Do you want to dive into real estate investing? A crowdfunded real estate platform like Roofstock could be the perfect way to start building your single-family rental property portfolio.
In this Roofstock review, we will take a closer look at what the platform has to offer investors like you.
What Is Roofstock?
Roofstock is an online marketplace for investing in real estate. As an investor, you can access research, analytics, and insights to help you evaluate potential properties. With that information, you can confidently move forward with investments in real estate properties.
Roofstock helps individual investors buy and sell entire rental properties. Since its founding, more than $4 billion in single-family residential home (SFR) transactions have been completed with Roofstock.
Roofstock also offers RoofstockOne, which is a crowdfunding site for real estate investment deals. With RoofstockOne, you can invest in fractional ownership opportunities of rental properties. Like other real estate crowdfunding platforms, Roofstock presents real estate investment opportunities to its members.
In either case, Roofstock has carved out a very specific niche by exclusively offering single-family rental homes for sale to its investors.
How Does Roofstock Work?
Real estate investing can be an important wealth building tool for many.
But as with all investments, there are challenges you'll need to overcome if you want to invest in single-family rental properties. A few of the biggest hurdles include hunting around for the right deal, obtaining the necessary financing, and managing the property.
When you work with Roofstock, the platform handles a lot of the tricky legwork for you. In our Roofstock review, we are taking a closer look at the process.
Roofstock Finds And Inspects Deals
The first step in the process is the Roofstock team finds potential deals to list on the online marketplace. Roofstock will put the property through a certification process.
Roofstock will ensure it has a clean title report, procure pictures of the property, and provide a valuation report within the certification process. Additionally, Roofstock will have a property inspection conducted. If the property becomes available on Roofstock, you can access the property inspection report to find out about any major and minor repairs on the horizon.
Beyond the physical condition of the property, Roofstock takes things a step further with their Roofstock Exclusive listings. In these special listings, Roofstock offers a review of the payment history and selection criteria of any tenants currently living in the property. You can use this information to make more informed investment choices on occupied properties.
Investors Explore Deals
With Roofstock, you can purchase entire single-family homes through the platform. As a buyer, you'll have access to an extensive number of deals. In fact, several hundred home transactions are conducted each month.
Typically, a Roofstock real estate investor is looking to build rental income through single-family rental properties. No matter what real estate market you live in, you'll find plenty of deals available through the platform from around the country. Through Roofstock, you can find some relevant rental market analysis information.
You can search by state, price, neighborhood rating, and more. Here's what the search process looks like:
The extensive reports compiled by Roofstock make the job of conducting your own due diligence much easier. But keep in mind that if you are looking for partial ownership opportunities, then you'll need to work with Roofstock One.
Here's what a look at a Roofstock listing would look like:
As a member, you can dive into the nitty-gritty details of each listing.
Close On Property
If you find a property that meets your investment criteria, Roofstock will facilitate the closing process. In most cases, Roofstock offers a relatively fast closing. Currently, Roofstock offers closings on properties within 30 days of a signed Purchase and Sale Agreement for an all-cash or financed deal.
With this facilitation, Roofstock acts as the seller's agent. Sellers pay a listing fee of 3% of the sale price or $2,500, whichever is greater. As a buyer, you don't necessarily need a real estate agent. You are able to retain a buyer's agent or real estate attorney at your own cost. But most will choose to avoid adding any additional expenses to their closing costs and keep more money in their pocket.
After closing, it is time to make decisions on property management. You can choose to manage the property yourself. Or you can work with a recommended property manager from Roofstock's network of property managers. Although there is a property management fee when you retain a property management company, the expense can allow you to enjoy the passive income associated with your rental real estate.
Roofstock Pros and Cons
Every financial product has pros and cons. Here's what you should know about Roofstock before diving in.
- Very low fee for buying and selling rental properties
- Remote access to hundreds of single-family rentals to purchase
- Information about property neighborhood, crime level, schools, and employment available
- Self-directed IRA investing available for an extra fee
- Network of property managers to work with
The low costs and streamlined efficiency of Roofstock make it an attractive opportunity for investors. But, there are a few drawbacks.
- Illiquid investment
- Properties not available in all states
- Fractional share investing is only available through RoofstockOne
Roofstock doesn't have properties available in all states. And once you invest, you may not like the illiquid nature of a real estate investment.
Additionally, we've focused this Roofstock review on the offerings available through the traditional model. But recently the company has added RoofstockOne, which allows for partial ownership in a crowdfunding environment. The traditional Roostock model is focused on providing solid listings for real estate investors.
Is Roofstock Only for Accredited Investors?
Roofstock offers the opportunity to buy tenant-occupied real estate. But is this opportunity limited to accredited investors?
The good news is that both accredited and non-accredited investors are able to invest in the deals available on Roofstock.
However, that is not the case for RoofstockOne. You'll need to be an accredited investor to work with the partial ownership opportunities available through RoofstockOne. An accredited investor is a person or entity that has individually earned an income of $200,000 in the last year or $300,000 jointly in the last year. You may also become an accredited investor with a net worth of at least $1 million (excluding your primary residence).
Roofstock Minimum Investment and Fees
As with all investment platforms, there are fees to keep in mind when working with Roofstock. You'll have to pay a marketplace fee of $500 or 0.5% of the purchase price. Roofstock uses the marketplace fee to cover its certification, underwriting, due diligence, and transaction management services.
Roofstock doesn't necessarily have a minimum investment. However, you are purchasing an entire house. With that, you should expect a significant down payment. In most cases, a down payment will be several thousand dollars.
If you decide to purchase a property through Roofstock, you should keep property management fees in mind. Also, consider that RoofstockOne has a minimum investment of $5,000.
Is Roofstock a Safe Investment?
Roofstock, like all other real estate investment opportunities, presents available properties that come with some level of risk. An element of risk is essentially unavoidable when building an investment portfolio. But you have to decide for yourself what level of risk you are comfortable with.
When investing in single-family rental properties with the intention of generating a rental income, one of the biggest risks associated is finding the right tenant. Roofstock helps to alleviate the concern of finding a great tenant through their Roofstock Exclusive listings which look into the payment history of the current renters. If you like what you see before you even buy the property, you can potentially generate an income stream from day one.
In the end, rental properties purchased through Roofstock come with some risk for the investor. It is critical to keep in mind that it is absolutely possible to lose money on investments made through Roofstock. But it’s also possible to make money on a good deal.
If you aren't sure where your risk tolerance stands, I highly recommend checking out our three-step test to see how much risk you can stomach.
Who Are Roofstock’s Biggest Competitors?
Roofstock offers two distinct services that put it in direct competition with several big platforms.
In terms of having the option to buy leased single-family rental properties, Roofstock is relatively unique. But you can find information on rental data for properties with tenants through Homeppl.
In terms of the crowdfunding options offered by RoofstockOne, Fundrise and CrowdStreet are some of the biggest competitors in the space. With both Fundrise and CrowdStreet, you'll find fund options. Fundrise is likely the better choice if you are looking for a real estate investment opportunity with low minimum investments.
Learn More: The 15 Best Real Estate Apps for Investors
The Biggest Difference Between Roofstock and Other Platforms
The biggest difference that sets Roofstock apart from other platforms is the extensive amount of information the platform provides investors with for each listing that makes its way across its path. Roofstock offers detailed information about the property's condition and value. Plus, in some cases, it even offers details about the current tenant's payment history.
Beyond the ample listings for individual investors to choose from, RoofstockOne offers an entirely different approach for investors. Through RoofstockOne, you can jump into real estate investing with as little as $5,000.
The versatility of Roofstock's offerings allows investors of all kinds to enjoy what this platform has to offer. But if you aren't convinced that Roofstock is the right fit for your investment goals, then check out our list of the best real estate crowdfunding options.
Want more? Check out all of the best real estate crowdfunding sites.
A rental property portfolio can provide a second stream of income for your household. But the process of building an extensive rental property portfolio without the helpful tools offered by Roofstock may be daunting. Instead of going it alone, it may be more profitable to work with this platform.
With Roofstock, you'll find access to more information about any of these platforms' listings. The useful information gleaned from the Roofstock certification process can help you evaluate potential investment opportunities with ease.
Ultimately, Roofstock is a great fit for investors searching for an occupied single-family home. You'll find plenty of opportunities through this platform.
Ready to sign up? Take action and sign up for Roofstock today!