The Easiest Way To Become a Rental Real Estate Owner. Can Buying Real Estate Be As Simple As Buying Stocks?
Roofstock Review: The Easiest Way To Become a Rental Real Estate Owner. Can Buying Real Estate Be As Simple As Buying Stocks?
- Minimum Investment: Dependent on the deal
- Account Fees: 0.5% setup fee
- Time Commitment: 0 months
- Accreditation Required: Dependent on the investment platform
- Private REIT: X
- Offering Types: Debt, Equity, Preferred Equity, Direct ownership
- Property Types: Commercial, Residential, Single Family, Foreign Investors
Owning rental property is a fantastic way to make money. However, being a landlord comes with a large number of responsibilities. Having to repair a broken pipe, a blocked toilet, or a gas leak are just a few situations that you, as the landlord, are expected to resolve as fast as possible. This is no problem for the Do-It-Yourself (DIY) enthusiast, but what about those of us who can’t tell you the difference between a light socket and a socket wrench? Does this rule out the real estate game as a potential source of income for us?
Thankfully not! Roofstock is an online real estate marketplace where investors can purchase or sell rental properties that already have tenants in place. Having tenants in place removes one of the biggest headaches a landlord has – finding suitable and trustworthy tenants. It also means that you will start receiving a return on your investment once you close on the property. And if that wasn’t enough to get excited, Roofstock also offers landlords access to their approved group of property managers, ensuring that you will never find yourself hurriedly watching a YouTube tutorial on how to fix a blocked toilet after an emergency midnight call from your tenants.
Who is Roofstock?
They are one of the biggest names in the United States online marketplace when it comes to investing in the sector of single-family rental properties, a sector worth a mind-blowing $3 trillion. Since the companies inception back in 2016, Roofstock has generated over $2 billion in transactional worth. You might be asking yourself, “what has made them so successful up to this point?” The answer lies in a combination of providing investors with access to US housing and the intelligent and innovative manner in how they have made investing in rental property as easy as investing in stocks.
Unique Feature of Roofstock
If the above hasn’t piqued your interest, perhaps their latest innovation will – Roofstock One. With Roofstock One, accredited investors can now purchase shares in a property. Each share equates to 10% of the home’s total equity and once an accredited investor purchases a share, they obtain the economic right of the property.
During the first year, 10% ownership in each property will be held by Roofstock, keeping investors from having sleepless nights. After a holding period of 6 months, investors with Roofstock One have the choice of either redeeming their shares or if they possess 90% or more of the shares in a property they are then able to switch to a traditional ownership model.
Investing in Roofstock One requires a minimum investment of $5,000. If that seems high, remember you’re buying at least 1/10th of a property! Roofstock One is a great way to diversify your investment portfolio by purchasing shares across several different property markets. Not only would Roofstock One strengthen an investor’s property holding but it also holds the potential to make it more rewarding and profitable.
Roofstock One, much like with their full ownership offering, is a passive investment. This means that once you close on the property, the only thing you need to do is sit back and wait for the money to come in; Roofstock takes care of everything else – from financing to property management.
Roofstock One came to be after one of the founding members, Gary Beasley, had spoken to several people who had browsed the site many times but still had not invested. After chatting with these individuals, Gary had a pretty clear outline of why they were reluctant to take the investment plunge with Roofstock:
- Financing was an issue for a few
- Some did not feel comfortable appearing on the property title
- Many potential investors were concerned about having to deal with tenants and or property managers
- Finally, others felt that by investing in a single property lacked diversification
Gary, along with the Leadership Team at Roofstock worked out solutions to the above concerns, creating one simple platform – Roofstock One.
Best Features of Betterment
Owning Actual Property
One of the best investments you could make is owning a rental property in an area that offers both low real estate prices and a high monthly rental cost. Rental properties can become an opportunity to become a homeowner, diversifying and strengthening your portfolio of investments, and serving as an additional stream of revenue.
Not Limited to Accredited Investors
Where Roofstock differs from many crowdfunding real estate platforms is that it is open to anyone, not just accredited investors.*
*Roofstock One is limited to accredited investors only
Return On Investments From Day One
Once you close on a rental property with Roofstock, it is already a cash-flow positive investment. Before platforms like Roofstock, house flipping was seen as the fastest way to make a return in the real estate game. However, house flipping usually requires a fairly significant amount of investment and repairs to bring it to the point where it is livable and can be flipped for a profit.
Affiliated Property Manager Not Mandated
Roofstock offers its investors the benefit of utilizing their large pool of certified property managers. However, investors are free to self-manage or appoint a property manager for any properties listed on their platform. Once a property manager is appointed and the expectations have been agreed upon, you sit back and wait for the money to start rolling in while they serve as liaison.
Far Lower Commissions
Most real estate agents in the United States charge a 6% commission. However, the commissions charged by Roofstock is far lower, mostly thanks to their innovative use of technology. The commission charged for sellers is 2.5% while buyers are charged 0.5% commission of the final property price.
Their Simple Process
Roofstock is based on a single goal – make investing in real estate as easy as it is to invest in stocks. And by all accounts, they seem to have managed it!
Perhaps the biggest advantage for investors is the fact that all of the homes on Roofstock come with paying tenants already in place. You might be wondering why anyone would sell a money-making property, complete with paying tenants. Well, most sellers on Roofstock are either looking to diversify their portfolio with other investment opportunities or are wanting to get out of the real estate market altogether. Whatever the seller’s reason for selling, one thing is clear – investing in a rental property with Roofstock will give you a steady revenue stream from day one and is the ideal passive income stream for anyone looking to invest in real estate.
Roofstock has created an extensive system aimed at ensuring each of the homes listed on their site are of the highest standards and worth investing in. One of the ways they do this is by insisting each home is certified before it can be posted on the platform. So, what does it mean if a house is certified? Several factors go into getting a property certified. The first factor is a thorough inspection of the listed property by a legitimate investment property inspection business. Then, an estimation of repairs costs must be given and the property valued. Other items required include, property photos, floor plans, and a title report. As you can see, Roofstock has a high standard that single-family rental properties must meet before they can be offered for sale on their site. Roofstock has been known to refuse to list a property if they happen to feel that the seller is asking too high a price for their property.
Services provided by Roofstock
In-Depth Analysis Of Every Property On Platform
The specialists at Roofstock review every single property listed on their site, giving prospective investors all the information they need to make an informed decision. The property analysis includes:
- Photographs of the interior and exterior of the property
- Floor plans
- 3D tour and model
- Curb view of the property
- Property valuation
- Property inspection
- Title report
- Insurance quote
- Interactive tools to both cost and return estimates
- Detailed history on tenant and lease
- Rating of neighborhood
- Rating of local schools
Management of Property Managers
Roofstock offers all investors access to highly-rated property managers. All property managers are continuously rated and monitored to ensure a high quality of service. This allows investors all of the benefits that come with owning a rental property without the common stresses that come with being a landlord.
Roofstock continuously checks the following of all their approved property managers:
- They have all the necessary licenses needed
- Transparency and how quickly they respond to tenants
- They maintain a performance portfolio
- Operating background
- Roofstock customer pricing
- Referrals from members of the real estate community
- If they are recognized by trade organizations
- Desired Salary
Benefits of Using Roofstock’s Property Managers
- Save time – Roofstock’s team of approved property managers are there to handle the day-to-day management of your rental property, allowing you to focus on the more important things
- Peace of Mind – Roofstock’s approved property managers will protect your investment by carrying out all household maintenance, emergency repairs, and act as a liaison between you and the tenants.
- Invest Anywhere In The US – Thanks to Roofstock’s extensive network of property managers across the US, you are free to invest in any real estate market, ensuring you enjoy the best returns on your investment no matter where you are based in the United States.
- Low Fees – Roofstock charges 0.5% when purchasing a property through them.
- Turnkey Investment – Roofstock does everything in its power to ensure there are as few admin or logistical issues to handle as possible.
- Fractional Property Shares with Roofstock One – Accredited investors can invest in Fractional Property shares for as little as $5,000 with Roofstock One.
- Access to Over 70 Real Estate Markets – Thanks to a nationwide footprint, investors can invest in more than 70 different real estate markets in the United States.
- Roofstock Does the Negotiating For You – Yes, you read that correctly – Roofstock handles the biggest headache that comes with investing in real estate and will negotiate on your behalf.
The real estate game has always been seen as a cumbersome and complicated field. Roofstock have used technology to simplify it and give their investors opportunities that they otherwise might never have known of. Potential investors on Roofstock.com can now view rental properties from over 70 markets in the United States. The big question is – has Roofstock managed to make investing in US rental properties as easy buying stocks? We happen to think that they have.