Roofstock is an online marketplace where you can buy or sell single-family rental properties or invest in fractional shares of tenant-occupied single-family rental properties.
The company makes real estate investment convenient. You don’t deal with the hassles that come along with property management and maintenance. You do own the rental properties outright and can start earning income on day one.
Keep reading to learn the details about this marketplace, including how Roofstock works, how much you’ll pay in fees to invest, and how Roofstock’s customer service stacks up.
Roofstock is a fast-growing real estate investment platform that helps its users invest in real, tenant-occupied single-family rental properties (SFRs) in markets throughout the United States. Founded in 2015, Roofstock was the first platform to specialize in single-family residences.
Real estate crowdfunding sites such as Fundrise have specialized in commercial real estate or larger apartment complexes, dividing these properties into shares (REITs) which investors can trade, much like mutual funds or ETFs.
Roofstock is different. You could actually buy individual rental properties, and you can sell properties on this platform, too. Roofstock now has a new platform through which you can invest in partial shares of a property.
Roofstock is headquartered in Oakland, Calif., and was founded by real estate investor Gary Beasley. The platform has raised significant cash since inception. Most notably, it raised $50 million in early 2020 and $35 million in 2017. To date, Roofstock has processed over $2 billion in transactions. Not too shabby for being just five years old.
If you want to be a Roofstock investor, you’ll need to make a $5,000 minimum investment to get started.
Using the platform, you can browse hundreds of SFR listings or invest in fractional shares of the properties of your choice. You can also buy property portfolios (i.e., multiple units) and even use Roofstock to sell your rental property or get it managed.
Here is a closer look at what all Roofstock has to offer:
Roofstock Investment Property Marketplace
In Roofstock’s Investment Property Marketplace, you can browse rental properties that are available for sale. Each property listing contains a neighborhood rating, which is a neighborhood quality score.
To determine a neighborhood’s rating, Roofstock uses an algorithm that factors in a neighborhood’s school quality, crime level, home values, median income amounts, real estate market, and employment levels to produce an overall neighborhood score on a 5-star scale.
Roofstock Marketplace listings also show the amount of money you’d need to buy in, the cash flow generated from the investment, the estimated rental income, and the estimated total return and annualized return you’ll get from the investment.
All of Roofstock’s properties go through a certification process to help assure investors the property will earn income.
Roofstock’s Portfolio Properties Marketplace offers investors the chance to buy into multiple rental units in a single transaction.
Portfolio listings include the same search options and neighborhood ratings as marketplace listings.
Roofstock One is the company’s automated investing service for more passive investors. With Roofstock One, you can purchase fractional SFR shares of Roofstock-owned rental properties.
You’d still need at least $5,000 to get started, which is a much lower buy-in compared to the amount you’d need to purchase a single-family rental unit or a portfolio listing.
This lower entry fee lets you spread your investments across multiple SFRs if you so choose. This strategy distributes your risk across a greater number of markets. Another main benefit of being a fractional property owner is that Roofstock handles all of the tenant and maintenance work on your behalf.
You won’t be reading inspection reports or title reports. You won’t need to work with a real estate agent or negotiate a purchase price.
However, your investment can still grow along with the broader real estate market. So, you get the upside of being a “landlord” without any of the headaches.
Roofstock Seller Services
Unlike the popular real estate crowdfunding platforms, Roofstock can help you sell a rental property you already own even if you didn’t buy it through this platform.
Roofstock Seller Services helps rental property owners sell their units up to 77 percent faster than they would otherwise be able to.
When you list your property, Roofstock handles all of the property listing work. They’ll even coordinate open houses for potential buyers.
The best part is that you won’t have to leave your home to complete the entire selling process.
Roofstock Property Management
Property owners that would like someone else to do the heavy lifting can use Roofstock’s Property Management service.
Roofstock does its due diligence when it vets its property managers. You won’t have to worry about hiring an unreliable property management company.
Roofstock Self-Directed IRA
Investors who want to save toward retirement (and who won’t need to access their investments until retirement) can participate in Roofstock’s Self-Directed IRA program.
In partnership with New Direction Trust Company, Roofstock’s IRA service allows you to contribute your real estate earnings to a tax-deferred retirement account.
The major benefit here is that you won’t have to pay income taxes on any rental income you earn from your Roofstock investments.
New To Real Estate Investing?
Roofstock Academy is the company’s online learning hub where you can take a series of courses that teach you how to become a successful real estate investor.
Pros and Cons
- Innovative way to passively invest in real estate
- Available to non-accredited investors
- You can purchase properties that already have tenants and are maintained for you.
- Much lower transaction fees than traditional real estate transactions.
- Invest with as little as $5,000; much less than a large down payment to get into your local rental market.
- Finding the best deal might be tricky and competitive.
- You need at least $5,000 to invest in Roofstock One, and much more than that if you want to purchase a property.
- Not available in all markets.
It’s free to sign up for a Roofstock account, and there aren’t any monthly or annual membership fees.
If you sell your home on their platform, you’ll pay a 3 percent listing fee or $2,500 (whichever is greater).
If you purchase a home, you’ll pay a 0.5 percent marketplace fee.
These fees are much lower than what standard real estate companies charge—the national listing fee average is 6 percent — which is most likely part of the reason why the company is growing so quickly.
To get started with a Roofstock account, click the Sign-Up button at the top right of your browser.
Then, it’s time to create your account. Enter your first name, last name, phone number, email, and password. You’ll also have to indicate what type of properties you’re interested in and how you heard about the company.
At the next step, create your investor profile and answer whether you’re an accredited investor. You don’t have to be an accredited investor to be a Roofstock member.
Next, indicate your primary goal:
- to earn passive income
- to diversify your investment portfolio
- to earn money from a market that has lots of potential upside.
After that, tell them how much money you’re looking to invest, how long you plan to hold on to the investment, and when you want to make your first purchase. You’ll also have to enter if monthly cash flow, location, and property appreciation are important factors to you.
Once that’s done, your account is ready to go. Roofstock will then recommend properties that meet your criteria.
All that’s left to do is browse the available listings. If you find one you’d like to move on, you can make an offer. It’s that simple.
Questions about your Roofstock account? Their customer support team can be contacted at 1-800-466-4116. You can also send them an email at [email protected] or schedule a call. Roofstock offers a 30-day money-back guarantee. The platform will essentially buy you out if you’re not happy.
Important Facts About Roofstock
- Certification Process: If you see a property on Roofstock, you know it has passed a certification process, and as a member, you can view the documents — inspection reports, tax reports, previous list prices, title reports, and the like — before putting down your money. A professional inspection firm ensures the properties shouldn’t require significant improvements after your purchase.
- Open to Anyone: If you have money to invest in real estate, you can invest through Roofstock. The platform does not require you to become an accredited investor, although you would need accreditation to invest in Roofstock One.
- Roofstock Markets: Roofstock makes a point of supplying properties in growing real estate markets. Most of their properties are in warm weather states with Florida, Texas, and California having the most homes.
- Sources of Income: After paying the sale price and becoming the owner of a turnkey property, you’d earn income from rents. If the property is vacant, Roofstock would pay you the equivalent of its rent, minus property management fees, until a tenant moves in. You could also earn cash as the home appreciates in value or lose money if the market declines.
Alternatives to Roofstock
Other popular real estate investment platforms include:
Is Roofstock a Good Investment?
Roofstock gives you access to the real estate market which is historically a sound investment. Roofstock offers access to occupied single-family rental homes. In many cases, you can probably make money. In some cases, you might lose money. That said, if you’re keen on investing in rental properties—without having to wholly purchase them on your own—you’ll be hard-pressed to find a better alternative.
How Does Roofstock Make Money?
Roofstock earns money from transaction fees (from 0.5 percent to 3 percent) when properties are bought or sold in their marketplace. They also earn profits from their large portfolio of single-family rental properties, which they offer fractional shares of to outside investors like yourself.
Is it Wise to Invest in Real Estate?
Yes. If you have the extra cash to invest and would like to diversify your investments outside of the stock market, real estate investing is worth considering. A large percentage of seasoned investors have a portion of their portfolio allocated in real estate because it offers stable returns, and in many cases, reliable upside. Everyone needs somewhere to live, after all.
If you’re new to the real estate investing game and would like to learn more about how it works, make sure to check out my post: Real Estate Investing for Beginners.
Is Roofstock Right for You?
Roofstock’s investment platform offers one of the easiest ways to invest in real estate. You don’t need to hire a Realtor or tour dozens of properties in person to find the best deals. You don’t have to read property inspection reports or explain your property’s floor plan over the phone to potential tenants.
You simply provide the capital while others do the legwork. The fractional investing platform also enables you to own a stake in income-producing rental properties without having to maintain them yourself or deal with renters.
Real estate investing is not the most secure form of investing, though. Rental real estate comes with plenty of costs, from professional cleanings to ongoing maintenance. So, if you only have $5,000 to start an investment account, I would probably suggest you put that into the stock market. Then, once you build up a solid portfolio, you can look at branching out into other investment areas (such as Roofstock).
One thing’s certain: The demand for single-family homes probably isn’t going away anytime soon. What’s more, interest rates are predicted to climb in the coming years, making it harder for people to purchase their own homes outright—which means they have to rent. In turn, investors who are well-positioned with quality rental properties are likely to profit from this scenario.
And with Roofstock’s certification process you should be insulated from some of the dangers inherent in real estate investing.
If you have the capital, I would strongly recommend considering investing in real estate, especially when you can do so without becoming a property manager. But as personal finance experts always say: Don’t put all your eggs in one basket. We all saw what happened to the housing market in the mid-to-late 2000s. Never forget that a healthy portfolio is diversified.
Here’s to making smart decisions when it comes to investing in real estate on your quest to achieve long-term financial independence. I hope this Roofstock review has helped.