Would you like to create an income by investing in the real estate market?
Then investing in a rental property may be perfect for you!
Investing in rentals can be a lot of work, and while you can make money hosting an Airbnb, it takes time, money, and patience. Ain’t nobody got time for that!
In this Roofstock review, we’ll discuss how investing with Roofstock works plus look at some pros and cons so you can decide if they are right for you!
Roofstock is an online real estate marketplace co-founded by Gary Beasley, Rich Ford, and Gregor Watson that allows investors to purchase US-based single-family rental properties.
It is a platform that allows you to invest in income-generating properties without ever leaving your home.
Roofstock’s an easy and accessible way to invest in single-family residential (SFR) rental properties, with data and analytics provided to you so you can find matches that fit your risk tolerance and investment goals.
Single-Family Rental Properties
Investors can purchase or sell single-family homes through Roofstock.
You can sign up for free and gain access to 70+ markets nationwide in order to buy and sell single-family rental properties.
For buyers, you can search based on local, earnings/yields per property, potential cap rates, neighborhood scores, and more.
In addition, some homes are already being rented out so when you buy the property, you can immediately start collecting rent from your investment.
For sellers using Roofstock, you can sell your single-family rental properties without removing tenants from the property.
Plus, you can avoid the hassle of staging the property and showing it to possible buyers like you would in traditional real estate processes.
Investors can also purchase portfolios of homes.
This option is perfect for those interested in purchasing multiple properties, but don’t want to find them individually
Like most online marketplaces and investing platforms, Roofstock also charges a marketplace fee to use its service.
Fees for the buyer:
Once you make an offer and it is accepted, you can expect to pay $500 or 0.5% (whichever is higher) of the contract price.
Included in this fee, Roofstock offers a property inspection and preliminary title report.
Keep in mind other fees will differ per rental. These include costs such as closing costs, maintenance fees, HOA, management fees, and other costs of owning a property, such as insurance.
Fees for the seller:
Listing a property is free. However, when the property is sold, there is a 3% fee on the contract price or $2,500 per property, whichever is higher.
One of the key features of Roofstock is it is a more accessible approach to investing in real estate.
This platform provides you with access to some amazing properties all over the US on a searchable online database.
Property listings come with information like:
- pictures, physical address (when available)
- location data like schools or amenities nearby
- and property details including projected cap rate, gross yield, cash flow, and appreciation
- Online open houses
The company offers a 30-day money-back guarantee for certain Roofstock-certified properties.
The Roofstock certification includes having an inspection to check the roof, heating and cooling system, exterior walls, a check for water damage in the house as well as looking at the windows to make sure there is no need for immediate repairs.
Who Is Roofstock Best For?
Investing in any real estate property requires some due diligence on the part of the investor. It also involves making a substantial investment of your money.
This service is best for:
- beginners who want to get started in real estate investments
- experienced investors
- anyone looking to make a long-term income
- investors who want diverse portfolios
- those who want to own rental property, and have funds to do so
How To Invest With Roofstock
There are a few different options available for those who want to become part of this online marketplace.
Investors can choose to purchase a property that is currently being rented or one that will be vacant when they close on it.
Another option for investors is purchasing vacant properties that need some work before being ready to be rented out again. This means there will be an additional cost associated with doing the work necessary to make it habitable again.
The market is always changing, and it’s important to adjust your investment strategy accordingly. One way to do this is by holding real estate in your IRA.
To hold real estate in your IRA, you will need to have a self-directed IRA account with a custodian that specializes in self-directed IRAs. All the paperwork and financial reporting will go to the custodian to make sure that you are not violating any rules regarding real estate transactions.
The real estate property you purchase with your IRA cannot be used by family members of the IRA owner or the owner of the IRA.
Cash is usually required when purchasing real estate within an IRA. The IRA must also pay all property ownership expenses.
Per Roofstock, there are benefits of owning real estate property in an IRA.
- “You don’t have to pay current taxes on rental income or capital gains, allowing your assets to grow more quickly.”
- “Real estate provides great diversification because its returns are not correlated with the stock market.”
- “When you reach the retirement age of at least 59 ½, the rents on your properties provide you with ongoing income.”
Roofstock One – Managed Investing
Investing in real estate can be a great way to build wealth, but it’s not for the faint of heart.
If you’re looking for a more hands-off way to invest in the single-family rental sector, Roofstock One could be the perfect option for those who are qualified as accredited investors.
Roofstock One is a new investment platform that lets investors buy shares of tracking stocks that are tied to the performance of fully-curated single-family rental property portfolios without any management responsibilities on their part.
To begin investing with Roofstock One, you must be an accredited investor with at least an individual income of $200,000 per year or a joint income of $300,000 per year for each of the past two years with an expectation of the same in the current year or with a net worth exceeding $1 million (excluding a primary residence).
You will need to make a minimum investment of $5,000 and will be eligible for the receipt of quarterly dividends calculated based upon a pro-rata share of gross rent proceeds less and pay the operating expenses.
These expenses include an annual asset management fee of 0.5% of the home price as well as a management fee of 10% of the gross rent for a property manager to take care of all the management and maintenance.
Roofstock will retain 10% ownership in the property and you will receive economic rights in the property, which include tax benefits, net rental income, and appreciation.
Roofstock Pros & Cons
- You don’t have to be an accredited investor to invest through Roofstock Marketplace
- Roofstock offers a 30-day money-back guarantee for certain Roofstock-certified properties
- If your property is already tenanted, you can start getting cash flow from rental income almost immediately
- The transaction fees are competitive with Roofstock
- Buyers get access to properties in hot rental markets
- Buyers own 100% of the single-family houses they purchase
- Roofstock facilitates the closings on the property
- Projections like cap rate, gross yield, cash flow, etc. are provided
- It’s free and easy to sign up on the Roofstock website
- There is a high minimum investment – the total price you are paying for the property
- To invest in Roofstock One there is a minimum investment of $5,000 and you must be an accredited investor
- It is a long-term investment
- You cannot cash out of the investment quickly if you need cash fast in the case of an emergency
How To Sign Up With Roofstock
Signing up for an account with Roofstock is completely free and easy.
Go to the Roofstock homepage and click the signup button in the upper right corner of the page. This will take you to a “Welcome to Roofstock” page.
Roofstock provides three ways to sign up on the Welcome page:
- fill in your personal information on Roofstock
- use your Google account
- use your Facebook account
Next, you will need to create your Roofstock Investor Profile. It will ask you whether you are an accredited investor and what your goals are.
Once you’ve submitted this information successfully, it’s time to start looking for properties Roofstock lists that are available to invest in.
Is Roofstock Right For You?
Roofstock gives you an opportunity to invest in investment properties and start getting income from rental properties, but there is more work to do on your end.
Roofstock is the right option if:
- you have the desire to get started investing in rental properties
- are willing to put in a little work and do your due diligence when selecting properties
- and if you have finances available that you can invest in the properties.
Comparing Roofstock To Competitors
But there are other real estate investment platforms that also offer ways to invest and earn income cash flow in the real estate investment market.
Roofstock Vs. Fundrise
Fundrise is a crowdfunding platform that allows you to buy and sell real estate investment portfolios by investing in one of two main ways through REITs and eFUNDs.
Depending on your investing goals, there are different portfolios for real estate investing available on Fundrise. You can choose from one of the following: Starter, Supplemental Income, Balanced Investing, or Long-term Growth.
The minimum to get started investing with Fundrise is as low as $10 with the Starter portfolio.
- Entire single-family homes are purchased on Roofstock.
- Real estate investments are made through REITs and eFUNDS on Roofstock and Fundrise
- There is no minimum to get started on Roofstock, however, the total investment is the purchase price of the property you are buying
- There is a 1% annual fee on Fundrise
- The fee for buyers on Roofstock is $500 or 0.5% (whichever is higher) of the contract price and the fee for sellers is 3% fee on the contract price or $2,500, whichever is higher
- Roofstock offers a 30-day money-back guarantee on certain Roofstock-certified properties
Roofstock Vs. Crowdstreet
CrowdStreet is a real estate crowdfunding platform that focuses solely on commercial properties.
It offers investors the opportunity to buy shares in commercial properties that include multifamily homes, office buildings, retail strip malls, self-storage facilities, and even parking garages.
Investing with CrowdStreet is based on performance rather than property type which makes it unique from other real estate investment platforms like Roofstock which focuses on single-family residential properties, small multifamily residential properties, short-term vacation rentals, and built-to-rent properties.
While investing with Roofstock requires an investor to have more capital available than investing on CrowdStreet, both platforms are easy to use and offer investors an opportunity for income through real estate investments.
There are three ways to invest with Crowdstreet.
- Diversified funds and vehicles
- Individual deals
- Tailored portfolio
Accredited investors (those with a net worth of $1 million or a high income) can get started on CrowdStreet with a minimum of $25,000. The fees on CrowdStreet are between 0.50 % to 2.5%.
Roofstock Vs. PeerStreet
PeerStreet is another real estate crowdfunding platform that specializes in providing a different way to invest in real estate.
With PeerStreet, accredited investors can invest in peer-to-peer lending through real estate loans. The loans are not unsecured but are backed by real estate assets.
Investors can invest as little as $1000 and get started without any lender fees or interest rate charges.
Fees are charged differently with PeerStreet than on other crowdfunding platforms. For example, a borrower may obtain a loan on PeerStreet with 7% interest. PeerStreet would then sell it to an investor and pay them 6.5% of the interest to the investor.
PeerStreet’s fee is the difference between what the borrower is paying and what PeerStreet is paying the investor who buys the loan.
Roofstock Vs. Wealthfront
Wealthfront is a robo-advisor that specializes in providing investors with low-fee investment advice.
Investing with Wealthfront is easy and offers a way to invest in stocks, bonds, real estate, and ETFs for low fees.
Investing with Wealthfront requires no minimum and does not charge fees for investing with balances under $5,000. There is a required minimum deposit of $500.
Wealthfront is easy to sign up for and easy to use with automatic portfolio rebalancing.
If you are looking for a robo-advisor that can provide investment advice without the high fees of other companies, then Wealthfront may be the right fit for you.
Is it safe to invest with Roofstock?
It is safe to invest through Rookstock. There is a 30-day money-back guarantee and/or vacancy protection on certain Roofstock-certified property purchases.
However, there are risks involved with any investment. The investment may make less money but it may also make more money than their experts predict.
Is Roofstock a good investment marketplace?
Yes. It is a good online marketplace for single family rental real estate investing.
It is a great way to get started in real estate investing.
Where does Roofstock get properties from?
They source a majority of their properties from property owners directly who want to sell, the agents and brokers who represent investment property sellers, and property management companies.
How do I invest with Roofstock?
To get started, an investor must sign up to become part of the online marketplace. The process is free and there are no fees for signing up.
An investment can be made by researching properties based on your specific criteria, selecting a few that meet your needs, and submitting an offer.
To use Roofstock, you do not have to be an accredited investor. However, if you want to invest in Roofstock One, you will need to be an accredited investor and there is a minimum investment of $5,000.
What sort of return should I expect from Roofstock?
It depends on the single-family residence you want to purchase. Roofstock provides details of the neighborhood trends and also a neighborhood score in each property listing.
When you decide to sell, you will also get any appreciation the property has accrued.
Our Roofstock review reveals that the company is a good investment marketplace for people who want to invest in single-family rentals and start getting side income from rental properties.
Investing with Roofstock is great because they have competitive transaction fees when compared to traditional closings on property.
Investments can have long-term cash flow from rental income which is great for their finances.