Roofstock Review 2022 – Invest in Single-Family Rental Properties

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RoofstockReal estate can be a lucrative investment but it often comes with massive fees and requires a lot of capital to get started.  If you want to diversify your portfolio with single-family rental properties, you need to find a way to invest without massive capital risk. That's where Roofstock comes in.

Commissions & Fees - 8.5
Customer Service - 8.5
Ease of Use - 8.5
Diversification - 8
Amount of Deals - 8.5
Due Diligence - 8

8.5

Roofstock gives non-accredited investors the opportunity to invest in single-family rental real estate. However, it requires a hefty down payment to begin, and the properties are a highly illiquid investment.

Pay only $99 For First Investment

Single-family rental homes can be an appealing investment. But they come with a lot of fees, from mortgages to maintenance, not to mention the work of being a landlord.

The cost of buying multiple properties outright prices many out of the market – for the average investor, real estate is an attractive diversification option that they can't afford.

Roofstock is trying to change that. This online real estate investment platform gives the average investor access to single-family rental properties without eye-watering commission and transaction fees. It aims to minimize the time and effort associated with tracking down high-quality investment properties.

So is Roofstock safe? Should you invest in Roofstock properties, and what is Roofstock One? We break down the company's offering and answer all your questions in this comprehensive Roofstock review.

Roofstock Features

Minimum Investment$0
Account Fees
Time Commitment0 Months
Accreditation Required
Private REIT
Offering TypesDebt, Equity, Preferred Equity, Direct Ownership
Property TypesCommerical, Residential, Single Family, Foreign Investors
Regions ServedMore than 70 Markets
Secondary Market
Self-Directed IRA
1031 Exchange
Pre-vetted
Pre-funded

What is Roofstock?

Roofstock started in 2015. The platform's goal is to transform real estate investing into a more accessible, affordable opportunity for ordinary investors.

The founders saw the process of buying and selling real estate as inefficient and used their combined expertise in tech solutions to develop Roofstock. The platform combines AI with input from its experienced team to select the best opportunities for investors seeking rental properties.

Today, the platform has conducted over $4 billion worth of transactions across 70 markets in the U.S.

How Does Roofstock Work?

Getting started with Roofstock is easy. There are no sign-up fees. You simply enter your information on the sign-up page, including an email address and phone number – no bank details required.

Once you've signed up, you can start browsing the list of properties available or bring your rental property to the market. There's also the option to work with Roofstock as a broker or agent. You can also list an existing property on the platform.

And you have the option to have your property managed through Roofstock. The platform connects you with vetted property managers. This is a key part of the platform's goal to make property management easy for a wider range of real estate investors – you don't have to be a hands-on landlord to keep a hold of your investments.

Roofstock Fees

Roofstock's pricing is what makes it a game-changer for investors looking to access the single-family rental property market. When you purchase a property through the platform, you'll be charged a 0.5% asset management fee, or $500, whichever is greater.

The commission rate for sellers is 3%, or $2,500 – whichever is greater. This is very low compared to the fees that sellers pay through most traditional real estate agents (typically around 6%), and the selling process is also far more streamlined.

There are also closing costs such as preliminary title commitments for buyers and sellers – the platform will provide a good-faith estimate of these before you make your investment.

Is Roofstock Only For Accredited Investors?

You do not have to be an accredited investor to buy or sell properties using Roofstock. There's some confusion with Roofstock One, a premium service that the platform has offered since 2019. We'll cover this tool for accredited investors later.

The platform aims to open up the real estate market to ordinary investors. Making its service exclusive to accredited investors would defeat the point! Of course, you need to provide evidence of a strong credit score if you want to finance your purchase through the company's lenders.

Roofstock Features

Here are some of the features that Roofstock claims set it apart from traditional estate agents and real estate crowdfunding platforms alike.

Invest in Single-Family Rental Properties

Roofstock focuses on helping users purchase single-family rental properties and it does so by making its fees much cheaper than a standard real estate agent.

Transaction costs are the biggest barrier to entry for many investors when it comes to real estate investing. Rental properties especially can be intimidating, because the down payment is so high. While Roofstock can't (and shouldn't) reduce the down payment too much, its transaction fees for single-family rentals are low compared to conventional real estate agents.

Pre-Vetted Properties

Roofstock vets all its properties thoroughly before listing them on its online marketplace. Here's what it looks for:

  •     A walk-through from an independent property inspector and a full inspection report.
  •     An accurate estimate of short-term and long-term repair costs.
  •     A title report produced by a professional title company to ensure listed properties are fit to be sold.
  •     A valuation of the property and the local market. This lets Roofstock compare properties to more viable or profitable alternatives nearby.
  •     A full review of the lease terms including monthly rent, annual gross rent, etc.
  •     A full review of the tenant selection process.
  •     A floor plan, a virtual property tour, and interior and exterior photos.

Rental Property Management

Roofstock offers users the opportunity to have their property taken care of by experienced property managers. The platform vets its managers as rigorously as its rental properties.

Property management is an option rather than a mandatory feature. You can manage your Roofstock properties in person, ensure the property meets your standards, and get to know your tenants.

No minimum investment

Roofstock is free until you're ready to act. There's no marketplace fee, so you can monitor properties and portfolios while building up a war chest to start your real estate investing journey.

You can view detailed information on single-family rental properties across the Roofstock marketplace. This will help you form a better picture of the best type of investment for you, and in conjunction with the Roofstock Academy program (see below), it's a free introduction to rental market analysis for first-time and experienced real estate investors alike.

Roofstock Academy

Educating customers is a hallmark of a good business, and the Roofstock team hasn't disappointed here.

There's no free option for study at the Academy, although you can check out free articles via the Roofstock Knowledge Center.

The self-study program costs $478.80 per year, which will get you access to 13 courses. Upgrading to the Workshop program costs $1,198.80 per year, while the Mastermind program is $6,000, which gives you access to a private virtual learning community.

Self-Directed IRA

Roofstock works with the New Direction Trust Company to integrate your real estate investing choices into a self-directed IRA (individual retirement account). This allows you to defer taxes on your rental properties, as they become part of your retirement savings – your IRA will be listed as the holder on your title report.

1031 Exchange

If you're interested in building a portfolio through the Roofstock marketplace, the platform allows you to make timely 1031 exchanges. This means you can avoid capital gains tax by upscaling your portfolio.

Roofstock One

Roofstock One is closer to a conventional managed real estate portfolio than the platform's main offering. It's available to accredited investors and comes with a minimum investment of $5,000.

Rather than direct ownership, you buy shares of Tracking and Common Stock. Each of these shares is valued at 1/10th of the property's equity. This gives investors more freedom to find properties that suit their long-term investment goals.

It requires a time commitment of at least five years. You’ll need to be an accredited investor to participate. That means you'll need to provide evidence of gross income of $200,000 per year or over for the past two years, or $300,000 combined income with a spouse for the same period. You'll also need to show evidence that this income level is set to continue.

Roofstock Customer Service

You can find Roofstock's phone number and email address at the bottom of the page. They have two offices, one in Oakland, California, and the other in Dallas, Texas. You can also send them a direct message through their contact page.

Who Should Use Roofstock?

Roofstock is aimed at ordinary investors looking to bypass the extortionate transaction fees you'll typically face when investing in single-family rental homes.

Its fees are extremely low, and it provides good-faith estimates of any additional costs such as closing fees.

The properties are vetted so you know what you are getting. This is also true of its property management services; you can create a diverse portfolio in markets across the country and have confidence that they'll be taken care of by well-reviewed professionals.

And if you’re an accredited investor and want to have long-term passive exposure to single-family real estate, then Rooftstock One is a feature worth considering.

Who Is Roofstock Not Good For?

You don't have to be a real estate expert or business insider to know that any direct ownership purchase comes with a large down payment. There's nothing that Roofstock can do about this – it partners with some top financial institutions as lenders, but the financing terms will always require you to provide 20-30% as a down payment.

For this reason, Roofstock isn't accessible until you've saved a certain amount. However, you can still sign up and track properties. You can build investment goals and start saving while tracking properties you're interested in.

pros

  • Thorough vetting process for all properties
  • Available in 27 states
  • Low fees for buyers and sellers
  • No sign-up fee
  • Optional property management service
  • Passive investing option through Roofstock One

cons

  •     Real estate investments are somewhat illiquid
  •     Requires a large down payment
  •     Roofstock One is only open to accredited investors

Roofstock: the Verdict

For buyers and sellers looking to limit their real estate transaction fees, Roofstock is worth considering. It uses technology to simplify the buying process and pre-vetts properties, making it easy for investors to find quality real estate to invest in.

It's a very well-designed platform with an attractive fee structure and great quality control processes. If you're looking to build a real estate portfolio in single-family rentals, Roofstock should be on the top of your list.

Investor Junkie Team

Founded in 2009, Investor Junkie started as a humble blog with a single idea at its core: help people become better investors. Since then we’ve grown into one of the top platforms for people who truly love investing. Every day, our team works hard to create the essential destination for modern DIY investors to explore their options and find their wins.

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4 Comments

  1. This type of investment reminds me of the people who sunk money into “Time Share” properties. Who in their right mind would invest in something they have never seen and have no direct control over? Successful real estate Investments are “hands on” investments that need local ownership and management. What else will they come up with to find money??

    1. I have just finished closing on a roofstock property, and while the investment was a good one, I did not have a great experience with rooftsock. maybe it was the time difference from being on the east coast, but I was always chasing them for something, no follow up, poor choice of title company. A big pain, but happy with my investment

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