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Real estate should be a part of your investment portfolio if you want to create long-term financial wealth. Today, technology makes it easier than ever before to invest in this asset class through online platforms that offer REITs, standalone deals, and pre-curated portfolios.
However, many investors are still looking to buy entire rental homes to generate passive income. Plus, the hot markets around the country aren’t necessarily the ones they live in. So they turn to online platforms like Roofstock, which also connect you to property managers if you don’t want to be a landlord yourself.
In this Roofstock review, we’ll have a deeper look into the platform’s available features, how it all works, and the fees you can expect. Moreover, we check out the pros and cons and who should use the platform.
Bottom Line: Roofstock is an online marketplace for those looking to invest in single-family rental properties. Roofstock provides research, analysis, and evaluation of their listed properties to make it easier for people to invest in rental properties across the U.S.
|Features and tools
|Ease of use
What Is Roofstock?
Roofstock is an online marketplace founded in 2015 by Gary Beasley, Gregor Watson, and Rich Ford where investors can buy and sell single-family rental properties in more than 70 markets in the United States. These turnkey rental homes are already occupied by tenants, giving you immediate cash flow.
The company’s core team has a background in the single-family rental space. Their mission is to make “real estate investing radically accessible, cost-effective, and simple.” That’s why Roofstock does everything from screening and evaluating properties to negotiating on your behalf to helping with the closing and transaction process. However, the company usually doesn’t own or finance any of the investments.
How Does Roofstock Work?
When you want to buy single-family rental properties on Roofstock, you will follow a four-step process:
- Search: First, you browse the available properties, using the custom filters to find houses according to your parameters like price, returns, location, and more.
- Analyze: After finding a potential property, you review the provided details and learn more about it. We will go into more detail in the features section.
- Make an offer: From there, you can submit an offer free of charge. When it’s accepted, Roofstock charges 0.5% of the contract price or $500, whichever is higher. You can also get pre-approved by a lender to strengthen your offer.
- Close: On the final step, the transaction team helps you with the closing.
From there, you can earn a consistent monthly cash flow and enjoy continued support from Roofstock.
Although Roofstock doesn’t have an average low-end purchase price for its properties, users have to assume a high minimum deposit since this platform offers complete access to single-family houses.
Therefore, people using Roofstock must commit to a single-family home or use the platform’s financing features to put down 20% of the property’s value and make regular payments plus interest.
Requirements to Open an Account
To sign up for Roofstock, you must submit personal know-your-customer (KYC) information, such as an email address, full name, and phone number.
However, unlike some competing real estate investing sites, clients don’t have to be accredited investors to buy or sell single-family homes in Roofstock’s signature marketplace.
How to Open a Roofstock Account
Opening an account with Roofstock is free and easy. First, click on the sign-up button in the upper right section of the website. You will be redirected to the respective form, where you can also choose to sign up using Google or Facebook.
Using the form, you must provide personal information such as your name, phone number, email address, and password. After that, you let the platform know whether you are interested in buying or selling properties. Once you finish signing up, you can start browsing the many available listings on the platform’s marketplace.
Roofstock wants to make real estate investing easy and hassle-free for investors. Hence, they give investors many tools and features to work with, including their easy-to-use marketplace and educational resources.
|Account Fees – Buyers
|0.50% of purchase price or $500
|Account Fees – Sellers
|3.00% of sale price or $2,500
|Single-family rental properties
|Direct ownership and REITs
|More than 70 markets
|Phone (+1 800 466-4116) and Email ([email protected])
The Roofstock marketplace is the place for buyers and sellers of investment properties or entire portfolios. The online marketplace was launched in 2016 as a platform for cost-efficient and transparent real estate purchases.
Here, investors browse the available listings and search for rental properties that align with what they are looking for in single-family turnkey rental properties.
Analyze Rental Properties
After picking the property that piques your interest, you can analyze it from various angles. For example, you can look at pictures and floor plans, do a virtual property inspection, and get a title report and insurance quote.
You also get information on the neighborhood ratings, local school scores, the market itself, tenants, and payment history. Moreover, you can apply tools to visualize returns and cost estimates.
Track & Optimize Rental Properties
A feature that helps you track your income, expenses, leases, and other information related to your rental properties is Stessa.
This free service offered by Roofstock allows you to monitor everything from your dashboard. With this feature, you will make better, smarter decisions and optimize performance as well as returns.
Roofstock Property Management
Investors who want to invest in real estate but don’t fancy being a landlord will be happy about Roofstock’s property management feature. The company connects you with their pre-vetted property managers to save you time and give you peace of mind.
From there, you can choose the property manager you like best (or your own) and let them take care of everything while communicating directly with them. That way, you can invest in markets with favorable returns and always have a best-in-class property manager at hand.
Purchase New Builds
Roofstock also makes it possible to invest in newly built, high-quality homes in the United States. The US construction company Lennar, specializing in building private homes, is now listing properties on the marketplace and adding its Lennar Home Warranty.
What’s great about this is that you could buy these homes for personal use or even a vacation home. You don’t have to rent it out. However, you have Roofstock in your corner to help you manage the rental process should you want to.
Roofstock 1031 Exchange
If you want to defer all your capital gains taxes, a 1031 exchange is perfect for you. Deferring capital gains taxes is possible if you reinvest all your proceeds in new properties or property portfolios with the same or higher value while maintaining similar loan amounts.
As these 1031 exchanges are linked to time limits, you want a marketplace where you can easily buy cash-flowing properties. Roofstock is an excellent solution with its single-family turnkey properties.
Roofstock IRA Investing
Thanks to the partnership between Roofstock and New Direction Trust Company, you can now hold your investments in a self-directed IRA. By doing this, you let your nest egg grow tax-deferred and become a part of your retirement cushion. In addition, you further diversify your investment portfolio and avoid rental income taxes in this way.
You can either open a new account with New Direction Trust Company or transfer or rollover existing funds from your current IRA or 401(k) without tax penalties.
If you want to invest in real estate but don’t know where to start, a course about the ins and outs is often helpful. Roofstock recently created their Roofstock Academy, where they give insights on how to become a successful turnkey rental property investor.
Next to a comprehensive curriculum and on-demand lectures, you can also get one-on-one coaching from professionals and join an active community of like-minded investors. The Roofstock Academy goes hand in hand with the platform’s entire property purchasing process.
Sell Properties with Roofstock
Roofstock also makes it easy for investors to sell rental properties via the platform’s marketplace. The best thing about this is that you don’t have to remove the tenants or organize showings.
Besides, you are still earning rent while your property is listed. Roofstock will take care of everything from A to Z. The only thing that hurts a bit is paying a 3% commission fee. However, the fee does seem reasonable for all the benefits you get in return.
For crypto investors interested in diversifying their portfolios, Roofstock offers a new Web3-native way to secure property deals through its Roofstock onChain subsidiary.
Traders who use Roofstock onChain purchase the rights to their property as a non-fungible token (NFT) on a blockchain like Ethereum and own it in a crypto wallet.
Besides the novelty of this feature, buying homes via the blockchain has unique benefits, such as transparency, tamper resistance, and immutability. Roofstock onChain also offers unique value prop
30-Day Satisfaction Guarantee
Another fascinating feature is the 30-day money-back guarantee the company provides to buyers. This unique (and never heard of before) guarantee allows you to invest confidently in vacant or occupied rental properties.
However, suppose you aren’t satisfied with the investment. In that case, you can notify Rooftsock within 30 days of closing, and they will issue a refund.
It isn’t easy to assess the performance of Roofstock’s assets since people use this platform primarily to buy and sell single-family homes. Ideally, the prices on Roofstock should mimic US real estate market values.
The company has facilitated over $5 billion in transactions since its start in 2016. Roofstock has also boasted $400 million in venture capital since its opening, and it has properties available in 26 states and over 70 markets.
Looking at the available property listings, you will see that the cap rate usually sits somewhere between 1% and 12.7%. The higher the cap rate, the better.
Roofstock Pricing and Fees
Roofstock has different fees for buyers and sellers.
Buyers, for example, have to pay 0.5% of the contract value or $500, whichever is higher. In contrast, sellers must pay a 3% commission fee or $2,500, whichever is greater.
While paying fees always hurts, their structure is reasonable and much better than those of traditional real estate brokers and agencies (up to 6%).
Looking at your investments, they are safe once the transaction on the platform is completed. From there, the property is yours, and you work with the responsible property manager directly. So, a potential Roofstock bankruptcy won’t have any effect on you.
Roofstock Customer Service
To get in touch with customer service, you have multiple options. You can either use the contact form on the website, email the support team ([email protected]), or call one of two toll-free numbers (+1 800 466-4116).
One leads you to the Oakland headquarters and the other to their Dallas office. Therefore, you have an extended window to get your problems solved within regular business hours, depending on your issue and location.
Roofstock Ease of Use
The Roofstock website is professionally designed and has an intuitive user interface, but there are no mobile apps available for those interested in using their phone to manage property deals.
In fact, the latest BBB score for Roofstock is an “F,” with an average star rating of 2.33 out of 5. The Trustpilot score averaged 2.9 stars, with most complaints centered around poor customer service and issues with the expected and actual quality of the properties.
However, there were only four formal complaints for Roofstock on the BBB in the past three years. Just keep in mind that Roofstock isn’t an accredited BBB business.
Roofstock Pros Explained
- Tons of rental properties give you access to hot rental markets: Roofstock operates in over 70 markets throughout the USA, and it boasts using hi-tech screening tools and AI to supercharge its search for the best property deals in the country. Although Roofstock primarily focuses on single-family homes, there’s a great variety of locations in this marketplace.
- Open to non-accredited investors: While Roofstock has some features only available to accredited investors, you don’t have to have this high status to start investing on the platform. There are even ways for investors outside of the US to set up a Roofstock account (such as through Roofstock onChain).
- Direct ownership in single-family rental properties: When you buy a home through Roofstock, you own the entire property rather than fractional shares in a managed fund. When the deal closes, you can use your new property to collect cash flow or live in it yourself.
- Roofstock has a thorough inspection and vetting process: Roofstock works with professional property inspectors and lists all of its findings in its Diligence reports so investors know exactly what they’re investing in before submitting an offer. You can rest assured the properties on Roofstock’s marketplace have gone through extensive quality assurance screenings before landing on this page.
- You earn rental income almost immediately: Since the turnkey rental properties on Roofstock already have tenants, you start generating cash flow the instant the property switches over to your hands. You should see this income flow into your Roofstock account in the next monthly statement.
- Low buying and selling fees: Roofstock has attractive and transparent rates when purchasing or selling properties through its portal. Buyers on Roofstock pay 0.5% of the contract value or $500 when selecting a property. However, property sellers have to prepare for a 3% commission fee or $2,500, whichever is greater at the time of sale.
- Roofstock connects you with property managers: You don’t have to look to another platform to find property managers to handle your new investment. Roofstock created a one-stop-shop platform where you can find and interact with property managers for a seamless experience.
- Unique 30-Day Money-Back Guarantee: If you aren’t satisfied with your property investment after the deal closes, no worries! You can use Roofstock’s 30-day money-back guarantee to get a refund if you have issues with your single-family home.
- Roofstock onChain offers an innovative new way to buy homes: The new subsidiary Roofstock onChain gives investors ways to take advantage of the latest technological breakthroughs in blockchain. For people who prefer a digital record of their transactions, using this flat-fee portal may be a more attractive option than the standard Roofstock marketplace.
- IRA investing and 1031 exchanges are supported: If you want to defer yearly taxes, Roofstock helps investors rollover retirement funds in IRA accounts. You could also defer capital gains taxes with a 1031 exchange on Roofstock’s platform.
Roofstock Cons Explained
- High minimum investment as you buy a house or make a 20% down payment: Unlike many other real estate investment platforms, Roofstock requires investors to buy a full single-family home. If people just want to own shares in a managed portfolio, they won’t find what they’re looking for on Roofstock.
- You buy an entire house unseen and have to trust Roofstock: A major draw of using Roofstock is to invest in properties outside your general vicinity, which makes it challenging to inspect the properties first-hand. Investors have to put a lot of trust in Roofstock’s vetting procedures and documentation to get a feel for these rental opportunities.
- Real estate is generally an illiquid investment: Although Roofstock has a marketplace for buyers and sellers, it’s not easy to liquidate real estate at the drop of a hat. Even if you have property in a hot region, negotiating, inspecting, and finalizing transfers is a long process.
- Homeowners need to set aside money for potential repairs: Since you’re the property owner through Roofstock, you’re also responsible for damages that occur while it’s under your authority. While you should earn consistent cash flow from these properties, you also have to factor in maintenance and repair costs to your investment strategy.
Roofstock is the leading marketplace for buying and selling investment properties with a focus on single-family rental homes. However, investors might also be interested in other forms of real estate. That’s why we have listed two alternatives below:
Roofstock vs. Fundrise
Fundrise is a very popular real estate crowdfunding investment platform that is also open to all investors. Compared to Roofstock, you can invest in commercial and residential real estate portfolios. If you compare fees, they are relatively similar with 1% at Fundrise and 0.5% at Roofstock.
Still, as you don’t buy entire houses, investment costs on Fundrise are way lower. Starting with the entry-level Starter Portfolio, you only need $10. That is nothing compared to a 20% down payment of at least $10,000, excluding additional costs. Plus, you don’t have to set aside money for potential repairs for your newly-acquired house.
However, if you favor owning a house or looking for standalone deals, Fundrise isn’t for you. Fundrise further offers various account levels with higher minimums that unlock features such as IRA investing, a customized portfolio strategy, or access to private REITs. Read our full Fundrise review to learn more.
Roofstock vs Arrived
Famous for its affiliation with Amazon’s Jeff Bezos, Arrived is a real estate investing platform that connects interested investors with residential properties throughout the USA.
However, unlike Roofstock, you won’t own single-family homes or vacation rentals on Arrived’s platform. Instead, investors get to put as little as $100 to work in fractional shares of real estate opportunities in Arrived’s managed portfolio.
Arrived may be a better option for investors more interested in a hands-off approach to real estate investing with low minimums, consistent cash flow, and the potential for price appreciation. Read our full Arrived review for more details on how this site works.
|0.50% of purchase price or $500 (buyers) and 3.00% of the sale price or $2,500 (sellers)
|1.0% per year
|Source fee: varies by property, property management fee: 8.00% and annual asset management fee: 1.00%
|Advisory fee waived (*12 months)
|Invest in real estate with single-family rentals
|Access to private real estate deals
|Access to shares of rental properties
|Long term investors
|Long term investors
|Long term investors
Find out how Roofstock stacks up against the competition.
Who Is Roofstock Best For?
Roofstock is an excellent choice for experienced investors looking to buy or sell rental properties regularly across the United States. Fees are relatively low, while the deal flow is relatively high. Buying a home is also great for those who prefer owning rental property and have the financial resources.
As rental payments serve as your income, single-family rental properties are ideal for long-term passive income investors. However, buying a rental property through Roofstock is also an excellent way for beginners to learn more about real estate investing. This can be the first step in creating a diversified real estate portfolio.
Roofstock Review FAQ
While we have covered Roofstock in detail in this review, we want to answer frequently asked questions regarding the company and its business model.
Is Roofstock Safe?
With the 30-Day Money-Back Guarantee, investing via Roofstock is relatively safe. If you don’t feel satisfied within 30 days after closing a property, you can contact Roofstock and request a full refund.
This is a unique concept that you won’t find that often (if at all) in the industry.
How Does Roofstock Make Money?
Roofstock makes money by charging buyers and sellers commissions and fees for their services, depending on the type of listing.
Buyers are charged $500 or 0.5% of the contract price, whichever is higher. Sellers must pay 3% of the sale price or $2,500 (again, whichever is greater).
How Do You Get Paid with Rooftsock?
There are two ways to make money with Roofstock. The first one is the rental cash flow you receive from the property manager of your investment minus the expenses related to it. The second option is any appreciation in property value if you resell it.
Where Can You Buy Properties with Roofstock?
Currently, Roofstock is available in more than 27 states and more than 70 markets. However, the company aims to expand its investment options continuously.
The markets include Alabama, Arizona, Arkansas, California, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Mississippi, Missouri, Nevada, New Jersey, New York, North Carolina, Ohia, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, and Wisconsin.
How Do I Sell Rental Properties with Roofstock?
If you want to sell your rental properties, you go through a very straightforward process. You first submit a listing, including property information, and answer a few questions.
Then, you get a Roofstock certification to prepare your property for listing. After that, you’ll launch your listing with the help of Roofstock. Ultimately, you will receive offers online and close the sale.
Is Roofstock a Good Investment?
If you want to include single-family rental properties in your portfolio, then you should consider Roofstock. There are various offerings on the platform’s marketplace with attractive investment profiles that offer excellent cash flows.
The company also provides many exciting features that make owning rental homes relatively easy.
What Happens If Roofstock Goes Bankrupt?
If Rooftsock goes bankrupt, nothing will happen to homes purchased via the platform. They are already yours, and you work with the property managers directly and not Roofstock.
However, if you are undergoing a buying or selling process, bankruptcy would affect those processes until a new company steps in and takes over operations.
In A Nutshell
- Minimum Investment: $0
- Fees: 0.50% of the purchase price or $500 (Buyers) and 3.00% of the sale price or $2,500 (Sellers)
- Promotion: None
on Roofstock’s website
If you want to invest in single-family rental properties and earn monthly rental income, then Roofstock is an excellent choice. While you have to bring more money to the table than with alternative investments in REITs or diversified portfolios, their fees are lower than those of traditional real estate brokers and agencies.
Nonetheless, Roofstock makes the entire process of buying rental properties smoother and provides access to rental homes in hot markets investors might otherwise never notice. Using technology enables investors to browse a massive amount of deals, review the details, and buy those properties online.
After all, it’s their mission to make investing in single-family properties radically simple.
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Carsten is a Freelance Copywriter with a personal interest in money management and investing. Besides taking care of his investments, he loves traveling, reading books, and working out (calisthenics & yoga).