice – not just this – I’m already in Betterment because of you guys and taking care of other stuff you guys bring up in the episodes I’m listening to.
    Anyways, as for Roofstock – the properties I’ve looked at are listed at 110% of Zillow estimated value. How did your 2 properties compare to Zillow estimate when you purchased? I mean I get that they invest in improving the property, but is it really at a premium of 10%? And yeah, Zillow is an estimate that doesn’t take into consideration actual condition of the house. So let’s phrase it differently – did an independent appraisal of the property match what Roofstock was selling them for?
    Thanks and continue doing the awesome work in breaking down barriers to what seems like unsurmountable topics for most of us regular Joes.

    • Hey @maratbeasley:disqus – glad you found this episode helpful!

      In terms of pricing, Zillow doesn’t really do all that well estimating price. They just have a rough data model that takes in location dynamics and local comps, nothing related to the actual home or its true value. For that, your best bet is an appraisal and here the bank does it (if you get a mortgage) and they tend to be very conservative.

      If the home appraises low, don’t take the offer. 9 times out of 10 the buyer will acknowledge the overpricing and adjust to meet the appraisal price. So negotiate where possible and only start on deals that you’d actually want. If the numbers and details meet your criteria than get it, don’t get caught up in speculation.

      For my properties, yes, they appraised. I know people’s who had properties that didn’t and the price was adjusted.

      Hope that helps!

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