To find out if Roofstock is a suitable fit for you, we’ll go through all the details of the service.
There has long been a perception that real estate investing was reserved for the wealthy and well-connected. Fintech firms, on the other hand, are making it easier for the general public to gain knowledge about real estate investing. Even better, you don’t need a lot of money to get started with this business model.
As little as $5,000 and no operating duties are required to get started in real estate investment with Roofstock. You won’t have to deal with renters or expenses on a day-to-day basis, so you’ll be able to reap the benefits of really passive income.
Online real estate investment marketplace Roofstock specializes in single-family houses. Real estate can be purchased or sold, as well as real estate investment shares, all through this website.
As of May 2015, the firm has three founders: Gary Beasley (Gregor Watson) and Rich Ford (Rich Ford). Three real estate investors came together to start a firm they believed would revolutionize the way people invest in real estate. They aimed to create a “radically accessible, cost-effective, and straightforward” real estate investing platform.
Since its inception in October 2016, Roofstock has processed over $1 billion in transactions. Roofstock has grown to more than 70 areas, spanning from California to Florida to New Jersey, as of December 2019. Currently, it employs over 200 people (referred to as Roofers) and has processed over $2 billion in sales.
How does Roofstock work?
First-time real estate investors will appreciate how simple it is to get started with Roofstock. It’s true that Roofstock allows you to list your homes for sale, but the creative investment choices are what really make it stand out. Turnkey real estate investing is made easier using its platform.
Before a property is posted on Roofstock, it undergoes a rigorous certification process. An inspection is scheduled; a value assessment and rental market analysis are prepared; the Roofstock team examines tenant payment history and lease conditions, and they estimate the cost of any necessary repairs. Roofstock’s verification procedure provides some comfort, but you still need to perform your own research before making an investment.
Head to the Roofstock homepage and click “Buy,” and you’ll be sent to the online marketplace. Properties, portfolios, and property shares are all included here.
- Properties are for purchasing whole properties as an investment.
- Portfolios are for purchasing multiple whole properties.
- Property shares are for purchasing fractions of a property.
We’ll walk you through one procedure to get a sense of how investing in each of these three areas works. We’ll walk you through the process of buying fractional shares in properties if you’re new to real estate investing so you can see if it’s right for you.
Steps in Buying
Let’s go through each stage in further detail.
Find a property
It’s easy to search for real estate investment possibilities on Roofstock’s online marketplace. Location (markets), investment amount, neighborhood rating, and property quality are just a few of the options available for narrowing down your search. Rental markets in Alabama, Arizona, California, Florida, Georgia, and Texas are all serviced by Roofstock. It is possible to find a price range of less than $100,000 to more than $900,000 for a home.
When you see a property that piques your interest, you may click on it to learn more about the investment. You’ll see many images of the property (both inside and exterior), its title report, property inspection report, valuation report, total house price, share price, and the expected return on your investment — indicated as the target yearly distribution — from your investment. It also has a closing cost estimator and a return calculator that allow you to see how much of a down payment you need to make.
As with any investment, there is no guarantee of this expected return. It is, however, determined by subtracting expected rent income from estimated expenses, reserve payments, and loan repayments. Your share (in shares) of the overall yearly dividend is represented by the estimated dollar amount.
Select shares and reserve
Choosing the number of shares you want to buy in a property is the next step after choosing a property. Right next to the photographs is a tiny place where you may begin your reservation. A reservation is nothing more than a claim to whatever number of shares are still available that you desire. To reserve a share, you must pay a fee that is refundable within 24 hours.
Investing in the selected property is out of the question if you see a block of text reading “ALL SHARES SOLD”. Select how many shares to purchase and add them to your basket if desired.
Sign and invest
Add investments to your shopping cart and then proceed through the checkout process. You’ll need to take a few further steps to finalize the reservation and finish your investments at this time. You’ll be able to attach a pre-approval letter if you’re financing your investment.
Additionally, you’ll need to provide your credit card details in order to pay Roofstock’s 0.5 percent marketplace charge.
An accredited investor must prove their identity and accredited investor status after paying the marketplace charge. After that, you’ll need to sign the subscription agreement and make an ACH transfer to pay for your investment.
Earn passive income
Now that your assets have been funded, you may relax and take advantage of the rental income generated by your investment properties. By purchasing fractional shares in Roofstock, you may avoid the time-consuming responsibilities of property management.
Instead, property and asset management is handled by a team of in-house employees.
Roofstock isn’t the only choice if you’re trying to buy full rental houses, of course. A real estate agent might help you purchase and sell a home, but their rates are likely to be higher than those offered by Roofstock. Roofstock’s cost is only $500, or.5 percent of the purchase price, compared to the average 6% realtor fee. Roofstock costs only 3% of the sale price, or $2,500 if you use it to sell your home (whichever is greater).
Isn’t it the best? No matter where you reside, you may make investments in real estate across the country. This expands your pool of potential rental houses and makes it much easier to narrow down your search.
Who may make use of Roofstock?
You may join up for a free Roofstock account and start participating immediately. Roofstock does not need accredited investors to acquire entire homes. Roofstock One, Roofstock’s fractional share investing scheme, requires accredited investors to participate.
Individuals with substantial wealth, lenders, trusts, corporations, and more are all examples of accredited investors. To become an authorized individual investor, you must be able to invest in full property acquisitions. Once you begin the investing procedure, Roofstock will verify that you are an accredited investor. If you’re unsure if you’re eligible, check out the government rules and guidelines.
How you get paid with Roofstock
Roofstock’s payment process is straightforward. Quarterly payments are paid out on the 15th of February, May, August, and November for investors in fractional share properties.
If you acquire a home through Roofstock, you may start collecting rental revenue as soon as you’ve closed on the property. The management of the property has an impact on how you are compensated. Roofstock can help you discover a property management business, or you may manage the property yourself if you choose. With your tenants or the property management business you’ve chosen, you set up your preferred form of payment.
How to stay safe investing with Roofstock
Investing in real estate is considered to be far more secure than doing so in the stock market. The price of a stock may vary in a matter of seconds, and spectacular dips are more typical than rises. When it comes to real estate, price changes tend to be more gradual, and spectacular reductions are less common.
Roofstock’s satisfaction guarantee gives you added peace of mind. Refunds are available from Roofstock if you’re not pleased with your purchase within the first 30 days. Refunds on real estate transactions are extremely rare, so this is a significant thing.
As a bonus, if you buy a rent-ready Roofstock home that doesn’t currently have renters (and neither you nor your property management staff can locate tenants), Roofstock will pay you the rent. This ensures that even if no one lives in the residence, you’ll still be able to collect rent.
Ultimately, there is no assurance when it comes to the risk associated with real estate investing, and you should always conduct your own due research before making any investment decisions. You may lose money if a property is harmed or loses value. However, there are still no assurances when it comes to real estate investing.