Roofstock Review

Roofstock Ratings at a Glance

The crowd-sourced real estate investment market has exploded with dozens of new brokers over the last few years, but none of them operate quite like Roofstock. As the first real estate marketplace to focus solely on single-family homes, Roofstock brings affordability and transparency to a sector that desperately needs it.  For too long, real estate has been an illiquid and nebulous market. With Roofstock, you’ll get clarity, consistency, and — most importantly — immediate income.

Who is Roofstock for?

Roofstock is a marketplace that brings real estate buyers and sellers together. Sure, there’s lots of crowd-sourced real estate investing marketplaces out there, but Roofstock is different. For starters, there’s no crowdsourcing. When you buy a property on Roofstock, you aren’t handing money to a developer or LLC like you do with Fundrise or CrowdStreet. You own it and you’re entitled to all the benefits of ownership. Of course, ownership has its downsides too, but Roofstock gives investors unique real estate opportunities without involving agents or middlemen.

Roofstock is terrific for newbies to the sector since they have no rules regarding accredited investors. Most real estate marketplaces only allow accredited investors to make purchases, which usually means having a $1 million net worth or a $250,000 annual salary. Instead, Roofstock allows nonaccredited investors to buy properties with no minimum purchase price. This makes the company ideal for millennials and younger investors who want to own rental properties but can’t pony up the funds needed for accredited status. Roofstock will even set you up with a lender if you want to buy property with a loan.

Just remember, ownership comes with different perks and drawbacks. Yes, your tenant will be paying rent that goes directly into your pocket, but they’ll also expect prompt repairs if the heater or dishwasher breaks. If you can’t afford the services needed for common repairs, you could quickly find yourself in legal trouble. 

Finding a suitable investment property with Roofstock is as easy as searching for a new pair of headphones on Amazon. Potential investors can navigate the full docket of Roofstock properties from the main website. You can view individual properties or portfolios of properties, sorted by a number of different categories.

Looking for a specific square footage? Roofstock will help you narrow your search. You can view properties based on location, list price, monthly rent, gross yield, cap rate or annual appreciation. All properties listed have the year built, square footage and neighborhood rating right on the thumbnail.

Once you click on a property, you’ll have access to a number of tools, including cash flow and appreciation estimates. The Financial Highlight snapshot tells you the annual rent, expenses, and property taxes to formulate an expected cash flow figure. Want to see how much you can expect the home to appreciate in 30 years? Roofstock allows you to extend the analysis out decades with charts showing cumulative cash flow, appreciation and equity.

Once you’ve reviewed a selection of properties and decided on a suitable purchase, you can initiate the buy process by contacting the property owner and choosing a property management team. Roofstock works as a broker to ensure a smooth transition and your management team will make sure the property is up to standard for tenants. 

Each property listed on Roofstock meets specific criteria to ensure quality and dependability. Unoccupied properties come with a 90-day rental guarantee and inspection records are available. Roofstock provides a thorough analysis of each property, extending far beyond the simple cash flow estimates.

The first thing you’ll notice in the property analysis is the due diligence reports. These include title documents, valuations and inspection reports. For example, this property in Alabama has 3 different inspection reports, which found everything suitable except some bathrooms in need of repair. If the property is occupied, you’ll receive info about lease length, security deposits and late payments. 

Want to learn more about the area? In addition to a star rating, Roofstock lists schools in the district, median income and home values, and employment statistics of the neighborhood. They also offer a training course called Roofstock Academy. For a one-time fee, Roofstock Academy members get access to educational materials and lectures about the real estate market and owning property. You’ll get one-on-one coaching sessions, access to the Roofstock community Slack channel, a personalized investment playbook and $750 in Roofstock marketplace credit. 

If you don’t want to shell out the price for the courses, Roofstock has a terrific blog covering topics like investment strategies, market trends and property ownership tips and tricks.

Buying a single-family home the old-fashioned way carries a lot of fees. The brokers take their cut, the bank takes its cut, even the government gets in on the action. But the beauty of online marketplaces is their ability to reduce fees, and Roofstock investors get a great deal compared to more traditional counterparts. 

The platform needs to make money, so some fees do apply. However, they charge much less than traditional brokers. In fact, they’re one of the more modestly priced real estate marketplaces around. Roofstock charges a marketplace fee, which is either $500 or 0.5% of the contract (whichever is higher). You’ll still pay closing costs, and if you use a Roofstock property management team they’ll need to be paid.

Sellers also pay a fee, a stiffer one. If you want to see your home on Roofstock, you’ll be hit with a $2,500 or 3% fee, whichever is greater. The seller’s fee is reduced if you own multiple properties, for example, an owner of 6 properties only pays 2.75%. Again, closing costs still apply. While the fees are relatively inelastic, the cost of owning and maintaining a home varies depending on the property. Be sure to read each financial statement thoroughly and understand the real costs of maintenance, taxes, and insurance.

Roofstock takes client security very seriously. All personal data is encrypted and credit card processing is done through BrainTree, one of the industry’s top processing platforms. No personal information is ever sold to a third party.

Only 15% of applicants' properties are accepted following Roofstock’s rigorous verification process. Roofstock-certified properties are evaluated by veteran real estate inspection vendors. If a property is listed on Roofstock, you can feel safe knowing the inspector found no evidence of water damage, structural decay, pest infestation or faulty wiring. If repairs are needed, they must not exceed 15% of the listing price.

One of their best features is the goal of client satisfaction. Unoccupied properties come with a rental income guarantee: Roofstock will pay 75% of the market rate rent if no tenant has moved in within 45 days. Additionally, all properties have a 30-day money-back guarantee. If you no longer wish to own the home you purchased, Roofstock will relist it for free and refund your money regardless if the property resells for less after relisting.

Roofstock can be contacted via its website, phone or email. You can call Roofstock directly or use its chatbot to schedule a phone meeting with an advisor. Using the chatbot allows you to categorize your desired meeting into 4 categories: 

• New client orientation (group session)
• Investors actively looking for properties (30-minute call)
• Investors inquiring about specific properties (15-minute call)
• Property owners looking to sell

There’s no live chat feature, so getting immediate answers requires a phone call to the 800-number listed on Roofstock’s Contact page.

If you’re looking for a diverse portfolio of residential and commercial properties, Roofstock might not be the platform for you. Roofstock concentrates specifically on single-family rental homes — no business properties or student housing. By focusing on this one niche in the real estate market, Roofstock is able to provide better and more convenient service to clients. Plus, you don’t have to worry about any pesky accredited investor rules. 

Roofstock investors still have options when it comes to buying property. The marketplace currently lists over 450 different available properties in dozens of markets. Roofstock has listings located from New Jersey to Minnesota to Texas. Additionally, Roofstock offers property portfolios. Each portfolio is located in a specific region and includes anywhere from 2 to 100+ properties. For example, a portfolio in Memphis, Tennessee, contains 2 homes valued at a combined $102,000 while another portfolio in Gainesville, Florida, contains 20 different properties valued at $3.2 million.

Finally, Roofstock does operate a shares investing program, but only accredited investors can participate. Called Roofstock One, the program allows investors to buy fractional shares in single-family homes. Buying fractional shares of ownership allows investors to diversify across multiple regions without worrying about the day-to-day business transactions and maintenance required to keep a rental property. Investors must purchase a share worth at least 10% of the property value.

Roofstock gets high marks here thanks to its simplicity and transparency. If you can navigate a Google search, you can navigate the Roofstock marketplace and search for appropriate properties. The advanced search functions enable users to eliminate homes that don’t fit their criteria, presenting only the best options for each investor. The financial data is expressed in clear and elementary terms. You won’t be bogged down going through statements as you peruse your choices, but all the details are available once you create an account. 

Roofstock provides access to real estate for many investors who previously were left out in the rain. By opening its doors to nonaccredited investors, Roofstock allows younger generations to experience rental property ownership without jumping through hoops. Focusing on single-family homes streamlines the process and simplifies the arrangement between owner and tenant.

You’ll need to set aside cash to fund repairs and taxes, but Roofstock’s property management teams handle the daily operations — you just collect rent and pay for repairs when needed. Owning property (especially single-family homes) is a great way to diversify your capital away from the stock market while netting monthly income.

Methodology

To review Roofstock, Benzinga took into consideration the following features and attributes: offerings, fees, security, mobile app, ease of use and customer support. Each category was given a value between 1 and 5 on a weighted scale. The Overall Rating was determined by the aggregate rating from each category dependent on the pre-determined weight each category holds.