A Roofstock review is essential for both soon-to-be and current real estate investors who wanted to expand their investment options. Just a quick fact, Roofstock is a company that is focused on helping investors buy single-family homes for rental purposes.
While there are so many investment options out there, nothing beats investing in properties. It is perhaps the most ideal investment. But of course, certain factors have to be considered like the property’s location, as well as its use.
One of the most perfect property investments is – homes. If you do not intend to reside in there, you can instead make money out of it by renting it out. It’s a passive income for you and your family.
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In an article published by CNBC, it shared about Warren Buffet’s (yes, one of America’s business magnets) interview on Squawk Box wherein he said that apart from equities, at the moment, “single-family homes are a very attractive investment” as well.
Billionaire Andrew Carnegie will surely agree on that. As he popularly said that 90% of millionaires in the world got their wealth by investing in real estate.
You see, real estate is still, by far, the most effective way to make lots of money. Needless to say, that while investing in equities can sometimes be very risky, investing in properties is not as risky as it seems. In fact, property values increases as the years go by.
Before you start debating in your head about costs, and all. Here’s the thing. We understand not all people are capable to buy a property in an instant like how wealthy people do that. However, if you aspire to do something like Warren Buffett and other wealthy people want to do, but not to the same extent, well, companies such as Roofstock are the way to go.
Having said that, we are going to share with you essential information about Roofstock. We are doing, in particular, a Roofstock review to help you gauge if this one’s the best option.
Specifically, we are going to touch the following topics:
- What Roofstock is all about?
- How does Roofstock work?
- How does a typical property look like?
- What are the different Roofstock fees and pricing?
- Who are the partners of Roofstock?
- What is the typical return on investment?
- What are the pros and cons of Roofstock?
ABOUT ROOFSTOCK
Roofstock is a turnkey rental property online marketplace that specializes in single-family rental homes.
When it comes to the properties listed on their site, Roofstock makes sure that these properties meet their core requirement, which is — that a property has to be occupied by tenants who also need to meet the company’s strict screening guidelines.
Roofstock understands that their industry is not like eBay or any other online marketplace and that people rather investors are not just using a small amount of money to invest in. Thus, the company does a lot of research on each property they list in.
As mentioned, the company ensures that each house or property listed in their platform is certified. This is made possible by inspecting each property through a professional investment property inspection service. Should they find needs for repairs on maintenance on the property, those are estimated and are immediately included in the valuation of the property.
Each property comes with photos, as well as its floor plan, and title report.
For your reference, here is the list of information on every property report:
- Property valuation & comparable
- Interior & exterior inspection reports
- Preliminary title report
- Market, neighborhood, and local school insights
- Tenant payment history & lease details
- Visualizations of appreciation, income & total returns
- Detailed financial pro forma & return estimates
- Major repair cost estimates, if applicable
Apart from the afore-mentioned service, Roofstock also offers service during the acquisition process, and the company also provides references on property management companies once the sale is done.
Should you push through purchasing a property, you get to take advantage of Roofstock’s 30-day money-back guarantee as well as guaranteed rent on properties without tenants.
To be clear, most properties listed on Roofstock is not owned by the company itself. So, basically, you are buying from another seller, which can either be a small-time operator or a bigger company. Roofstock does sell properties that they bought and rehabbed, but as mentioned, this is not always the case.
To put everything simply, as stated on their website, Roofstock is an online marketplace that “delivers new levels of transparency and efficiency to create a better way to transact. Buyers access vetted homes with attractive investment profiles and cash flow potential. Sellers’ market homes without lost income or disrupting tenants. It’s win-win all around.“
Furthermore, what makes Roofstock revolutionary is the fact that it enables “investors to treat their real estate investments more like stock portfolios, focusing on asset allocation, rather than dealing with the hassles of property management.”
Know more about Roofstock in this very informative Roofstock review by Graham Stephan. Watch the video by clicking the play button below:
HOW ROOFSTOCK WORKS
As mentioned, Roofstock is an online real estate marketplace with a focus on single-rental properties. The company offers a wide variety of options of homes to buy, which in turn you can make money by turning them into rental properties.
Technically, here’s how Roofstock works:
– Roofstock sells homes with existing tenants.
What makes Roofstock unique is the fact that they sell properties that are already being rented out, which means you do not have to worry about finding people to rent the property anymore because someone is already there. It’s like instant income!
Essentially, those property owners who already want to move on from rental properties list their houses on Roofstock as well.
Now, if you are wondering why people would sell properties when in fact they are already earning from there. Well, the answer to that is pretty simple — some people want to diversify their investments. In some cases, they want to move on and stop being a landlord.
– Roofstock certifies every property on their list.
What’s nice about Roofstock is that it does have a comprehensive system that ensures properties are held to a particular standard. Thus, the certification process.
There are several factors that need to be taken into consideration for a property to be certified. First and foremost, the house has to be inspected by a professional investment property inspection business. The inspector will now have to assess repair costs if there’s a need, and eventually, property valuation will be done. Other important items include photos of the whole property, as well as floor plans, and a title report.
With such a process, you can see that the company ensures that the properties are up to a high standard. Roofstock is serious about ensuring that only the best single-family rental properties are available on their site. Needless to say, they do have the capacity to reject sellers who they think are selling their properties for a high price.
HOW A TYPICAL PROPERTY LOOK LIKE
If you will look over the property listings on the Roofstock website, you will get to feel what an average property is like. You will find information like the price of the property, the condition of the house, the neighborhood, as well as the appearance, and more.
Mostly, the properties listed in the Roofstock marketplace are not the kind that has just gone through a full rehab. Expect that there are most likely going to be odds as well as ends that need to be replaced and updated. Also, most properties will show signs of wear and tear.
Furthermore, it is worth sharing that Roofstock also does not list properties that require big as well as immediate capital expenditures. Roofstock ensures that each property should at least be in a liveable condition.
When purchasing a property, it is important that the buyer gets as much information as possible not just about the property itself, but also about the people currently living in there.
Good thing is, Roofstock aims to be as transparent as possible. This is precisely why they provide most of this information up front. Thus, making the decision-making process easier.
ROOFSTOCK FEES AND PRICING
This Roofstock review will not be complete if we are not going to look into the company’s list of fees as well as pricing.
First and foremost, joining Roofstock is free for everyone. Anyone can sign up regardless of investor status, which means you do not necessarily have to be an accredited investor to be able to sign up for Roofstock.
Second, when buying a property, you have all the usual fees related to buying a property such as a title insurance fee, loan origination fees (if needed), closing fees, recording fees, document preparation, etc. All these fees go to the different entities involved in the sale of the property.
Third, Roofstock collects a Marketplace Fee amounting to 0.5% of the property’s Contract Price. This is payable once you have already agreed to buy the property. This fee actually secures the property.
Lastly, if in case you thought of selling your property, Roofstock charges 2.5% for that. The thing we like about Roofstock is when selling a property, it does not require the property to be vacated, which means whoever is in their can stay regardless of change of ownership.
In addition, Roofstock also offers a 30-day satisfaction guarantee. This basically means that if the buyer is not satisfied with the property he/she purchased within 30 days since buying it, you can notify Roofstock anytime, and get your money back without any charges.
Roofstock will just re-list the property and will repurchase it if the property does not sell within a 90-day period.
ROOFSTOCK PARTNERS
Roofstock does not do all the works alone. In fact, the company has two partners in two different areas — financing as well as property management services.
These areas enable then to help facilitate the process in case you need financing. Technically, you only need a 20% down payment when buying a property. Roofstock has integrated lending partners that also provides various options. If you have your own preferred lender, you may also use it.
After-sale, Roofstock is also in partnership with various property management companies to help you with you in managing your property. Again, if you have your own, you can also use them.
All these partnerships are optional for buyers. But is very handy especially if you do not have your own.
RETURN ON INVESTMENT
This time around, we thought it’s ideal to include in our Roofstock review the return on the properties bought through this company.
According to reviews, the typical return of the houses from Roofstock is pretty decent. In fact, there’s positive cash flowing with cap rates that range from 3% to 4% on the low end, while 8% to 9% on the high end.
For some investors, this may not be as big. However, for someone who is working in a seller’s market, as well as cash flowing properties are a little harder to find. Thus, making it decent enough. Needless to say, Roofstock makes it easy to shop for properties with all the information you need in one place.
PROS AND CONS OF ROOFSTOCK
Just like other Roofstock reviews, our very own Roofstock review will also tap into the advantages and disadvantages of Roofstock. After all, a review will not be complete if we will not share these with you, right?
PROS
- With Roofstock you are assured that the properties have already been inspected prior to marketing. — As mentioned earlier, all properties listed in the Roofstock marketplace have been thoroughly inspected. All these properties have gone through a rigorous process ahead of being listed. That being said, you are assured of buying a house that can give you a relentless flow of money.
- Properties do have existing tenants already. — What’s nice about the properties you buy through Roofstock is that they already have existing tenants, which means you immediately earn from the property upon purchasing it.
- It is available for anyone (yes, even if you are not an accredited investor). — To be honest, of all the pros on our list, this has to be the best thing of all. Roofstock offers a great opportunity for people regardless of status to start out with real estate investment.
- Roofstock has impressive customer service. — Another notable aspect that we like about Roofstock is their customer service. The company has outstanding customer service. Well, the fact that they offer a 30-day guarantee already shows how confident the company is about their listed properties.
- Roofstock charges low fees. — With Roofstock, buyers avoid paying the standard 6 percent charged by traditional real estate agents. Instead, sellers will only have to 2.5 percent, while buyers will just spend half of a point of the agreed-upon price of the property.
- Roofstock offers property managers through its property management company partners. — Another thing that we like about Roofstock is the fact that they are affiliated with many property managers. Property managers are the ones responsible for professionally managing your property to ensure it gives you income on a monthly basis. Property managers act as landlords instead of doing it yourself. Although they do have one, you can always opt for your preferred property manager/s if you have existing.
CONS
- Roofstock requires a large down payment. — Unfortunately, Roofstock needs you to pay a quite large amount to buy a property, which means, if you are someone who does not have the means to purchase a property outright, you have no choice but to look into mortgage options. This means a larger down payment and has the possibility to make things difficult for potential investors.
- Owning a rental property requires work than you thought. — While owning a rental property gives you passive income, it is not always easy to manage one. What most people do not know is that when you own a rental property, you need to ensure you have set aside money for emergency cases, renovations, etc. Keep in mind also that is something happens to the property, the owner is always the one responsible for it.
- Buying a rental property needs a lot of research. – Roofstock offers essential details about every property they have, however, as a potential owner, you also have to do your own research about the property you are eyeing.
- It is not crowdfunded shares and is illiquid. – This is not ideal for those who want a liquid type of investment. More so, if you are eyeing for a crowdfunded share.
FINAL THOUGHTS ON ROOFSTOCK REVIEW
There are so many different ways to invest in real estate. But with Roofstock, it’s a platform where you can purchase actual property. Unlike other sites you will find online, Roofstock is not using the crowdfunding real estate approach wherein you get to but just a piece of the property instead of the whole thing, which is also the very reason why you do not have to be an accredited investor to be able to buy a property.
Having said that, we find Roofstock ideal for people who want to invest in actual single-family properties for rental purposes. Roofstock is one of the simplest turnkey ways to do it.
With just 3% on each transaction (0.5% from the buyer, 2.5% from the seller), Roofstock indeed provides a very attractive option.
So, if you are looking into investing in a property that you actually own, Roofstock is ideal for you.
