Investing

Roofstock Review: Start Investing In Single-Family Rental Properties

Last updated on March 18, 2020 by
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Investing in real estate has the potential to earn you a lot of money. In fact, many investors see it as a long-term way to make a steady source of passive income. So, if you have some money to invest, buying rental properties could be the best way to grow your long-term wealth.

Sounds great, doesn’t it? Well, it’s not as easy as it sounds. Many investors face issues while seeking properties to invest. For example, significant renovations, low rental demand, and many fees that cut huge chunks out of earnings!

To avoid these problems, investors have been using Roofstock, an online market for tenant-occupied properties.

What is Roofstock

Roofstock is a company by investors for investors created exclusively for investing in single-family rental (SFR) homes. When an investor considers investing in an SFR, they can count on Roofstock to provide research, analytics, and insights to evaluate and purchase independently certified properties.

With Roofstock, investors can be confident the homes are going to provide long-term cash flow. Perhaps the best part of Roofstock marketplace is enabling investors to treat their real estate investments more like stock portfolios, focusing on asset allocation, rather than dealing with the hassles of property management.

Roofstock investors will also have access to property managers who’re available to handle operational responsibilities like tenant relations, checking for upgrades and repairs, and other day-to-day management duties.

Why use Roofstock

Roofstock has a lot of features that home investors can appreciate.

A lot of information available at your fingertips

Roofstock goes above and beyond many real estate websites. When viewing a property on their website, they make it feel like you’re physically there with floor plans, 3D pictures, 3D tours, 3D models, curb views, interactive tools for visualizing finances, and much more.

Invest in properties with tenants already in them

One of the most useful things about Roofstock is they sell homes that are already being rented. This will save you the time and money of finding an agent, doing showings, marketing, etc.

How are they already rented? Property owners who want to move on from investing in rental properties list their houses on Roofstock. So, the homes come with the tenants.

From there, the new investor purchases the house with a steady flow of income already set up. Roofstock ensures the tenants don’t get bothered during the process.

Heavy inspections

Before a listing gets accepted onto Roofstock’s website, it must go through a heavy inspection by a professional investment property inspection business. The inspection looks at the quality of the house, the estimated maintenance and repair costs, and all the financial figures you need. You could technically buy a house from Roofstock without ever seeing it.

The property only gets certified upon making the inspection. With this in mind, Roofstock only deals with properties of a high standard. Properties are refused if they can’t pass the inspection. And, sometimes, they’re refused if the owner is demanding too much for what the property is worth.

Save on service fees

Many companies in this business have a catch for signing up. Roofstock is free of snags and free of sign-up fees!

Sellers will save on fees they would normally pay using a traditional real estate company. Sellers will typically pay a 2.5% marketing fee to Roofstock, whereas the conventional real estate company will charge at least 6%. That’s half the savings!

Once the buyer has read the full inspection report, talked with an advisor, and has made the decision, they’ll pay a .5% fee that can be paid with a credit card. Yes, a credit card.

Why is it so much cheaper than similar companies?

Thanks to technology, Roofstock doesn’t need to hire as many employees to be actively involved all of the time. Because of this, the company saves a lot of labor fees and can offer customers better deals.

Financing made easier

One of the hardest parts about buying a property is finding the financing for it. Roofstock partners with Better and Agora Lending to give you some easy options.

If you decide to use one of the two, you’ll need a qualifying credit and at least a 20% downpayment. If you know a financing company that offers better options for your needs, all you need to do is let them know you’re buying a rental company with Roofstock.

However, financing through Roofstock ‘s partners is the quickest option. You can get your financing in order in as little as 30 days.

30-day satisfaction guarantee

Roofstock’s 30-day guarantee is an even better reason to invest in a house without seeing it.

If you don’t like the house, you can notify Roofstock, and they’ll relist it on their marketplace. If the house doesn’t get bought withing 90 days, Roofstock will actually repurchase it from you. Buying a home from Roofstock is about as low-risk as it gets.

Reasons you may want to avoid Roofstock

Every pro comes with cons. Luckily, Roofstock’s cons aren’t that bad. But they’re worth considering before you give thousands to this investment.

 Large downpayment

If you don’t have the means to buy the property outright, you’ll be forced to look at mortgage options (which means paying a downpayment of 20%).

Great properties go quickly

If you want to snatch a great deal on a great property, you’ll need to check Roofstock’s marketplace daily, sometimes multiple times per day, depending on how badly you want to find “the one.”

It’s a long-term investment

Rental property is high illiquid, and it can be much easier to buy then sell. Unlike loaning money on a real estate crowdfunding platform or investing in a REIT (real estate investment trust) for a specified term, you’re buying a home. The process will require a lot of research and time to review documents adequately. While Roofstock does do a lot of this work, it’s essential for you to double-check everything to ensure the transaction is how you want, and more importantly, mistake-free.

Who is Roofstock best suited for?

First-time or amateur investors can benefit from Roofstock’s resources, security, and interactive website. It’s easy to understand, and there’s loads of information available, all the figures are calculated and set up for you.

Someone who is looking for an alternative to going through a real-estate company and paying their high fees could also benefit from Roofstock’s low costs.

Of course, the investor needs to do some research before buying anything. But if it all works out, it could be a very lucrative investment.

Final thoughts

If you’re a first-time investor, you might really appreciate Roofstock’s hold-handing features. The platform offers so many details that someone on the other side of the world could buy a house without ever seeing it in person. Roofstock’s technology, including 3D imaging and meticulous details and inspections, make that possible.

However, remember that since this isn’t the same as investing $200 in a company. Instead, you’re investing thousands, hundreds of thousands, or even millions of dollars. You’ll want to do your own investigating and research to be positive that investment will make a return over time.