Focusing on single-family properties, Roofstock offers an impressive inventory which you can then rent to tenants. Then, the rent checks start rolling in. That is different from real estate crowdfunding platforms like Fundrise, which only allow you pool your money with other investors.
Roofstock is best for:
Beginner real estate investors
Those who want to diversify their portfolio
Those who want to invest in markets other than their own
If you’re new to real estate investing, entering the marketplace can seem overwhelming. You already have your own home to worry about, so how can you honestly deal with another one?
Well, having a platform that simplifies the process makes it easier for new investors.
Enter Roofstock. This online marketplace lets you purchase single-family homes with existing tenants and low fees. Plus, there’s no need to be an accredited investor.
You just open your account and start browsing, which makes Roofstock the ideal way for beginners to embark on their first real estate venture. Pretty simple!
Sound good? Read on to learn more about Roofstock and whether this could be the right option for you.
Roofstock At A Glance
Sign Up Costs
Only for Roofstock One
Single-Family Rental Homes
Direct Ownership, Equity
Over 70 Markets
30-day Satisfaction Guarantee
Property Management Service
Roofstock Review: What Is Roofstock?
Roofstock is a Fin-tech startup that helps beginners invest in real estate. Specifically, it lets you invest in single-family rental properties. If you have no idea what Fin-tech is, don’t worry—we won’t quiz you on that.
Roofstock’s properties are also turnkey, meaning they can be rented out immediately.
Platforms like Fundrise invest in commercial real estate, REITs, and other large-scale projects such as apartment complexes. Conversely, Roofstock lets you buy your own properties outright.
Launched back in 2015, Roofstock was funded with $133 million of venture capital and its first transaction was in 2016.
Roofstock provides analytics, insights, and research for every offering. These tools enable you to evaluate and then purchase investment properties. Also, all properties are Roofstock-certified investments.
This platform has a long and well-established history in the marketplace. After all, it was set up to be a rental house marketplace that was created by investors, for investors.
For buyers, Roofstock charges a fee of 0.5% or $500 – whichever is higher. This is quite reasonable for everything you get, especially since it’s a one-time fee. That’s all you pay for help securing financing, a property manager, and insurance.
Plus, Roofstock properties are usually occupied, so there’s a good chance you won’t have the hassle of having to find tenants.
For sellers, the fee is 3.0% or $2,500, whichever is higher. For that price, Roofstock will handle all of the marketing including all of the marketing. It will negotiate with tenants and handle all of the legal work for you. Traditional brokers charge 5% to 6% for this work.
How Does Roofstock Work?
If you visit the Roofstock platform, you’ll find a user-friendly search filter. It allows you to find real estate investment properties sorted by the features that are important to you.
This includes criteria such as:
Type of funding
Estimated annual appreciation
Indeed, you can search for almost anything imaginable, which is pretty dang nice.
Plus, 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.
Also, the Roofstock Guarantee should 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 satisfied with your purchase, you can contact Roofstock within 30 days of your purchase 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. Furthermore, Roofstock helps you occupy your properties right away.
One of the best things about Roofstock is that you can buy properties anywhere they are available. That includes major real estate markets all over the United States, such as:
Even if you live in a small town, you can set now set your real estate eyes on the big city!
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 This Marketplace?
Roofstock stands out from its competitors because it sells homes with existing tenants. Plus, current property owners are keen to move on and to sell up to another landlord.
On the Roofstock marketplace, you can browse available properties, purchase the one that’s right for you, and enjoy a steady income flow from day one. Buying certified rental property is easy on Roofstock’s platform.
Essentially, it’s an ideal way to invest in real estate if you’re seeking a passive source of income. A key element of owning rental properties is managing those properties. As a result, the landlord must carry out several tasks, including:
Screening tenants and placing them
Handling maintenance issues
Managing turnover of tenants
These are all time-consuming tasks. Consequently, 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 manager” service with screened professionals who can manage the property 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.
Roofstock provides the option to set up a self-directed IRA. 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.
Real investors have lots of positive things to say about using the Roofstock platform. Check them out below:
Roofstock enables me to market specifically to people that would be potential buyers – and not only nationally, but internationally.
Nate P // Financial
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
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
Roofstock vs. Fundrise
Roofstock and Fundrise are both solid investment platforms, but their target markets are different. Here’s a quick look at how they compare:
Roofstock allows you to buy your own single-family home for rent. Most of the properties are already occupied, but if they aren’t, Roofstock will help you find tenants.
The minimum investment for Roofstock is higher, but you get to own your own properties outright. Thus, there is no monthly or annual fee. Plus, you don’t have to share profits with other investors and you can decide exactly which home(s) to invest.
Fundrise allows you to buy shares in a variety of real estate projects in the form of real estate investment trusts (REITs). Those can be anything from single-family homes to large, commercial real estate properties.
Because you buy shares instead of owning properties outright, the minimum is naturally much lower. Fundrise starts at $500, although you have to cough up at least $1,000 to take full advantage of the platform.
The biggest downside to Roofstock is probably the fact that you have to pay an annual fee, as you would with any REIT. The fee Fundrise charges is 1% of your portfolio every year.
Given that real estate investment marketplaces are a new concept for many people, you are bound to have questions.
So, let’s go ahead and answer some of the more common ones.
Is Roofstock Safe?
Yes, Roofstock is completely safe. Of course, you want to be certain that when you invest you’re choosing a reliable platform that you can trust.
Luckily, Roofstock’s comprehensive certification process ensures the homes on the platform live up to a high standard. As well, properties have to be professionally inspected with all repair costs estimated with an accurate valuation.
And 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 even refuses property listings when it believes asking prices are too high.
Having facilitated over $2 billion worth of transactions since 2015, Roofstock’s co-founder and CEO has extensive experience in real estate investing.
Gary Beasley was previously 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. That said, 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 Single-Family Rental Properties?
Anyone who has the money to invest can buy properties from Roofstock. In the past, it was only open to accredited investors, but that is no longer the case.
Indeed, the platform is open to non-accredited investors today—unless you want to join Roofstock One.
Of course, if you are a non-accredited investor, you’ll need to have the cash to pay for the property unless you plan to finance it. That’s because lenders usually demand that investors make a down payment of around 20% 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.
Is Roofstock a Good 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.
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.
Unfortunately, there’s no app available right now. However, the website is mobile-friendly.
On the other hand, 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 Does Roofstock Make Money?
Roofstock makes money with the fees it charges. Typically, you’ll pay a marketplace fee of 3.0% to sell properties on Roofstock. In other words, that’s 3.0% of the final sale price.
This makes Roofstock a cost-effective option. And 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 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.
Buying properties on Roofstock is easy, even for the new real estate investor. It 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 review will give you the details you need to determine whether or not this is the right platform for you.
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 Yahoo! Finance, MSN Money, and GOBankingRates. You can see more of his work on Muck Rack and Contently, or connect with him on LinkedIn.