Roofstock Review 2024

How Does Roofstock Work?

Roofstock provides investors data and analysis tools, acquisition help, management services, and a platform for selling SFR investments. Each step is designed to help the investor move more efficiently through the investment cycle.

First, the company collects all the information it can find about single-family homes that are already rental properties, but are also for sale. Then they provide valuation analysis and calculators to help work through the details an investor needs to know. 

This helps investors answer questions like, “Does this property meet the 1% rule?” The 1% rule is a time-worn guideline stating that an investor should strive to find deals where the mortgage payment is less than 1% of the property value—including needed repairs—because that is likely close to the going rate for a rental in the area. Guidelines such as this one are more relevant in some years than others. Yet no matter what proportion of rents and mortgage payments an investor needs, Roofstock’s web-based analysis tools can help them discover which properties are more likely to be profitable over time.

Once an investor selects a few targeted SFR investments, they can work with Roofstock as a broker or an agent to help them acquire the property. They can also secure accounting and property management services all at the same time, making for a smooth process that saves time and effort for most investors.

As well as the process works, it isn’t suitable for everyone. For accredited investors who might want to assemble a more sophisticated, hassle-free investment experience, Roofstock offers shares in real estate investment trusts (REITs) that are fashioned around ownership of one or more SFR properties.

Key Features

Roofstock offers the most comprehensive collection of resources available for SFR investors. It has worked aggressively since 2015 to untangle the inherent information gaps within this asset class. The website requires a free sign-up to get full access, but once you do, Roofstock’s high-value resources are at your command. 

• Available to non-accredited investors: Roofstock caters directly to individual or small partner investors looking for SFR investments. This asset class is not restricted to accredited investors, so as long as the investment meets the minimum requirements, anyone can take advantage of the properties for sale. 
• Investment minimum: Roofstock requires a minimum investment of $5,000; however, SFR properties often require a substantial down payment, so the minimum amount needed for investment greatly depends on the property you want to buy. For example, if you wanted to acquire a $100,000 home and your lending institution required a 30% down payment, your minimum investment would be $30,000, plus any closing costs
• Ease of use: Roofstock is very easy to use and is organized by the type of information you are pursuing: exploring properties for acquisition, managing your accounting, managing the property, selling the property, and so forth. Many of the website’s tools are free to access and simple to navigate.
• Curated portfolios: Roofstock offers curated portfolios to accredited investors only through a product called Roofstock One. It requires a $5,000 minimum investment and a five-year commitment.
• Customizable portfolios: Roofstock does not over customizable portfolios.
• Reinvestment opportunities: Roofstock does not offer dividend reinvestment services.
• Countries where accounts are available: Roofstock currently allows accounts to be open within the U.S. only. The majority of U.S. real estate crowdfunding platforms do not allow international investors to invest in the platform. International investors should look to real estate crowdfunding platforms such as Cityvest and DiversyFund to get into the space.   

Fees

The fees for buying an SFR investment property begin at $500 as a minimum, but rise higher if the purchase of the property is more than $100,000. From that point the fees are 0.5% of the purchase price. Investors can also sell their property on Roofstock, for which the company charges 3% of the purchase price (minimum $2,500).

Transparency

While Roofstock is highly transparent about the process of acquiring or selling SFR properties, the details about property management and accounting management services tend to be a bit more opaque. That’s partly because there are many variables at play with each property and its circumstances, and partly because these services are offered through companies Roofstock has acquired along the way. 

Liquidity

SFR investment is constructed of illiquid assets such as residential properties or shares in structured REITs. Neither Roofstock One’s REIT offering nor the individual properties should be considered liquid, though the company makes every effort to help investors enter and exit SFR properties as smoothly as possible. The REIT fund requires a commitment of five years minimum.

Investment Selection

Roofstock differs from other real estate crowdfunding platforms as it allows both accredited and non-accredited investors to invest in physical properties. Each property comes equipped with a helpful calculator to better understand the investment obligation, however, it also covers the macro and micro analysis of the location to give the investor a holistic view of the investment.

Roofstock also offers Roofstock One, a REIT that allows accredited investors who want a hands-off experience to buy shares of privately held SFRs controlled and operated by Roofstock. When investing in Roofstock One, investors have the potential to benefit from both income generation and capital appreciation. Although due diligence is recommended when investing in REITs, it is not as intensive as investing in physical properties.   

Similar to most of the companies we reviewed, Roofstock currently does not offer any other alternative investments such as wine, art, legal, private equity, or venture capital. Investors looking for a variety of unique investment offerings should look to Yieldstreet.

Sectors and Domains

The main focus of Roofstock is acquiring, managing, and selling single-family homes in the rental sector. Investors looking for passive income with residential rental properties may find Roofstock to be an enticing platform. However, investors should expect to conduct a large amount of research to ensure their investments yield the intended passive income they are expecting. Investors looking to invest in commercial, industrial, and multi-family properties will want to look elsewhere, as Roofstock is not present in any of those sectors.

Educational Offerings 

The company offers a blog with useful articles and previously had established an educational site named Roofstock Academy. As of January 2024, the academy doors are closed to new students.