Any opinions on roofstock.com

[frankied]

First time poster here!

At the moment I'm 100% in the stock market ( I'm at about 350k now). I've been thinking to diversify a little for the past two years and concluded that a single family home would be a great way to do that. But I've never done it mostly for lack of time and convenience. I live in the bay area so there is no way I would buy something around where I live, which complicates the process.

I've recently stumbled on roofstock.com which seems really great to solve my issues. They claim to make investing in a single family home as easy as investing in the stock market. Does anyone have any experience with them? I'd love to hear your opinions.

[bacchi]

Gosh, first time poster, since you asked, and you're not really here driving traffic to that site: Don't Do It. Why would you reduce your return by letting someone else take a cut? It's the same as hiring a financial adviser and paying a 1% wrap fee...for an investment in one equity.

Bad idea. Buy a REIT if you want real estate exposure.

[not_a_trex]

Why would you reduce your return by letting someone else take a cut? It's the same as hiring a financial adviser and paying a 1% wrap fee...for an investment in one equity.

You basically do this when you hire a property manager. There are several reasonable answers to hiring a PM (remote, unable to manage property, convenience...). And a realtor takes a % cut too, regardless of the work involved in getting a house.

I peeked at their website. It looks like they're a turnkey investment company. Their numbers for investment gains looked awfully nice. Too bad they didn't mention repair fees or a lot of the other variable costs that go into managing a house. You might find some winners, you might not. But before you get into finding a great deal from them, how much do you know about real estate? Do you know what a good deal looks like?

At the moment I'm 100% in the stock market ( I'm at about 350k now).

Have you looked at bonds at all? Do you hold international stocks? Those are other great avenues to diversify with.

[Jakerado]

You basically do this when you hire a property manager. There are several reasonable answers to hiring a PM (remote, unable to manage property, convenience...). And a realtor takes a % cut too, regardless of the work involved in getting a house.

At least the property manager adds value(in theory)...a financial manager doesn't add any value in practice, though that's getting a bit off topic =)

I peeked at their website. It looks like they're a turnkey investment company. Their numbers for investment gains looked awfully nice. Too bad they didn't mention repair fees or a lot of the other variable costs that go into managing a house. You might find some winners, you might not. But before you get into finding a great deal from them, how much do you know about real estate? Do you know what a good deal looks like?

Their numbers for investment gains actually look pretty terrible. Off the cuff w/out doing research into the area they're running in, purchase price at 10x rents is always suspect (could be a good deal out there, but you're probably relying on gambling), and if you click through, well, it's just more obvious...their gross and net yields are hilariously bad, and don't even account for everything (What, you didn't expect a "marketplace fee" in order for the privilege of buying an asset that underperforms the stock market?)

[Ricky]

I don't think there's necessarily anything wrong with turnkey investments. It certainly has a much better potential than investing locally in your HCOL area where deals are few and far in between. Using geographic arbitrage without having to actually do anything can definitely good be a way to go.

Lots of things to look out for though. You still need to do a great deal of due diligence: research neighborhood, look for deferred maintenance, double check the numbers, vet the property management, etc. Since you should be going to those lengths anyway, it makes more sense just to do it yourself. It's a little extra work, but that's the point in real estate: leveraging your own time in order to receive higher returns.

I think most people are better off in index funds than buying turnkey, since the only reason to buy turnkey is if you didn't want any control in the property at all.

[retiringearly]

I have no experience with roofstock, but I do have 4 single family homes as rental properties that i purchased through a local turnkey provider.  Overall, I have been happy with my experience.  I pay $95 per month per property to my property manager - they provide more than enough value to justify their fee.  My property manager is a fairly large company that manages several hundred properties for itself and investors (including a publicly traded REIT). 

Some advice when dealing with a turnkey provider:
1) ALWAYS hire your own home inspector to inspect the house prior to closing.  I used Angie's List to find a quality home inspector.  DO NOT use a home inspector recommended by the turnkey provider - their home inspector will not want to find problems that may kill the sale.

2) Try to purchase a rental at no more than 8 times annual rent (lower is better).  You should have positive cash flow at a purchase price that is no more than 8 times the annual rent of the house.  I do not want to rely on price appreciation to make a profit since I can't control that.  This may be difficult in some real estate markets so I would stay away from them.