Are you thinking about investing in real estate but aren’t sure where to start? If so, Roofstock may be the real estate investment platform for you.
With Roofstock, it’s easy to invest in rental properties, find and purchase single-family homes, and more. You can make some serious money all by becoming a virtual “property manager” with Roofstock.
In our Roofstock review, we’ll tell you all about how to manage your single-family rental properties and more with this revolutionary platform.
What is Roofstock Real Estate Investment?
Founded in 2015, Roofstock is an online real estate investment platform that allows you to rent or buy single-family rental homes. Not only that, but it also allows you to invest in commercial real estate properties via self-directed IRAs.
In short, it’s a great entry into real estate investing for people who are interested in building up a regular income stream from rental properties.
How is it different from REITs or real estate investment trusts? In a lot of ways! Roofstock doesn’t allow you to passively invest in real estate. Instead, you will be taking an active role in buying single-family rental properties. It’s a more hands-on approach that might not be ideal for all real estate investors, but can lead to greater returns if you know what you’re doing.
How Does Roofstock Work?
Roofstock is perfect for investors who are interested in taking a more active role in their real estate investment properties – but not quite as much of a role as if they were property managers for rental properties in their own zip codes.
The way it works is simple.
Once you create an account on this online marketplace, you can either sell or buy rental properties (usually, these are single-family rental properties that already have tenants living in them).
You can begin by using custom filters to find a property based on its list price, location, or desired return – whichever you find most relevant. You can also sign up for alerts, so you know when a matching property is available.
Once you find a potential property, you can review details (including pictures, floor plans, inspection history, and more) to learn more about the property.
Then, you submit an offer. This is free. Once your offer is accepted, you’ll be charged a marketplace fee of 0 .5% of the contract price or $500, whichever is higher.
You can finance the purchase of the rental property via the normal channels – or you can pay with cash. You can acquire a mortgage just as you could with any other property transaction. There are Roofstock resources to help you go about getting the mortgage or other financing you need, too.
The difference is that when you sign up with Roofstock, you will also be matched with a property manager who will handle the day-to-day tasks that need to be done when working with tenants.
What’s different about Roofstock versus other platforms is that you will not be working with other investors. You will be purchasing or renting your own rental property, not splitting it with multiple investors. Buying a home through this platform gives you direct ownership of the property – again, another difference between this real estate investing opportunity and other platforms.
If you need to sell, you can go about the traditional methods of doing this – contacting a realtor in the area to offload the property or attempting to market and sell it yourself. You can also resell it through Roofstock.
Roofstock offers all kinds of resources that make it advantageous to consider, especially when compared to buying your own properties directly. For one, you’ll get information about properties before they even hit the market, giving you an edge over the competition. You’ll also be partnered with resources to help with financing, selling, property management, and more.
There are currently investment opportunities for rental property in more than 27 states.
You don’t have to pay any kind of minimum investment if you choose to purchase rental properties with Roofstock. That’s a major benefit of using Roofstock to purchase investment properties versus other real estate crowdfunding platforms.
As a buyer, you can choose between multiple options – investing in a single real estate property, choosing to invest in a portfolio of multiple properties, or bringing your own property up as one of Roofstock’s many real estate investment opportunities.
Roofstock even has a helpful “open house” feature that enables investors to take a look at properties that aren’t even listed on the marketplace for transactions yet.
And if you’d rather be a more passive investor, there are some limited options for that, too. Roofstock One is a program that allows accredited investors to manage properties in a more hands-off way.
Can You Make Money on Roofstock?
Earnings on Roofstock vary widely depending on a variety of factors, including the expected rent you might be able to charge in your rental real estate property, what other expenses to expect (such as repairs and maintenance), property taxes, and loan payment interest (if the loan is being financed).
You’ll get paid via quarterly distributions if you are investing with fractional shares. If you are investing in property management as the goal, you can start collecting rental income as soon as you’ve closed.
How Much Should you Invest in Roofstock?
You can invest on Roofstock with a minimum investment of $5000, though this can sometimes be less based on the value of the single-family homes you’re considering investing in.
How much you should invest is up to you and depends on your investment goals. Talk to a certified financial planner for a better idea of how to go about your investment decisions.
Is Roofstock Safe?
Investing in real estate is no more or less safe than investing in real estate in general. There are risks, but for the most part, Roofstock offers investors a good way to predict, prevent, and mitigate risk.
There are also guarantees available when using the platform. If you purchase a property through Roofstock, you have up to 30 days to start the refund process.
Plus, if your property has no tenants, Roofstock will pay your rent in some cases.
Customer Service at Roofstock
The Better Business Bureau has given Roofstock an A- rating, an indication that the company not only has excellent customer service but also provides a good method of providing rental income.
The company hasn’t acquired any major lawsuits, and it has had no major complaints within the last 12 years.
As you might assume, this also indicates that this online marketplace is both safe and secure to use.
Roofstock Pros and Cons
Below are some of the biggest benefits and disadvantages of using this property management platform.
Pro: Wide Real Estate Market Access
Roofstock makes it easy for you to buy and sell rental properties that might otherwise be out of your reach – both logistically, financially, and geographically.
If you want, you can even invest in real estate halfway around the world! The world is truly your oyster when it comes to using this platform.
Pro: Options to Buy or Sell Properties (or Even Bring Your Own to the Table)
Many REITs are limited in that you can only invest in crowdfunded schemes. With Roofstock, you can buy, sell, or bring your own rental properties to the table – a big advantage for savvy investors.
Pro: Great Options for Passive Real Estate Investing
Even if you aren’t sure that the more hands-on approach championed by Roofstock is right for you, there are other avenues you can explore. Roofstock has passive investment options for non-accredited investors that you can tap into as well.
Con: No Passive Options for Non-Accredited Real Estate Investors
WIth the last pro on this list comes the first con – although there are technically some passive options if you want to take a more hands-off approach, they are limited unless you are an accredited investor.
An accredited investor is generally someone with a high income and who has extensive experience in real estate investing. If you don’t fall into that category, you’re going to have to take the more active approach.
Con: Investing Here is More Expensive Than It Is In REITs
Although the minimum investment required by Roofstock is much lower than what you might find with other investment platforms and avenues, it is still relatively high.
Again, the minimum investment varies depending on the value of the property in which you are planning to invest – but it is still expensive.
Con: Lack of a Mobile App
Last but not least, Roofstock does not have a mobile app. This might not be a dealbreaker for some investors, but many people aren’t fond of having to log on to a desktop browser in order to do their work.
Roofstock Competitors and Alternatives
To wrap up our Roofstock review, we’ll take a look at some common alternatives to this platform.
There are lots of options out there when it comes to investing, but Roofstock is one of the few that allows for active investing in single-family rental properties.
Of course, it’s not the only one. Two other competitors include Crowdstreet and Fundrise.
The main differences between the three have to do with investment minimums, fees, and investment choices.
Technically, CrowdStreet and Fundrise are closer to being REITs than Roofstock. Although there’s less risk in investing in one of these real estate opportunities, there’s also less of a potential for a high return.
The fees for both vary – CrowdStreet charges fees of around 2.5% (though these vary), while Fundrise fees are about 1%.
Is Roofstock Legit?
Roofstock offers a legitimate way for active investors to buy or sell actual rental properties. Although it may not be the best for newbie property managers who aren’t yet familiar with the ins and outs of real estate investing (or managing investment properties), it’s a great way for the more experienced real estate investor to build his portfolio.
That’s especially true if your time is limited and you don’t want the hassle of traditional property management.
So what are you waiting for? Hopefully, this Roofstock review has been helpful when it comes to figuring out whether this real estate investment opportunity is right for you. Get started today, or consider one of the many alternatives to Roofstock today.