Investing in real estate is a great way to diversify your portfolio and hedge against inflation. Because you can use a mortgage to leverage your investment, you can invest in assets with a much higher value than the cash you have to invest.
Roofstock Marketplace is one of the latest marketplaces available to investors, making it easy to buy and sell real estate investment properties, but is it worth it? Check out our review below.
What Is Roofstock?
Roofstock is an online real estate marketing platform. It brings together buyers and sellers of investment properties. Even though it’s touted as a ‘crowdfunding’ website, you don’t pool your funds with other investors like you would in a traditional crowdfunding marketplace.
Sellers list their properties for sale on the marketplace, and interested buyers review them. Roofstock provides plenty of information to make choosing properties easy, and the entire sales process takes place online in the Roofstock marketplace.
Right now, Roofstock doesn’t have an app, but you can access the marketplace on any internet-enabled device, including your phone. Anyone is free to browse the marketplace to see what it’s all about, and signing up for an account is free too.
How Does Roofstock Work?
Roofstock brings together buyers and sellers of investment properties. They focus on single-family properties, and many properties already have tenants in them. This means you earn cash flow from day one if you buy a property with tenants already in it.
Roofstock doesn’t list all properties sellers try to list. They have exclusive requirements that all homes must meet before Roofstock lists them in their marketplace. Roofstock certifies all properties they list, which means they went through Roofstock’s due diligence and passed their requirements.
The Roofstock guarantee makes it easier for buyers to trust the properties listed on the marketplace, allowing them to buy properties sight unseen. Many people even buy properties located thousands of miles away from them, using Roofstock’s expertise. Roofstock also matches buyers with property management services making it easy to manage your property long-distance.
To use Roofstock as a buyer, use the following steps.
1. Sign up for an Account
It’s free and easy to sign up for a Roofstock account. Once registered, you can browse the Roofstock Marketplace, look at pictures of homes, and read their analytics to determine if it’s a good fit for you.
You aren’t under any obligation to buy a property if you sign up for a free account, but it does get you ready to place a bid on a property should you find one that’s right for you.
2. Evaluate Properties
Read through the analytics Roofstock provides, including:
- Property characteristics including 3D photos and video tours
- Financial information including returns, historical appreciation, rent prices, closing costs, and net cash flow
- Inspection and lease analysis
- Property management options
The information is there for you to use in your decision-making. You are also free to do your own research to add to what Roofstock provides.
3. Choose a Property and Place a Bid
Once you choose the right property, you can place a bid in Roofstock. It’s free to bid. You only pay a fee when your offer is accepted.
Sellers can accept your bid, counter it, or reject it. If they accept it, you continue with the process through Roofstock and your lender. Just like when you buy a property with a real estate agent in person, you can add contingencies to the contract to safeguard your investment if you wish. Talk to your real estate attorney before making any decisions.
4. Decide if You Want Property Management
As a part of their services, Roofstock offers property management options. You aren’t obligated to use their partners but are free to use them, which cuts down on the legwork and research you must do.
You can choose the property management through Roofstock or go off on your own once you own the property.
5. Closing on the Sale
The final step is to close the sale. Once you take possession of the home, you become an instant landlord and earn cash flow from day one. Roofstock helps you all the way through the last step.
Who Should Use Roofstock?
Roofstock Marketplace is great for first-time investors because you don’t have to be accredited (have a certain amount of assets) or know anything about investing in real estate.
Roofstock does all the work. The hardest thing you have to do is choose the right property. But using Roofstock’s in-depth analysis, you can easily make decisions.
Experienced investors can also use Roofstock Marketplace to add to their real estate portfolio without the extensive research and work that goes into finding investment properties yourself.
Who Shouldn’t Use Roofstock?
You shouldn’t use Roofstock if you aren’t ready to invest in real estate. As a real estate investor, you are in charge of managing the property. This means paying for and arranging for contractors and repair personnel to fix or maintain the property, especially if it’s not local to you.
You’ll also need enough money to cover the real estate taxes and home insurance, plus the cost to maintain and/or repair the property. The cash flow you earn from the rent should cover all expenses, including the mortgage, maintenance/repair costs, taxes, and insurance. If you don’t have a reserve account or won’t have the cash flow to cover the expenses, you may want to consider other investments.
Pros and Cons of Roofstock
All investment opportunities have pros and cons. Knowing both sides can help you determine if it’s right for you.
- Roofstock does a lot of the legwork. They don’t list properties until they’ve undergone and passed Roofstock inspections both physically and financially. Most investors still do some of their own research, but Roofstock handles the bulk of it.
- Many Roofstock properties already have tenants. This saves you time and money since the properties earn cash from day one. You don’t have to spend time looking for tenants, marketing the property, or even screening tenants.
- It’s free to search. It costs nothing to search Roofstock and read through the property evaluations. You only pay a (small) fee if you find a property and place a bid.
- Roofstock offers a 30-day money-back guarantee. If you’re unhappy with the property you bought through Roofstock, you can notify them in writing within 30 days. They’ll immediately list the property for sale, and if it doesn’t sell within 90 days, they’ll buy the property from you.
- Roofstock offers financing through lender partners. If you have at least 20% to put down and decent credit, you may get better financing deals using Roofstock partners.
- Roofstock offers Roofstock Academy to help you learn about turnkey real estate. It’s a combination of online learning, one-on-one coaching sessions, and access to a group of professional real estate investors.
- You may need a large down payment. Most lenders require at least 20% down on an investment property, but you may need more depending on your qualifying factors.
- Rental property isn’t a passive investment. You’ll need to manage the property, even if from a distance; making decisions and providing the funds to handle the issues can be a lot to handle.
- Investment real estate costs a lot of money. Aside from the down payment and closing costs, you’ll need money to cover the maintenance, unexpected repairs, and even the mortgage payment should your tenant default or vacate the property.
Roofstock Features and Offerings
- Search filter – Roofstock makes it easy to search properties based on your criteria. You can narrow down your results by searching by location, price, neighborhood information, lease information, property age, and school ratings.
- Alerts – You can sign up for alerts that meet the criteria you set, so you’re the first to know when a property hits the market that you may want to invest in.
- Professional analysis – Roofstock does most of the legwork for you, providing you with detailed information, including pictures, floor plans, videos, inspections, lease details, and a neighborhood rating.
- Open houses – Get alerted about the newest properties to hit the market and have the opportunity to view and bid on them within the first 24 hours.
- Roofstock works with you through the closing – Roofstock works with you on everything you need until you close on the property.
Roofstock Fees and Pricing
Roofstock offers extensive services for buyers and sellers at half the cost of a traditional real estate agent, yet they provide many more services.
In general, Roofstock buyers pay 0.5% of the sales price after placing a bid. Roofstock sellers pay 2.5% of the sales price, for a total of 3% between buyers and sellers, which is half the cost of a real estate agent.
If you use Roofstock to browse the marketplace and don’t place a bid, it’s free to use. There’s no catch and no credit card required. Roofstock uses technology to its advantage, allowing them to cut down the fees charged to buyers and sellers and provide free services to buyers.
Roofstock Review FAQ
Is Roofstock Legit?
Roofstock has facilitated over $2 billion in transactions to date and has successfully helped thousands of buyers and sellers buy and sell investment real estate.
Is Roofstock Safe?
Roofstock offers a 30-day money-back guarantee which makes it a safe way to invest. If you are unhappy, you can request a refund. You’ll incur some fees, which is a risk, but knowing you can sell the property and get it off your portfolio if you find it’s not suitable for you makes it safer than other investments, such as investing in stocks.
What Is the Minimum Roofstock Investment?
Roofstock Marketplace doesn’t have a minimum investment. Sellers determine the listing price (Roofstock makes sure they are fair). You then work with a lender to secure the financing if you aren’t paying cash for the property. The lender you work with determines how much you must invest, but typically buyers need at least a 20% down payment.
How Much Does Roofstock Cost?
Roofstock is free to use until you place a bid. Only then will you pay the 0.5% buyer’s fee. For example, if you bought a $100,000 property, you’d pay $500 for the buyer’s fee. This is in addition to any closing costs your lender charges.
How Does Roofstock Make Money?
Roofstock makes money from both buyers and sellers. Buyers pay a fee when they place a bid, and sellers pay a fee when they list a property. Overall, Roofstock makes 3% on the sales price of a property.
The Bottom Line
Roofstock is an excellent investment if you’re a first-time real estate investor or an experienced investor looking to increase your portfolio.
They make it easy to invest in real estate by doing the research and legwork for you. You can use Roofstock to its full extent, choosing their property management companies and lenders, or just use the platform to buy a property and find all third-party services yourself. You choose what works best for you and realize your dream of becoming a real estate investor.