Purchase single-family properties already generating rental income.
Roofstock is an online marketplace that connects investors with single-family rental properties available for purchase. The occupied properties are vetted according to strict criteria, removing the work involved in finding, buying and managing a rental property yourself. However, it requires a lot of capital, and you may find a wider selection working with a broker.
What we think of Roofstock
Roofstock is an online marketplace platform that lets you invest in a single-family rental home. The goal is to earn passive income from tenants. We like how Roofstock makes it straightforward to become a single-family rental homeowner with minimum effort on your side.
The platform’s two strong points are:
- The homes you invest in are either already occupied by paying rental tenants or Roofstock guarantees that they will find tenants. If they don’t within 45 days, Roofstock guarantees to pay you one year’s rent. In a way, this can provide you a “safety net” and help you manage your funds early in your investment.
- Roofstock provides property managers that oversee the rent payment and serve as the intermediary between the investors and tenants. These managers often come with slightly lower fees than if you hired them yourself.
What is Roofstock One?
Roofstock One is a separate platform where users can invest in whole or fractional shares of single-family rental homes. Roofstock One acquires properties and holds them in trust. Then they issue shares of the trust, which investors can buy.
You can start investing with as low as $5,000, and you get to enjoy passive income without the responsibilities of ownership such as property and tenant management. Roofstock One manages and services the homes in your stead.
However, Roofstock One is only available to accredited investors. Investors must meet specific guidelines to qualify as an accredited investor. For individuals, accredited investors can be those whose individual net worth, or joint net worth with their spouse, exceeds $1 million, or individuals who had an income higher than $200,000 in each of the two most recent years.
3 ways to fund your Roofstock investment
Buying a home isn’t cheap. Because of that, Roofstock offers three options to fund your investment:
- Standard option where you make a down payment and pay off the property according to your agreement with Roofstock.
- Finance your investment with your IRA funds. Roofstock lets you use your retirement money to fund this investment, which can be a good long-term investment.
- Buy full or fractional shares of home trusts offered by Roofstock. This feature is only available to high net worth individuals via Roofstock One platform.
Who is Roofstock best for?
Just like any other real estate investment, Roofstock requires a substantial amount of upfront capital, making it best for:
- Experienced investors. This service is a better fit for experienced investors who want to diversify their portfolio.
- Long-term investors. Investors who want to earn passive income over many years may find this type of investment worthwhile.
- Hands-on investors. Unlike stocks, bonds and other investments, rental properties require work, even if you have a property manager. Roofstock is best for investors who have the time and money to maintain rental properties.
Pros and cons
You don’t have to be an accredited investor to take advantage of Roofstock’s perks:
- Screening process. Roofstock properties are thoroughly screened and listings are equipped with 3D tours, inspection reports, neighborhood scores, financial analysis and more.
- Low fees. Once your offer is accepted, you’ll only pay a 0.5% marketplace fee of the contract price or $500, whichever is higher. This is much lower than the typical real estate transaction fee, which can be up to 6% of the amount.
- Hassle-free. Most properties are already occupied by paying tenants, so there’s no legal work and you can insure and finance your home directly through the website.
- Guarantees. Roofstock offers a 30-day money-back guarantee for single-family homes if you’re not satisfied with your purchase. But it has to meet its terms and conditions. Plus, if you purchase a vacant home, Roofstock guarantees you will secure a signed lease on the property within 45 days, or it will pay rent for up to 12 months.
Despite its strengths, there are a few things you should consider before opening an account with Roofstock:
- Large upfront capital. On Roofstock, you’re not buying into a fund that pools the cash of multiple investors — you’re purchasing a house. The average price of a Roofstock property is $140,000, and with most lenders requiring a 20% down payment, that places the average minimum investment on Roofstock at $28,000.
- Limited markets. Roofstock only has properties in 27 states. Some states have markets in multiple cities, and others may only have a market in one.
- Property management fees. You’ll pay up to 8% fee for the property management. This is lower than the 10% you could likely pay otherwise.
- Online only. While Roofstock has accessible customer service and one physical office, you can’t visit a traditional broker or agent to do business in person.
- Less selection. Since listings are exclusive to Roofstock, there’s a smaller selection than you’d find when working with a broker, agent or MLS.
Compare with other real estate investing platforms
If you’re interested in investing in real estate, explore your options by asset types, fees, annual return and eligible investors. Select the Go to site button for more information about a particular platform.
What information is included in Roofstock listings?
Roofstock’s listings offer plenty of information to help you make an informed decision:
- Property summary. Explore the list price, lot size, location, occupancy status, lease start and end date and more.
- Financials. Run the numbers on projected cash flow, equity, interest rates, closing costs and net cash flow over time.
- Analysis. Assess the property’s overall value, rental value, inspection highlights, neighborhood rating and more.
- Diligence documents. Review inspection, title and property valuation reports.
- Buy process. Explore your financing and property management options with Roofstock’s partners.
- Similar listings. Compare similar listings available on Roofstock’s marketplace.
How do I sign up?
Get started online in four simple steps:
- Visit Roofstock’s website and select Sign up.
- Fill out your personal information and select Sign up. You can also sign in with Google or Facebook.
- Build your investor profile or Skip to build it later.
- Review your profile and then scroll down and select View All Properties to start your search.
You don’t need to be a US citizen to open an account. During your application, you’ll need to provide the following information:
- First and last name
- Phone number and email
- Investment and financial information
6 steps to start investing with Roofstock
The process of investing in real estate via Roofstock is fairly straightforward. Here’s how it works:
- Create an investor profile on the Roofstock website or speak with an adviser to develop a strategy.
- Browse through a selection of pre-screened, exclusive listings or set up custom filters to browse properties that meet your standards.
- Analyze details, pictures, lease and tenant information and use calculators and other tools to determine if a property is right for you.
- Negotiate or make an offer without additional costs. You’ll only pay the contract fee when your offer is accepted, which is either 0.5% of the amount or $500, whichever is greater.
- Close the deal. Roofstock’s transaction team will walk you through closing, lending, escrow, insurance and property management. Closing generally takes 15 days if you pay cash or 30 days if you’re financing.
- Start collecting rental income. Whether you use your own property manager or one of Roofstock’s, you’ll start earning passive income as soon as you close the deal. Your property manager handles the day-to-day operations for a fee of up to 8%.
Roofstock reviews and complaints
As of March 2022, the Better Business Bureau (BBB) rates Roofstock with a D+ rating for failing to respond to two complaints in the last three years. Roofstock isn’t accredited by the BB, and two customer reviews rate the company 1.5 out of 5 stars. On Trustpilot, Roofstock earns a 3.6 rating out of 5 from one customer review.
Negative reviews claim that Roofstock’s inspection reports were misleading and that there is a strong learning curve for newcomers.
The only place we were able to unearth more feedback was on Reddit. Redditors report that Roofstock’s platform is easy to use and that the process of purchasing was smooth and simple thanks to ongoing guidance throughout the process.
How do I contact Roofstock customer service?
There are three ways to get in touch with customer service:
- Phone: Call 800-466-4116.
- Live chat: Use the feature on the website to schedule an appointment.
- Email: email@example.com.
I’m ready to start using Roofstock. Now what?
Now that you’ve signed up, here’s how you can get the most out of the platform:
- Set up your profile. Fill out your investor profile to create an investment strategy that aligns with your financial situation and goals.
- Investor checklist. Go through the investor checklist to ensure you’re ready to start investing.
- Set up filters and alerts. Create filters and watch lists to find ideal properties.
- Speak with a Roofstock adviser. Set up a phone call or live chat to discuss your investment strategy or ask questions.
- Start investing. Make an offer or buy a property.
- Roofstock property manager. While you’re free to manage properties yourself or hire a third party, Roofstock has certified property managers that can take care of everything.