Updated May 3, 2020

Roofstock Review

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Roofstock allows you to invest in single-family rental properties without the hassle. Find out how this real estate platform works and if it's right for you.

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Traditional real estate investing is a lot of work. You have to go around shopping for properties, go through the tedious paperwork and inspections, find tenants, and manage it all yourself.

Roofstock makes this process easy for investors to purchase single family homes. It does all the work and due diligence for you.

Roofstock is open to non-accredited investors, but its not suitable for everyone. For one, you still need a large down payment to buy a property.

Read on to learn if Roofstock is the right investment for you.

What is Roofstock

Roofstock is an online marketplace where investors can easily buy and sell properties. You don't need to be accredited.

It focuses on single-family homes already with tenants. The idea is that you can buy a house with tenants and immediately start earning rental income.

Roofstock's properties are already certified and inspected, so you don't have to go through the hassle yourself.

The platform also connects you with lending partners and property management services, making it an all-in-one platform for buying real estate.

Roofstock is NOT a real estate crowdfunding platform. You don't pool your money with other investors. You purchase the entire home and hold the direct title to the property.

Roofstock is best for:

  • Investors with enough cash to purchase a house.
  • Investors who want to purchase property in other states.
  • Passive investors who want a property manager to handle rent and tenants for them.

Roofstock also offers a fully managed passive investing option called Roofstock One (more below). But it's only for accredited investors.

Roofstock Pros & Cons

PROS:

  • No accreditation needed
  • Low buying fee compared to traditional realtor fees
  • Generate rental income almost immediately
  • You actually own the property
  • Properties are already vetted
  • Buying and selling is fast
  • 30-day money back guarantee

CONS:

  • Need large sum of money to buy a property
  • You're buying a whole house sight unseen
  • You're responsible for managing it
  • Long term investment

Read on to learn more about Roofstock in detail.

What is the Minimum Investment

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Roofstock has no stated minimum investment. But you'll need enough money to either purchase the house outright or finance it.

To finance, you'll typically need at least a 20% down payment. So if a house costs $68,000, you'll need $13,600.

There will also be closing costs, which covers things like transfer taxes, title insurance fees, association fees, and document preparation fees. These costs could be 2-5% of the house price.

What are Roofstock Fees

The Roofstock marketplace is completely free to use. You can browse and make offers for free.

If you go through with buying a house, the fee is 0.5% of the purchase price or $500, whichever is greater. So on a $100,000 house, you'll pay $500 in fees. This is much lower than traditional realtor commission fees, which is typically 6%.

If you sell a property, the fee is 3% of the sale price or $2,500, whichever is greater.

Remember that there may also be additional fees like HOA costs, closing costs, management service fees, etc.

30-Day Money Back Guarantee

If you're not satisfied with the property after buying it, you can notify Roofstock within 30 days of closing. They will relist the property for free in their marketplace.

When the property sells, you'll be refunded your original purchase price (regardless of the sale price). If it doesn't sell after 90 days, Roofstock will buy the property from you. It's a full refund, but you're responsible for the closing costs.

You're also responsible for maintaining the property until it sells, as it must be returned in the same condition.

How Does Roofstock Work?

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Signing up for the platform is free. To invest in a property, here's what you can expect:

1. Search for homes
Search for homes by location, price, or even potential returns. You'll see visuals of the property (floor plans, pictures, and 3D tours), cost, current rent, potential return, and neighborhood/school rating.

You can also see the property inspection report, title search, and quote for insurance.

2. Make an offer
Making offers are free. You can go for the full listed price and take the property off the market, or make an offer at a lower price.

If your offer is accepted, you'll pay the 0.5% (or $500, whichever is greater) Roofstock commission fee.

3. Closing
Roofstock will guide you through escrow. During this stage, Roofstock can connect you with mortgage lenders, insurance agents, and property managers (if you wish).

Typically it takes 15 days to close an all-cash sale and 30 days if financed.

4. Earn rental income
Once you close on the property, you start earning rental income. If you opt for a property manager, they'll directly send you the net rental income every month.

If you are comfortable self-managing the property, you don't have to hire a property manager.

Selling Your Home with Roofstock.
Even though your investment isn't liquid, you can sell your investment homes if you need money in hand. Roofstock can help you sell your home in a few simple steps. They do have strict guidelines regarding who can sell with them.

In addition, they continually change the requirements, so you should contact them if you want to try listing your home with Roofstock to see if it's an option.

Rigorous Certification Process

Roofstock conducts all due diligence on the property, including the inspection. Roofstock Certified Homes have been through a strict evaluation process.

This includes:

  • Analysis of the area for growth, schools, crimes,
  • Property inspection by a professional inspection firm
  • Complete title search and examination
  • Valuation of the property
  • Valuation of the rental market in that area
  • Evaluation of the current lease terms
  • Summary of the current tenant's rental payment history

Homes that pass inspection means that they:
  • Don't need immediate roof repairs
  • No water intrusion, mold, or active water/gas leaks
  • No knob-and-tube or double tap wiring
  • Don't need immediate repairs greater than 15% of list price
  • No structural, fire hazard, pest and/or asbestos concerns

As a part of their vetting process, Roofstock's inspectors provide you with a report that details the repairs the home may need moving forward.

If the home currently has a lease, the report usually shows repairs you'll need to do before turning the home over to another tenant upon lease expiration.

Some properties may have an inspection contingency. This means the inspection happens after you are in contract. After you get the inspection report, you'll the opportunity to review and re-negotiate your offer terms, or even cancel the transaction.

Guaranteed Rent

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Roofstock has a guaranteed rent program. If you buy a vacant home and no one rents it within 45 days (of being rent-ready), Roofstock will pay you 75% of the estimated market rent until it is leased, for up to 12 months.

To qualify for this rent guarantee, you must be working with a preferred Roofstock property manager.

The house must be rent-ready, meaning that it needs to be in a good enough condition for tenants to move in. If the house wasn't in move-in condition, you must make the necessary repairs identified by the property manager with 90 days of closing.

The program helps bring more peace of mind that you'll earn some cash flow even if your house doesn't immediately rent.

Roofstock One (Fully Managed Investments)

Roofstock also introduced a new full service investment option called Roofstock One. This is completely passive real estate investing without any management responsibilities on your part.

Some benefits include:

  • Low $5,000 minimum investment
  • Able to buy 1/10th shares of single-family rentals
  • Diversify across more homes and locations
  • Roofstock managers handle all operational responsibilities

However, Roofstock One is only open to accredited investors (which means having an individual income of at least $200,000 per year, or a joint income of $300,000).

There is an annual asset management fee of 0.5% of the home price, and property management fee of 10% of gross rent. Also, money will be allocated to a reserve fund to pay for things like repairs, taxes, and insurance.

Downsides

Roofstock isn't going to be for everyone. Here are some reasons you may want to look elsewhere.

You need a lot of money upfront
The homes range in price based on the areas they are in. You can either buy the home outright or secure a mortgage. If you do need financing, you'll need at least 20% of the purchase price for a down payment.

If you don't have enough to buy a house, look into real estate crowdfunding platforms like Fundrise and DiversyFund instead.

Long term investment
You aren't buying a liquid investment you can sell in the market any time you want. You are buying a physical home that you must sell in order to get your investment back.

If you aren't in it for the long term, it's probably not the right investment for you. Not only can it take months to sell a home, you should let it sit for a while so that you can earn the rental income as well as give the home time to appreciate.

You'll need a large amount of reserves on hand
Owning a home means you are responsible for the cost of repairs and maintenance. You can't predict when the water heater will break or the pipes will burst. You have to be able to pay for the repairs at a moment's notice.

You may need several thousand dollars on hand at all times to make sure you can cover anything that goes wrong.

Where Roofstock Operates

Roofstock has property in these 21 states:

  • Alabama
  • Arizona
  • California
  • Delaware
  • Florida
  • Georgia
  • Illinois
  • Indiana
  • Michigan
  • Minnesota
  • Mississippi
  • Missouri
  • Nevada
  • New Jersey
  • North Carolina
  • Ohio
  • Pennsylvania
  • South Carolina
  • Tennessee
  • Texas
  • Wisconsin

Some states have a market in just one city, while others, like California, have markets in several cities.

Roofstock Customer Service
Customer Support Number:
1-800-466-4116

Email:
support@roofstock.com

Roofstock vs Fundrise

 RoofstockFundrise
 Visit SiteVisit Site
 

Roofstock

Fundrise

SPECIAL OFFER
Build Wealth Through Real Estate - Learn More

SPECIAL OFFER
Starter Plan - Learn More

 

Benefits and Features

Annual FeeNo platform fee. Buyers pay 0.5% transaction fee for each purchase or $500 (whichever is greater)
1% management fee
Minimum DepositHouse down payment usually requires at least 20% of purchase price
$500
DividendsRental income from your propertiesChoose quarterly payouts or auto reinvest
Investment Types
Single family homes
Commercial, single family, industrial
Wealth Requirements
None
None
 Visit SiteVisit Site

Build Wealth Through Real Estate

Starter Plan

 Terms Apply. Offering Circulars

Fundrise is currently one of the most popular real estate investing platforms. It works very differently from Roofstock. Here are some key differences:

Fundrise is a real estate crowdfunding platform.
You pool funds with other investors to purchase projects. Unlike Roofstock, you don't directly own any of the properties. And you don't get to pick your investments.

Completely passive investing.
Fundrise takes care of all the acquiring and managing for a low 1% annual management fee. Your funds are automatically diversified across multiple projects across the US.

You earn returns from quarterly dividends and from appreciation when the property is sold off.

You can sell your shares without penalty after 5 years, or during certain redemption times. Though this is a long-term investment too, you can sell and withdraw funds quickly without having to go through the selling process and selling costs.

Low minimum.
Fundrise's minimum investment is just $500. There's no income or accreditation requirements. It has a 90-day money-back guarantee.

Fundrise is better for:
Those who don't have a large amount of money for a down payment. Or for those who don't want the responsibility of actually owning a house.

Other Alternatives

HomeUnion: HomeUnion is another turnkey real estate company helping investors find the right homes to buy. HomeUnion offers more than just single-family homes, though. They offer one- to four-unit properties.

They have a quick questionnaire that will help guide you to the right property type. HomeUnion doesn't provide you with homes that already have tenants, though; they find the tenants for you after you buy the home.

Morris Invest: Morris Invest not only finds good investment properties for you to buy, they also fix them up, find tenants for you, and manage the property. All you have to do is invest your money and earn the profits.

With Morris Invest, you schedule a consultant with one of their experts, pick your property, and they handle the rest.

Memphis Invest: Memphis Invest operates in Tennessee and Texas, offering investors newly renovated homes to buy. Memphis Invest does the renovations, finds the qualified tenants, and handles the property management for you.

Memphis Invest does give you access to the home's renovation reports so that you have an idea of how much value they added to the home.

Bottom Line

Roofstock can be a good option if you have the cash and are looking to invest in real estate more easily. Roofstock takes care of the more time-consuming and troublesome aspects of home buying. You can start to immediately earn rental income.

Diversifying your portfolio to include real estate can be a great way to maximize your investments. However, remember that you're ultimately responsible for managing your house.

Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.

More from CreditDonkey:


Fundrise Review


Real Estate Crowdfunding


Passive Income

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