Roofstock Review 2020: Pros, Cons, & Expert Opinion

Bob HaegeleBy: Bob Haegele

October 24, 2020October 24, 2020

In a nutshell: Roofstock is a low-cost investing platform that makes it easy for anyone to start investing in real estate.


With its low fees, excellent customer service, and thorough inspections, Roofstock makes a great case for one of the best RE investing platforms around.

Fees

0.5% of Purchase Price

Minimum Investment

$5,000 (Roofstock One)

Pros:

  • Thorough home inspection
  • Property managers available
  • Low fees

Cons:

  • Large down payments
  • Properties can't always been seen before buying
  • Property owners pay for repairs

In a nutshell: Roofstock is a low-cost investing platform that makes it easy for anyone to start investing in real estate.


With its low fees, excellent customer service, and thorough inspections, Roofstock makes a great case for one of the best RE investing platforms around.

Pros:

  • Thorough home inspection
  • Property managers available
  • Low fees

Cons:

  • Large down payments
  • Properties can't always been seen before buying
  • Property owners pay for repairs

Disclosure: This Roofstock review may contain affiliate links. This means we earn a small commission (at no additional cost to you) if you purchase a product through our links.


If you’re new to real estate investing, entering the marketplace can seem overwhelming. Therefore, finding the right platform to get started is imperative.


That’s why you should check out Roofstock.


This online marketplace offers the convenience of homes with existing tenants and low fees, and there’s no need to be an accredited investor.


You just open your account and get started which makes it the ideal way for beginners to embark on their first real estate venture.


Technically, this is considered a crowdfunded real estate platform, but for the most part, you buy your own rental real estate.


Investing in real estate is a great way to generate cash flow for new real estate investors and experienced ones alike.


Plus, when the stock market is volatile, real estate investments can help balance your investment portfolio.


Sound good? Read our expert Roofstock review to find if this could be the right option for you.

Roofstock Review – Features At A Glance

Sign Up Costs

$0

Account Fees

0.5%

Time Commitment

0 months

Accreditation Required?

Only for Roofstock One

Property Types

Single-Family Rental Homes

Investment Types

Direct Ownership, Equity

Regions Served

Over 70 Markets

Pre-Certified

Yes

Guarantees?

30-day Satisfaction Guarantee

Property Management Service

Yes

What Is Roofstock?

If you are new to this company, you may not know what it’s all about. Roofstock is a company that enables even complete beginners in the real estate market to make an investment.


Focusing on single-family homes, Roofstock offers an impressive variety of homes for purchase. You make money by renting those homes to tenants.


That is different from real estate crowdfunding platforms like Fundrise, which only allow you pool your money with other investors.


Roofstock's properties are also turnkey, meaning they can be rented out immediately upon purchasing.


In addition, platforms like Fundrise invest in commercial real estate, REITs, and other large-scale projects such as apartment complexes. That's different from Roofstock, which lets you buy your own properties outright.


Launched back in 2015, Roofstock was funded with $133 million of venture capital. Its first transaction was carried out in 2016.


Roofstock provides analytics, insights, and research for every offering. These tools enable you to easily evaluate then purchase investment properties that have been independently certified.


This platform has a long and well-established history in the marketplace It was set up to be a rental property marketplace that was “created by investors for investors.”

How Does Roofstock Work?

If you visit the Roofstock platform, you’ll find it has a user-friendly search filter that allows you to easily find investment properties that are sorted by all the attributes that are important to you.


These include pricing information, location, neighborhood rating, gross yield, type of funding, estimated annual appreciation, and other criteria.

Once you’ve registered with the site, it’s possible to save your own custom filters. As a result, it is a breeze to find the right offerings to suit your needs each time you use the platform.


When searching, there are a large number of filters, including list price, neighborhood rating, location, inspection contingency, and a lot more.


Also, the Roofstock Guarantee to give you more confidence in your purchases. The guarantee has two parts:


  • 30-day Money-Back guarantee: All Roofstock properties come with a money-back guarantee. If you aren't fully satifisfied with your purchase, you can contact Roofstock up to 30 days after for a full refund.
  • Lease Up Guarantee: If you buy a vacant home, Roofstock guarantees the property will be occupied within 45 days. If it isn't, they'll pay your rent (less property management fees) for up to a year.

You can also sell properties on the Roofstock platform. There is a 3.0% fee for selling, but there are no brokerage fees, and Roofstock helps you occupy your properties right away.


Self-Directed IRA


Roofstock has also added a self-directed IRA option. They partnered with New Direction Trust Company (NDTC) to provide tax-deferred real estate investments.


To get started, all you have to do is open an IRA with NDTC. If you have an existing 401k or IRA, there is a rollover option as well.


This is a nice option since you would normally invest after-tax dollars with Roofstock. Real estate investing in an IRA allows even better growth potential.

Where Can You Buy Properties?

One of the best things about Roofstock is that you can buy properties anywhere they are available on the platform. That includes major real estate markets all over the United States, such as:


  • San Francisco
  • Los Angeles
  • Atlanta
  • Chicago
  • Miami
  • Dallas
  • Houston

These are just a few of the places where you'll be able to buy rental properties on Roofstock.

Currently, the platform only has properties in the United States, but it always expanding.


It also gives you the option to browse properties by market. In other words, if you have a specific area where you know you want to buy, you can look at properties in just that area.


The knowledge center also has articles about a few of its markets, allowing you to gain insight into market trends and developments.

Why Choose Roofstock?

Roofstock stands out from its competitors because it sells homes with existing tenants in them. Its focus is on rental properties where the existing property owner is keen to move on and to sell up to another landlord.


On the Roofstock platform, you can browse available properties, purchase the one that’s right for you, and enjoy a steady income flow from day one.


Essentially, it’s an ideal investment opportunity if you’re seeking a passive source of income with minimal hassle.


A key element of owning rental properties is managing those properties. The landlord must carry out several tasks, including:


  • Screening tenants and placing them
  • Collecting rent
  • Handling maintenance issues
  • Managing turnover of tenants

These are all time-consuming tasks. When properties aren’t managed correctly, your rental property can easily drain your resources.


This is where Roofstock can help.


It has a “preferred property managers” service with screened professionals who can manage your rental home on your behalf.


That saves you time and effort if you’d prefer to avoid taking on landlord responsibilities yourself.


Plus, leaving the heavy lifting up to a property management company is a great way to earn passive income.


Investor Reviews


Real investors have many positive things to say about using the Roofstock platform:

Roofstock enables me to market specifically to people that would be potential buyers – and not only nationally, but internationally.

Nate P // Financial

Great option for sellers looking to get rid of their rental property with tenants in place and/or not wanting to leave it empty while selling. Roofstock also minimized the high cost of selling without the need for high commission costs.

N Fiorito and S Fiorito

The most attractive feature to me is that I’m selling an occupied property. During the listing process, I keep getting rent. With a fix and flip, I have to eat up all the interest, utilities, and staging costs.

Billy Tran // Fix & Flipper

Can I Trust Roofstock?


Of course, you want to be certain that when you invest you’re choosing a reliable platform that you can trust.


Roofstock’s comprehensive certification system ensures that all of the homes available for sale on their platform are all up to a high standard before being considered.


Properties have to be professionally inspected with all repair costs estimated and an accurate valuation obtained.


If available, you'll be able to view a property inspection report, property valuation, title report, and insurance quote.


Photographs, floor plans, and title reports must also be in place for the investor’s peace of mind.

Roofstock inspection

Roofstock even refuses property listings when it believes asking prices are too high.


Having facilitated over $2 billion worth of transactions since 2015, Roofstock is managed by a co-founder and CEO with extensive experience in real estate investing.


Gary Beasley was co-CEO for Starwood Waypoint Residential Trust and CFO of ZipRealty.


His co-founder, Gregor Watson, worked in the real estate market for 15 years before forming this partnership to create Roofstock.


Another co-founder, Rich Ford, has two decades of M&A experience, so you can be confident he has the in-depth knowledge to lay the groundwork for the platform’s deal analytics, supply, and underwriting models.


All of this adds up to a reputable and trustworthy real estate platform. You should always do your due diligence when purchasing new properties, but Roofstock does much of the work for you.


The certification process is quite comprehensive, so you can be confident in each property on the platform.


Who Can Buy Properties From Roofstock?


There’s no need to be an accredited investor if you want to purchase one of Roofstock’s rental properties unless you wish to invest in Roofstock One. Of course, you’ll need to have sufficient capital to pay for the property outright unless you’re obtaining a loan.


Lenders usually demand that investors make a down payment of around a fifth of the purchase price.


You’ll also have to pay the closing costs of around 4-5% of the property price. In practical terms, this means that you’ll have a minimum investment of about $20,000 on a property worth $80,000.


When it comes to Roofstock One, you are making an investment worth a minimum of a tenth of the property’s value, so for a property worth $80,000, you’ll need to pay $5,000.


What Kind Of Returns Can I Expect On A Roofstock Investment?

 

Most properties available for purchase on the Roofstock platform project cap rates of between 5-8% and gross returns of between 11-12% before expenses.


Each offering shows its projected application, a neighborhood score, and details about historical neighborhood trends as well as projected ones.

How Do I Sell A Roofstock Investment?


Once the sale has closed, you own the property outright. Rental properties are long-term investments, but if you decide to sell at any time, you can relist it on Roofstock. In doing so, you make the change from an investor to a seller.


Does Roofstock Have A Mobile App?

 

Unfortunately, there’s no Roofstock app right now. However, the website is mobile-friendly.


You can access the same functions from your smartphone as on your desktop or laptop. You’ll be able to make offers, close transactions, and move transactions forward on any device.


How Much Does Roofstock Charge In Fees?


Another attractive feature of Roofstock is that the fees are lower than those you’d typically be asked to pay by a traditional real estate agent.


Standard fees come in at about 6%, while Roofstock halves those fees, or even goes lower.


Typically, you’ll pay a marketplace fee of 2.5% to Roofstock. In other words, that's 2.5% of the final sale price.


This makes Roofstock a cost-effective option. That fee is much lower than what a realtor would charge.


Even better, signing up won’t cost you a cent, and just for extra protection, there’s a 30-day satisfaction guarantee. However, keep in mind that you must provide a credit card number when signing up.

What Is Roofstock One?

Roofstock has another investing option available for accredited investors. Roofstock One allows you to buy shares representing one-tenth of a fully-managed rental home’s equity.


You pay a fee for asset management and receive all of the home’s economic rights, including tax benefits, net rental income, and appreciation. You get all this without the responsibility of having to act as a landlord.


When 6 months of ownership have elapsed, investors are offered liquidity options including share redemption or conversion to traditional property ownership.

Summary

Roofstock uses cutting-edge technology to offer a user-friendly platform that simplifies the complex process of purchasing real estate.


It gives even beginner investors convenient access to local deals they may never see otherwise.

 

Roofstock is a great choice for anyone looking for a simple way to dip their toes in the water of real estate investment. It's especially good for first-time real estate investors who want to become a homeowner.


It allows investors to seek, research, and purchase already tenanted single-family rental properties from anywhere efficiently and transparently.

 

Hopefully, this Roofstock review will give you the details you need to determine whether or not this is the right platform for you.


Ready to get started? Head over to Roofstock to find your first property!

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About the Author:

Bob Haegele is a personal finance writer, entrepreneur, and dog walker. Bob has been writing about personal finance for three years and now manages several personal finance sites, including The Frugal Fellow, Modest Money, and Blooming Wealth. You can also find him contributing to popular websites such as Millennial Money, Club Thrifty, and The Good Men Project. Bob has a passion for investing and growing his net worth and wants to help others do the same.