Roofstock Review 2017

roofstock review 2017

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Have you ever wanted to own a rental property to earn some passive income but shuddered at the thought of spending countless weekends searching for the right one, wading through legal documents, finding tenants, and fixing broken dishwashers?

Or maybe those hassles don’t phase you but you live in a part of the country where rental yields are low compared to purchase prices for single-family rental homes?

Enter Roofstock, a platform which cuts out the hassle of buying rental properties by featuring only pre-vetted rental homes with existing tenants.

And the leaky dishwasher? You don’t have to worry about that either, even if your new rental property investment is a thousand miles from where you live, because Roofstock connects you to pre-screened property managers.

Whether you are looking to buy, own, or sell, Roofstock simplifies the steps to finding a cash flow positive property from day one in markets across the U.S. and charges approximately half as much as you would otherwise pay.

Roofstock Spotlight

ROOFSTOCK SPOTLIGHT

roofstock logo

InvestorMint Rating

5 out of 5 stars

  • Buyer Fees: 0.50%
  • Passive Income Opportunity: YES
  • Residential Single-Family Homes: YES
  • Access To Non-Accredited Investors: YES

via Roofstock secure site

Why Choose Roofstock?

Roofstock certifies and guarantees each purchase so you can get a full refund on your home purchase within 30 days if you are dissatisfied.

The idea behind Roofstock is not only to simplify the process of buying rental properties that cash flow from day one but to give you the peace of mind that an experienced professional has conducted due diligence on the curated list of homes available for sale.

For new buyers, the risk of missing something along the purchasing journey can be high enough to want to walk away from what might otherwise be an attractive passive income investment opportunity.

To ease any concerns you may have as a buyer, Roofstock certifies and guarantees each house featured in its marketplace.

When you purchase a property listed on Roofstock, you automatically enjoy a 30-day money back guarantee, meaning that you can hand back your property to Roofstock after providing written notice of your dissatisfaction.

The likelihood of coming across any major issue is lowered by the rigorous certification process that each property undergoes before featuring in the Roofstock marketplace.

HIGH POTENTIAL MARKETS

Roofstock evaluates markets with good potential for investment by evaluating rental rates, growth yields, population growth, job growth, and House Price Appreciation (HPA).

The supply and demand of single-family homes is factored into calculations to determine levels of projected growth too.

And Roofstock will evaluate neighborhood criteria, such as crime rates, amenities, and school districts as part of its research to gauge total returns.

EACH HOUSE CERTIFIED

A national inspection firm conducts a multi-point property inspection to assess habitability, risk, and safety.

Properties are examined both internally and externally.

roofstock advisor picks properties

You will also receive a preliminary title report to make sure no uninsurable encumbrances, liens, or title commitments exist.

And any HOA fees that may be applicable are evaluated and disclosed so you won’t be surprised post-purchase.

Because an existing tenant will already be in place, you will be purchasing a property that cash flows from day one.

For transparency, Roofstock makes sure that you see lease terms, such as monthly rent, lease-end date, utility responsibility, and security deposit. Plus, you will have access to the tenant’s rent payment history to make sure payments are timely.

ROOFSTOCK NEGOTIATES LIST PRICE

To save you the back-and-forth hassle of negotiating a price, potentially losing out on an investment property based on price alone, and to ensure you get a fair price, Roofstock conducts the list price negotiation after performing a property evaluation and rental market analysis.

In case repairs are needed, you will also receive an estimate cost for repairs.

CERTIFIED PROPERTY MANAGERS

Another way Roofstock simplifies the process for you is by finding and certifying local property managers.

Roofstock will review the property management process and personally interview top managers to source the best one.

Roofstock Highlights

  • Buy & Sell 100% Online
  • Minimum Downpayment: 20%
  • Geographic Diversification: Nationwide
  • Property Type: Residential

What Due Diligence Does Roofstock Conduct?

Roofstock screens locations, estimates growth potential, and conducts title and inspection due diligence on each property featured.

Where Roofstock shines is in vastly simplifying the process of buying a residential rental property for passive income.

Due diligence conducted by Roofstock on your behalf includes:

Research Performed By Roofstock
Preliminary title report
Interior & exterior inspection reports
Tenant payment history & lease details
Detailed financial pro forma & return estimates
Visualizations of income, appreciation, and total returns
Property valuation & comparables
Market, neighborhood & local school insights
Major repair cost estimates, if applicable

Where Can I Buy Roofstock Properties?

Roofstock serves markets it believes will perform well over the long-term.

High-potential regions are targeted by Roofstock based on a wide variety of economic criteria.

roofstock property map

The criteria used to determine the potential for growth include:

  • Housing supply trends
  • Economic data
  • Demand drivers, such as rental growth forecasts

The markets currently served include:

View Location
roofstock profile atlanta Atlanta
roofstock profile dallas Dallas
roofstock profile tampa Greater Tampa
roofstock profile houston Houston
roofstock profile indianapolis Indianapolis
roofstock profile jacksonville Jacksonville
roofstock profile las vegas Las Vegas
roofstock profile los angeles Los Angeles
roofstock profile memphis Memphis
roofstock profile miami Miami
roofstock profile north carolina North Carolina
roofstock profile orlando Orlando
roofstock profile riverside san bernardino San Bernardino
roofstock profile san francisco east bay San Francisco – East Bay
roofstock profile southwest florida Southwest Florida

How Does Roofstock Rate Neighborhoods?

A proprietary neighborhood rating formula is used to gauge key factors, including school district, income levels, and employment rates.

At its core, Roofstock is a technology company and it has built a proprietary Neighborhood Rating that ranges from 1 to 5 stars based on data that is normalized across markets.

Approximately one dozen key attributes are measured using a proprietary algorithm, including employment rates, home values, school district quality, and income levels.

roofstock neighborhood 5 star-rating

A 5-star neighborhood may be an affluent neighborhood with higher-income residents and a top-rated school district.

These neighborhoods generally are higher cost and lower yield opportunities.

Employment levels in the surrounding are will generally be higher, and a higher percentage of homes will be owner occupied.

In contrast, a 3-star neighborhood may have a blend of older and newer homes in a decent school district.

The yields tend to be higher to reflect the higher risk associated with lower income tenants.

Why Single-Family Homes?

Roofstock deals exclusively with single-family homes. If you are looking for commercial real estate opportunities, Realty Mogul may be a better fit.

Single-family home rental investments are a way to diversify an investment portfolio using an alternative vehicle than the stock market and to earn passive income from a tangible asset that can hedge inflation.

Single-Family Home Features YES/NO
Tax benefits
Tangible asset
Inflation hedge
Cash flow from day one
Uncorrelated to stock market
Investment portfolio diversification
Passive income
Buy with leverage

Roofstock Snapshot

Roofstock costs buyers 0.50% to purchase homes and sellers 2.50%. You can buy single-family homes from within a self-directed IRA.

Buyer Fees 0.50%
Seller Fees 2.50%
Property Type Residential Single-Family
Pre-Vetted YES
IRA YES
1031 Exchange YES
Do You Own Property? YES
List Price Pre-Negotiated YES

Roofstock Pros and Cons

Roofstock makes it easier and cheaper to purchase leased single-family rental properties than had traditionally been possible, but you will need to pay a hefty lump sum and get pre-approved financing to make a purchase.

Roofstock Pros Roofstock Cons
Uninterrupted Tenant Occupancy: You can buy a leased single-family home with uninterrupted tenant occupancy so you can earn cash flow on day one. High Investment Minimum: You will need to deposit at least 20% of the purchase price to get started.
Low Cost: Compared to the traditional 6% transaction costs, Roofstock charges just 0.50% to buyers while sellers pay 2.5%. Time & Capital Commitment: Unlike a REIT, which you can buy and sell easily, a single-family home requires a longer term commitment, higher upfront costs, and higher transaction costs, as well as more research, so you should think carefully before making what is a sizeable commitment of capital and time.
Proprietary Neighborhood Rating: Normally, you would need to research a locality, including school district, crime rates, income and employment levels but Roofstock does all that for you using a proprietary algorithm. Illiquid Investments: Transaction costs to buy and sell property are high, so your money will generally be tied up for a long time period and inaccessible, so it is best not to use any capital you may need over the short-term.
Preliminary Title Research: To avoid last minute surprises, Roofstock conducts preliminary title research.
Curated List Of Homes For Sale: Roofstock screens each home and conducts extensive due diligence, so sellers cannot simply post their homes for sale which is designed to increase the quality of homes available.
Passive Income: You can earn passive monthly income on homes you buy and are not limited to the number of homes you purchase on the platform.
Screened Property Managers: Roofstock interviews and screens property managers, so you can have more confidence that you are partnering with a top rated firm, but you also have the flexibility to choose another company or self-manage.
Alternative Investment: Buying single-family rental properties via Roofstock offers an alternative to stock market investing.
30-Day Guarantee: If you are not satisfied with your new home, simply notify Roofstock in writing within 30 days of your purchase.
Easy Connection To Lenders: Roofstock has partnered with lenders to make it easy to access mortgage loans directly through its platform.

Roofstock Account Types

Type Capability
Taxable YES
IRA YES

Roofstock Summary

If you ever wanted to own a residential rental property but couldn’t stomach the thought of all the hassles that come along with sourcing good locations, managing tenants, fixing leaky toilets, Roofstock may be the solution you could only previously have ever dreamed about.

You can be as hands-on or hands-off as you wish to be. While Roofstock will assess neighborhood quality, tenant payment schedules, screen properties, and produce pro forma financial estimates, you can self-manage the property post-purchase if you wish or choose a property manager that is pre-screened by Roofstock.

Roofstock makes it feasible for an investor on one side of the country to buy a property thousands of miles away with much less effort than had previously been possible, and you can do so via 1031 exchanges or self-directed IRA accounts as well as standard taxable accounts.

To give you even more confidence in Roofstock, the company has been funded by some of the top venture capitalists in Silicon Valley, which contributed almost $70 million in funding to ensure Roofstock has a long runway of opportunity ahead.

However, any purchase you make will tie up capital for a significant time period so be sure any money used is not needed for short-term expenditures.

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