Roofstock Review: Everything You Need to Know About Investing in Single-Family Rental Properties
Roofstock is a company that markets itself as an online destination for investors to easily invest in single-family rental properties. Roofstock claims it offers a variety of benefits to its investors, such as a streamlined process, access to vetted and certified properties, and detailed information on each property. However, like any investment opportunity, there are also risks involved with investing in Roofstock. In this article, we will take an in-depth look at Roofstock and everything you need to know before investing with the company.
History of Roofstock
Roofstock was founded in 2015 by Gary Beasley and Gregor Watson, who are also the co-founders of Starwood Waypoint Residential Trust (now Colony Starwood Homes). Roofstock is headquartered in Oakland, California and it has raised $62 million in venture funding from investors such as Sequoia Capital, GV (formerly Google Ventures), and Khosla Ventures.
Beasley has over 20 years of experience in the real estate industry. He co-founded Starwood Waypoint Residential Trust in 2009, which was a public company that owned and operated over 30,000 single-family rental homes. Beasley also served as the CEO of this company from 2009 to 2016. In addition, Beasley has worked as a real estate investment banker, a consultant for McKinsey & Company, and he has also taught real estate courses at Stanford University Graduate School of Business.
Watson has over 15 years of experience in the real estate industry and he is also a co-founder of Roofstock. Prior to Roofstock, Watson served as the Chief Financial Officer and Treasurer of Starwood Waypoint Residential Trust. Watson has also worked as an investment banker, where he focused on real estate and gaming companies.
How does Roofstock work?
Roofstock functions as an online marketplace where investors can browse and purchase single-family rental properties that are leased to tenants. Once you have found a property that you are interested in, Roofstock will conduct a due diligence process on the property and the tenant. Roofstock will also provide you with a Roofstock Neighborhood Rating for the property, which is based on factors such as crime rates, school quality, employment opportunities, and more.
Once Roofstock has verified that the property and tenant meet its standards, Roofstock will then facilitate the transaction between the investor and the seller. After the transaction is complete, Roofstock will provide the investor with a property management kit, which includes documents such as the lease agreement and information on how to contact the tenant. Roofstock also offers its investors the option to use its professional property management services.
If an investor decides to use Roofstock’s professional property management services, Roofstock will collect rent from the tenant on behalf of the investor and remit payments to the investor every month. Roofstock will also handle all communications with the tenant, maintenance requests, and lease renewals. Roofstock charges a monthly fee of $100 for its property management services, in addition to a one-time set-up fee of $250.
What fees does Roofstock charge?
Roofstock charges a flat fee of $499 for each property that is purchased through its platform. Roofstock does not charge any additional fees, such as commissions, management fees, or listing fees.
What does Roofstock offer?
Here’s a closer look at what Roofstock offers:
- Data: Roofstock provides its members with data and analytics on each property listed on its platform. This includes information on the historical performance of the property, the Roofstock Neighborhood Rating, and more.
- Certification: Roofstock certifies all of the properties listed on its platform. In order to be certified, a property must meet Roofstock’s standards for location, condition, tenant profile, and more.
- Roofstock Neighborhood Rating: As mentioned earlier, Roofstock provides a Roofstock Neighborhood Rating for each property listed on its platform. This rating is based on data such as crime rates, employment opportunities, school quality, and more.
- Certified local property managers: Roofstock has a network of certified local property managers that it works with. These property managers have been screened and vetted by Roofstock.
- Guarantees: Roofstock offers a number of guarantees to its investors. These include a Roofstock Neighborhood Rating Guarantee, a Tenant Guarantee, and a Buyback Guarantee. The Roofstock Neighborhood Rating Guarantee states that if an investor is not satisfied with the Roofstock Neighborhood Rating of their property, Roofstock will buy back the property within two years of the purchase date. The Tenant Guarantee states that if a tenant moves out within the first year of the lease, Roofstock will find a replacement tenant at no cost to the investor. Lastly, the Buyback Guarantee states that Roofstock will buy back an investor’s property at any time during the first five years of ownership.
- Search filters: Roofstock’s search filters allow investors to narrow down the properties that are listed on its platform. These filters include price, location, property type, and more.
- Roofstock marketplace: The Roofstock marketplace is an online marketplace where investors can browse and purchase single-family rental properties. Roofstock conducts a due diligence process on each property and tenant prior to listing the property on its marketplace.
- Roofstock Academy: Roofstock offers an online academy where investors can learn about topics such as real estate investing, due diligence, and more. The Roofstock Academy consists of video lessons, articles, quizzes, and more.
How can you get started investing in Roofstock?
If you're interested in investing in Roofstock, the first step is to create a free account on its website. Once you have created an account, you can browse the Roofstock marketplace and view properties that are available for purchase. When you find a property that you're interested in, you can submit an offer to Roofstock. If your offer is accepted, Roofstock will provide you with a due diligence package for the property. This package includes information on the property, the tenant, and more. Once you have reviewed the due diligence package, you can decide whether or not to proceed with the purchase. If you decide to purchase the property, Roofstock will act as the closing agent.
What are the advantages and risks of investing with Roofstock?
There are both advantages and risks associated with investing in Roofstock.
Some of the advantages include:
- Roofstock conducts a due diligence process on each property and tenant, which helps to mitigate some of the risks involved with investing in rental properties.
- Roofstock provides investors with a Roofstock Neighborhood Rating for each property, which gives investors information on factors such as crime rates, school quality, and employment opportunities.
- Roofstock offers its investors the option to use its professional property management services. This can be beneficial for investors who do not live near the property or who do not have the time to manage the property themselves.
- Roofstock charges a flat fee of $499 for each property that is purchased through its platform. Roofstock does not charge any additional fees, such as commissions, management fees, or listing fees.
Some of the risks associated with investing in Roofstock include:
- Although Roofstock conducts a due diligence process on each property and tenant, there is still some risk involved with investing in rental properties.
- The Roofstock Neighborhood Rating is based on data from third-party sources, which means that the information may not be 100% accurate.
- If an investor decides to use Roofstock’s professional property management services, they will be charged a monthly fee of $100 in addition to a one-time set-up fee of $250.
- Roofstock only operates in certain states, which means that investors may not be able to find a property that meets their investment criteria.
Where does Roofstock find its properties?
Roofstock finds its properties through a network of real estate agents, brokers, and third-party marketplaces. Roofstock also has a team of in-house real estate experts who work with local partners to identify properties that meet Roofstock’s investment criteria.
In which states does Roofstock operate?
Roofstock currently operates in Alabama, Arizona, California, Colorado, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Nevada, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, and Washington.
What are some alternatives to Roofstock?
Some alternatives to Roofstock include:
- RealtyMogul
- Fundrise
- Modiv.
How does Roofstock compare?
Roofstock is a good option for investors who are looking for a turn-key solution to investing in rental properties. Roofstock offers its investors the option to use its professional property management services, which can be beneficial for investors who do not live near the property or who do not have the time to manage the property themselves. Roofstock also charges a flat fee of $499 for each property that is purchased through its platform. Roofstock does not charge any additional fees, such as commissions, management fees, or listing fees.
- RealtyMogul is a good option for investors who are looking for a hands-on approach to investing in rental properties. RealtyMogul does not offer property management services, which means that investors will be responsible for managing the property themselves. RealtyMogul also charges a flat fee of $595 for each property that is purchased through its platform. RealtyMogul does not charge any additional fees, such as commissions, management fees, or listing fees.
- Fundrise is a good option for investors who are looking for a hands-off approach to investing in rental properties. Fundrise offers its investors the option to use its professional property management services, which can be beneficial for investors who do not live near the property or who do not have the time to manage the property themselves. Fundrise also charges a monthly fee of 0.85% of the total investment, which is higher than the flat fee that Roofstock charges.
- Modiv is a good option for investors who are looking for a hands-off approach to investing in rental properties. Modiv offers its investors the option to use its professional property management services, which can be beneficial for investors who do not live near the property or who do not have the time to manage the property themselves. Modiv also charges a monthly fee of 0.90% of the total investment, which is higher than the flat fee that Roofstock charges.
Who should invest with Roofstock?
Roofstock is a good option for investors who are looking for a turn-key solution to investing in rental properties. Roofstock offers its investors the option to use its professional property management services, which can be beneficial for investors who do not live near the property or who do not have the time to manage the property themselves. Roofstock also charges a flat fee of $499 for each property that is purchased through its platform. Roofstock does not charge any additional fees, such as commissions, management fees, or listing fees.
Who is Roofstock is not good for?
Roofstock is not a good option for investors who are looking for a hands-on approach to investing in rental properties. Roofstock does not offer property management services, which means that investors will be responsible for managing the property themselves. Roofstock also charges a flat fee of $499 for each property that is purchased through its platform. Roofstock does not charge any additional fees, such as commissions, management fees, or listing fees.
Final thoughts
If you're looking for an easy way to invest in rental properties, Roofstock is a great option. Roofstock offers its investors the option to use its professional property management services, which can be beneficial for investors who do not live near the property or who do not have the time to manage the property themselves.
Before making any investment decision, be sure to do your own research and consult with a financial advisor. An important source of information on companies like Roofstock and other online money-making opportunities is I Buy I Review. We review these companies, programs and courses to help you decide if they are right for you.
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