Roofstock review: Is it helpful to investors?

Our Verdict

Our Verdict

Roofstock is an online platform that allows both accredited and non-accredited investors to assess and invest in high-quality single-family rental (SFR) properties in 27 U.S. states. The company provides a wide range of analytical tools and services.

Pros

• Investors benefit from Roofstock's low transaction fees, reducing costs
• Roofstock provides valuable information and services to support investors
• Each year, Roofstock introduces new resources to enhance its offerings
• With a minimum investment as low as $5,000, Roofstock makes real estate investing accessible

Cons

• Customer service issues related to subsidiaries may arise
• REIT securities are exclusively available to accredited investors, with no secondary market option

4.8

Our ratings take into account a product's cost, features, ease of use, customer service and other category-specific attributes. All ratings are determined solely by our editorial team.

Investment minimum

$5,000

Open to non-accredited investors

Yes

Acquisition fees

$500 or 0.5% (whichever is higher)

What is Roofstock?

Roofstock is a real estate crowdfunding platform that leverages data and technology to streamline the process for investors interested in owning single-family real estate properties. Unlike traditional real estate funds where investors buy shares, Roofstock allows investors to directly acquire and sell physical properties while also providing management services for those who prefer a more hands-on approach to their investments.

What is Roofstock's revenue model?

Roofstock presents an alternative to the conventional real estate agent model, resulting in lower fees for investors. The company charges acquisition fees starting at $500 or 0.5% (whichever is greater) and sale fees beginning at $2,500 or 3% (whichever is greater). However, the website does not provide information about property management fees.

Our perspective

Roofstock is an internet-based platform that caters to both accredited and non-accredited investors, providing access to high-quality single-family rental (SFR) properties across 27 U.S. states. With its range of analytical tools and services, Roofstock is ideal for individuals eager to invest in single-family rentals while minimizing the challenges associated with property management.

Key features of Roofstock

Comprehensive resources: Roofstock provides a vast collection of resources tailored for single-family rental (SFR) investors, addressing information gaps within this asset class since its aggressive efforts starting in 2015.

Accessibility to non-accredited investors: Roofstock is accessible to individual or small partner investors, regardless of accreditation status, as long as the investment meets minimum requirements, making SFR investments available to a broader investor base.

Investment minimum: A minimum investment of $5,000 is required by Roofstock, although actual investment amounts depend on property-specific down payment requirements and associated costs.

User-friendly interface: Roofstock's platform is user-friendly and categorizes information based on the user's needs, simplifying property exploration, accounting management, property management, and sales processes.

Curated portfolios: Accredited investors can access curated portfolios through Roofstock One, requiring a minimum investment of $5,000 and a commitment of five years.

Customization: Roofstock offers limited customization options for portfolios.

Reinvestment opportunities: Roofstock does not provide dividend reinvestment services.

Geographical coverage: Roofstock accounts are currently available only within the United States, limiting international investor access to U.S.-based real estate crowdfunding platforms such as Cityvest and DiversyFund.

Roofstock functions as a comprehensive platform for investors, providing data, analysis tools, acquisition assistance, management services, and a marketplace for selling single-family rental (SFR) investments. The company's workflow is structured to guide investors efficiently through the investment cycle.

Initially, Roofstock aggregates information on single-family rental properties available for sale, offering valuation analysis and calculators to aid investors in their decision-making process. These tools help investors assess key factors such as whether a property aligns with the "1% rule," a guideline suggesting that a property's mortgage payment should be less than 1% of its value, inclusive of necessary repairs, to reflect the typical rental rate in the area. Despite varying relevance in different market conditions, Roofstock's online tools assist investors in identifying potentially profitable properties over time.

After selecting targeted SFR investments, investors can engage Roofstock as a broker or agent to facilitate property acquisition. Additionally, investors can access accounting and property management services concurrently, streamlining the investment process and saving time and effort.

While Roofstock's platform is effective for many investors, it may not cater to every investment strategy. Accredited investors seeking a more sophisticated and hassle-free experience can explore Roofstock's real estate investment trusts (REITs), which are structured around ownership of SFR properties, offering an alternative investment avenue.

Liquidity

SFR investments, whether in residential properties or structured REITs offered by Roofstock, are generally illiquid assets. Neither Roofstock One's REIT offering nor individual properties should be viewed as liquid investments, although the company facilitates smooth entry and exit processes for investors. The Roofstock One REIT fund necessitates a minimum commitment of five years.

Transparency

While Roofstock maintains high transparency regarding the process of buying or selling SFR properties, details regarding property and accounting management services can be less transparent. This is due to the complexity of variables associated with each property and the fact that these services are provided through companies Roofstock has acquired.

Fees

Roofstock charges a minimum fee of $500 for purchasing single-family rental (SFR) investment properties, with fees increasing for properties exceeding $100,000 to 0.5% of the purchase price. For property sales on Roofstock, the company levies a fee of 3% of the purchase price, with a minimum of $2,500.

Sectors and domains

Roofstock specializes in the acquisition, management, and sale of single-family rental homes, catering to investors looking for passive income opportunities in the residential rental sector. While it requires diligent research for investors to achieve their desired passive income goals, Roofstock's platform offers a compelling option for residential rental property investment.

For investors interested in diversifying their portfolio beyond real estate, such as exploring alternative investments like wine, art, legal investments, private equity, or venture capital, they may find better options with platforms like Yieldstreet.

Investment selection

Roofstock stands out among real estate crowdfunding platforms by welcoming both accredited and non-accredited investors to invest directly in physical properties. Each property listing includes a useful calculator to assess investment commitments, coupled with comprehensive macro and micro-level location analysis, providing investors with a well-rounded perspective on the investment.

Additionally, Roofstock offers Roofstock One, a REIT tailored for accredited investors seeking a hands-off approach. This REIT allows investors to purchase shares in privately held single-family rentals managed by Roofstock, offering potential income generation and capital appreciation benefits. While due diligence is advised for REIT investments, it is typically less intensive than vetting physical property investments.

It's worth noting that Roofstock primarily focuses on single-family rental properties, making it an attractive option for investors seeking passive income from residential rentals. However, investors interested in commercial, industrial, or multi-family properties will need to explore other platforms as Roofstock doesn't operate in those sectors.