Clark Galvan
Investing in Roofstock is a risky business, especially for those new to the game. While the platform has been praised for its smooth and quick process, with some investors making a profit, others have lost out.
Roofstock is a real estate crowdfunding platform that helps investors acquire, manage and sell single-family rental properties. It is a modern way of investing in real estate, making it more accessible and affordable for the average investor. However, it is not without its pitfalls.
The platform has been criticised for its poor customer service, with some investors feeling that Roofstock is too protective of sellers, making it difficult for buyers to have any recourse if things go wrong. There are also concerns about the quality of service from third-party providers, such as title companies and property inspectors.
For those looking for a hands-off investment, Roofstock could be an attractive option, but it is important to do your research and be aware of the risks involved.
| Characteristics | Values |
|---|---|
| Target Market | Busy professionals who want to put their money into lucrative rental properties without necessarily having to put in the time and work themselves |
| Property Type | Single-family homes |
| Tenant Screening | Strict tenant-screening guidelines |
| Property Selection | Ample property inventory with diverse prices and categories |
| Property Inspection | Thorough property inspection covering the general quality of the house, estimated repair costs, and the total finances needed |
| Property Acquisition Fee | $500 or 0.5% (whichever is higher) |
| Sales Fee | $2,500 or 3% (whichever is higher) |
| Minimum Investment | $5,000 |
| Account Minimum | $5,000 |
| Customer Support | Toll-free phone support, email, two physical offices |
| Trustworthiness | BBB rating: F |
What You'll Learn
Roofstock's fees and risks for buyers
Fees
Roofstock is an online real estate platform that allows users to buy or sell rental properties. The platform is accessible to accredited and non-accredited investors, with no sign-up fees. However, there is a $5,000 minimum for a Roofstock One account, which offers pre-built portfolios for accredited investors.
When purchasing a property, Roofstock charges an acquisition fee of $500 or 0.5% of the contract price, whichever is higher. There is also a down payment, which varies depending on the rental property.
Property management, brokers, and agents will charge their own fees on top of Roofstock's fees.
Risks
Real estate investing is considered a high-risk endeavour. Roofstock's properties are highly illiquid, and the company has received an F rating from the Better Business Bureau.
One user review highlighted issues with undisclosed permitting problems and difficulties with recouping losses. The review also noted that Roofstock's advisors lacked knowledge of local markets and that the quality of service providers, such as title companies, property managers, and inspectors, varied widely.
Another user review mentioned issues with property management, specifically poor communication and frequent breakdowns requiring repairs.
Overall, while Roofstock offers a convenient and accessible way to invest in real estate, buyers should be aware of the risks involved, including the potential for hidden issues with properties and the variability in service quality.
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Roofstock's fees and risks for sellers
Roofstock is a data-driven real estate crowdfunding platform that allows investors to buy and sell single-family rental properties. The platform uses an algorithm to pre-vet properties, taking into account factors such as home value, estimated rental income, total return, crime level, employment status, and average income in the surrounding areas.
For sellers, Roofstock offers a streamlined process to list their qualified properties in front of active buyers and investor-centric local agents. Properties are often listed on the platform within 24 hours of submission and are displayed for 30 days. Sellers can also take advantage of Roofstock's local agent referral program, which connects them with pre-vetted third-party agents who have experience in selling investment homes.
However, there are some fees and risks that sellers should be aware of when using Roofstock. Here are some key points to consider:
Fees:
- Listing Fee: Sellers are charged a listing fee of $2,500 or 3% of the sale price, whichever is greater.
- Commission: In most cases, sellers also pay a commission to the buyer's agent.
- Additional Fees: Property management, brokers, and agents will charge their own fees on top of Roofstock's listing fee.
Risks:
- Limited Recourse: One user reported issues with an undisclosed permitting problem that was not mentioned in the Roofstock inspection report. They felt that the Roofstock purchase and sale agreement favoured the seller and limited their options for recourse.
- Provider Quality: Some users have reported issues with the quality of service from different providers (title companies, property managers, inspectors) associated with Roofstock. While there are good providers, there is also a risk of encountering bad ones.
- Local Market Knowledge: Roofstock advisors may not have in-depth knowledge of the local markets, which can put sellers at a disadvantage.
- Target Market: Roofstock's platform primarily targets accredited investors with a net worth of $1 million or more. As a seller, your pool of potential buyers may be limited, especially if your property does not meet the specific criteria sought by these investors.
Overall, while Roofstock offers a convenient platform for sellers to list their rental properties, it is important to carefully review the terms and conditions, be aware of the associated fees, and manage expectations regarding the quality of service and local market expertise.
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Roofstock's property management services
Roofstock is an online platform that helps investors acquire, manage, and sell single-family rental properties. The company offers a vertically integrated suite of services, including property management, to make the process smoother for investors.
Additionally, Roofstock's property management services provide detailed financial reporting, forecasting, and accounting practices that meet lender requirements. This helps institutional property owners improve financial performance and streamline operations.
While Roofstock's property management services can be beneficial, some tenants have complained about poor performance, as seen in Trustpilot.com reviews for Great Jones.
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Roofstock's suitability for new investors
Roofstock is a real estate platform that allows investors to buy and sell single-family rental properties. It is suitable for both accredited and non-accredited investors, including those who are new to real estate investing. Here are some key considerations regarding Roofstock's suitability for new investors:
Ease of Use and Accessibility
Roofstock offers a user-friendly platform that is easy to navigate. The website is organized by property acquisition, accounting, property management, and selling, making it simple for new investors to find the information they need. There is also no minimum deposit required for Roofstock's regular platform, making it accessible to new investors with varying financial capabilities.
Low Barrier to Entry
Roofstock has a low barrier to entry, which is advantageous for new investors. There is no cost to start browsing properties, and the minimum investment required is relatively low at $5,000. This makes it possible for new investors to get started in real estate investing without needing a large amount of capital.
Streamlined Process
Roofstock's platform is designed to streamline the real estate investment process. It provides data and analysis tools, acquisition assistance, management services, and a platform for selling single-family rental properties. This comprehensive approach helps new investors navigate the complexities of real estate investing more efficiently.
Property Selection and Due Diligence
Roofstock offers a wide range of pre-vetted single-family rental properties, providing new investors with a diverse selection of investment opportunities. The platform also provides detailed information on each property, including inspection reports, valuation analysis, and calculators, enabling new investors to conduct thorough due diligence before making a purchase.
Hands-On or Hands-Off Approach
Roofstock caters to different investment styles, allowing new investors to choose their level of involvement. Those who want a more hands-on approach can use Roofstock to acquire and sell properties, while those seeking a more passive investment can utilize Roofstock's property management services.
Risk Factors
While Roofstock offers many benefits to new investors, it is important to consider the risks associated with real estate investing. Real estate investments are highly illiquid, and there may be challenges when it comes to offloading property shares. Additionally, new investors should be aware of the potential for large down payments and the need to carry out due diligence before purchasing a property.
In conclusion, Roofstock offers a suitable platform for new investors interested in single-family rental properties. Its user-friendly interface, low barrier to entry, streamlined processes, and comprehensive resources make it a viable option for those looking to enter the real estate market. However, new investors should carefully consider the risks and conduct thorough research before committing to any investment.
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Roofstock's reputation and trustworthiness
Roofstock is a real estate crowdfunding company that uses data and technology to create a more efficient process for investors looking to own single-family real estate investments. The company was founded in 2015 and has grown impressively each year. Roofstock has been recognised by Forbes, making it onto the Fintech 50 list in 2022.
Roofstock has a mixed reputation among investors. Some investors have had positive experiences with the platform, citing its smooth and quick processes, while others have encountered issues with property management and hidden costs.
One investor on BiggerPockets gave Roofstock a 1-star review, stating that they felt "buying properties from Roofstock is like buying properties without a buyer's agent" and that the "water is too deep for newbie buyers". They also mentioned issues with the quality of service from different providers, noting that it was a "hit or miss" experience.
On the other hand, an investor on Reddit shared a positive experience with Roofstock, saying that the "turnkey system is great from purchasing to selling". They bought a home near Augusta, GA, and sold it six months later for a profit of about $20,000, including rent and sales.
Roofstock has received funding from large, reputable investors, including Bain Capital and Lightspeed Ventures, and has serviced thousands of customers with over $6 billion in transactions.
The Better Business Bureau has given Roofstock an F rating, taking into account factors such as customer complaint history, time in business, advertising issues, and licensing and government actions.
Overall, while Roofstock offers a convenient platform for investing in single-family rental properties, it is important for investors, especially newcomers, to conduct thorough research and carefully evaluate each property before making a decision.
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Frequently asked questions
Roofstock is an online real estate platform that helps investors acquire, manage, and sell single-family rental properties. It is a data-driven crowdfunding platform that uses artificial intelligence and real estate market expertise to make real estate investing more accessible and affordable.
Roofstock charges a property acquisition fee of $500 or 0.5% of the contract price (whichever is higher) and a listing fee of $2,500 or 3% of the sale price (whichever is greater) for sellers. There are also property management, broker, and agent fees, which vary.
Real estate investing carries significant risk. Roofstock properties are highly illiquid, and there may be large down payment requirements and unexpected costs associated with repairs and maintenance. There is also a potential lack of control over property management, and due diligence is required to avoid unpleasant surprises.
Roofstock caters to accredited and non-accredited investors looking for passive income through single-family rental investments. It is particularly targeted at busy professionals who want to invest in lucrative rental properties without the time and effort of being a traditional landlord.
Roofstock offers a wide range of pre-vetted single-family rental properties with tenants already in place. It provides valuable information, tools, and services, including property inspections and integrated financing options. The platform also gives access to vetted property managers, brokers, and agents.
