Roofstock Review 2022: Invest in Single-Family Rental Properties

Jeremy Biberdorf By: Jeremy Biberdorf May 25th, 2022
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Roofstock logo

1/5

1.0 rating based on 5 ratings

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

It advertises low fees and thorough inspections, but is Roofstock one of the best RE investing platforms around?

FeesMinimum InvestmentPromotion
0.5% of Purchase Price$5,000 (Roofstock One)Get a free account

Roofstock makes it easy enough to invest in real estate with a marketplace of single-family homes, all of which are ready for purchase as investment properties.

Pros & Cons

PROS

  • Home inspection
  • Property managers available
  • Get a free account

CONS

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

Compare to Similar Platforms

Roofstock
4.9 rating based on 5 ratings
4.9/5
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Fees0.5% or $500

Minimum Investment$5,000

PromoGet a free account

Fundrise
4.6 rating based on 5 ratings
4.6/5
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Fees1%

Minimum Investment$500

PromoNone

RealtyMogul
3.5 rating based on 5 ratings
3.5/5/5
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Fees1% to 1.25%

Minimum Investment$5,000

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Full Roofstock Review

Focusing on single-family properties, Roofstock offers an inventory that you can then rent to tenants. Then, the rent checks can potentially start rolling in. That is different from real estate crowdfunding platforms like Fundrise, which does offer other very useful features.

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, right?

Enter platforms like Fundrise, Roofstock, and CrowdStreet. The Roofstock online marketplace lets you purchase single-family homes with existing tenants and low fees, but Fundrise does it for a lower minimum fee and your choice of an investment plan. Accredited investors may want to look into CrowdStreet, but those who aren’t will benefit from Fundrise and maybe Roofstock.

Roofstock At A Glance

Sign Up Costs
  • None.
Account Fees
  • 0.5%
Time Commitment
  • 0 months.
Accreditation Required?
  • Only for Roofstock One.
Property Types
  • Single-family rental homes.
Investment Types
  • Direct Ownership and equity.
Regions Served
  • Over 70 markets.
Pre-Certified
  • Yes.
Guarantees
  • 30-day satisfaction guarantee.
Property Management Service
  • Yes.

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. Roofstock only focuses on single-family homes.

This platform has a long history in the marketplace. After all, it was set up to be a rental house marketplace that was created by investors, for investors, which some may find beneficial while others may not.

For more information about Roofstock, see the company’s About page.

Roofstock Fees and Pricing

For buyers, Roofstock charges a fee of 0.5% or $500 – but there is a high minimum investment of $5,000, compared to Fundrise’s lowest $500, and Peerstreet’s $1,000.

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 pretty 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:

  • Pricing information
  • Location
  • Neighborhood rating
  • Gross yield
  • Type of funding
  • Estimated annual appreciation

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.

For more information, see Roofstock’s How It Works page.

Where Can You Buy Properties?

One thing 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:

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

These are major cities, but in a country as big as the U.S., it doesn’t really give you as wide a reach across the states as some other services.

Is Roostock safe? Roofstock coverage

Since the platform only has properties in the United States, it can shut out some potential investors.

If you ever have any questions, the knowledge center also has some articles about a few of its markets, allowing you to gain insight into market trends and developments.

Why Choose This Marketplace?

Roofstock’s selling point is homes with existing tenants, which is easier for some investors, but it isn’t necessarily what everyone wants.

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 one way to invest in real estate if you’re seeking a passive source of income, as is Fundrise. 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
  • Collecting rent
  • 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.

Roofstock 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.

Self-Directed IRA

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, 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.

Investor Reviews

Despite all the Roofstock may have going for it, real investors have lots of not-so-positive things to say about using the Roofstock platform. Check them out below:

Roofstock just wants your money as fast as possible and will then leave you in the dust. Their “inspection” reports are misleading at best and fraudulent at worst. I take responsibility since I trusted an inspection done by the seller’s agent (Roofstock). Please learn from my mistake and either avoid doing business with Roofstock or hire your own inspector to perform a real report on any properties that you’re looking at.” – Dean A.

“I am noticing significant bias and Roofstock conflict of interest, as a buyer investor…”Raja M. read the full review on the BBB.org site

BAD service, no one answers, clients are stressed. support always closed. disappointing, agent won’t answer.. Etc.”DV Lazarescu

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 and ou don’t have to share profits with other investors and you can decide exactly which home(s) to invest in.

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. This gives Fundrisers more options.

Because you buy shares instead of owning properties outright, the minimum is naturally much lower (a major win). Fundrise starts at $500 with plan choices up to $100,000 for the Premium portfolio, giving clients more diversity.

On top of everything, another downside to Roofstock is probably the fact that you have to pay an annual fee.

Roofstock FAQ

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

It has a certification process and properties have to be professionally inspected with all repair costs estimated with a 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 will also be included.

You should always do your due diligence when purchasing new properties, and that includes reading real user reviews on trusted review sites such as Trustpilot and BBB.org, which we have included.

Our aim is to give our readers an unbiased insight into what a platform has to offer and its shortcomings. After all, sometimes what’s advertised isn’t always put into practice.

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 are 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 Rental Properties?

All you have to do to sell a Roofstock investment is submit a listing.

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 them on Roofstock. In doing so, you make the change from an investor to a seller.

Mobile App

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.

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.

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

Should You Use Roofstock as a Seller?

Buy a home with Roofstock, and you will one day want to sell that home. Roofstock accommodates sellers who want to offload their investments on the platform.

Roofstock allows you to sell any single-family home in their supported cities without removing existing tenants from the property. Investors can save time, hassle, and money while collecting rent until closing day.

Selling with Roofstock is simple enough, but there is a 3% commission fee to pay for Roofstock’s services.

Part of the selling process is passing the platform’s certification process to ensure your property is suitable for the marketplace. Investors looking to sell must allow Roofstock to conduct a property inspection, title report, and collect several critical documents. Most sellers claim the process takes between 15 and 35 days.

After everything has been confirmed, your listing will go live, and all you have to do is wait for a suitable buyer to appear.

Investors interested in rental properties can buy and sell entirely on the platform. It’s a relatively ore straightforward way to manage the process (almost) entirely online.

Summary

Buying properties on Roofstock is simple enough for some beginners. It uses its technology to offer a platform that aims to simplify the process of purchasing real estate.

Roofstock an be a choice for someone looking for a simple way to dip their toes in the water of real estate investment, but it can cost a lot to play ($5,000 minimum) compared to other platforms like Fundrise here and CrowdStreet here.

Ready to get started?

Head over to Roofstock to find your first property!

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Jeremy Biberdorf

About the Author:

Jeremy Biberdorf is the founder of Modest Money. After working many years in the website marketing industry, he decided to take on blogging full time and also get his finances headed in the right direction. Also check out his contributions to Equities.com and Benzinga.

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