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Roofstock review: Invest in single-family rentals with cash, financing, or IRAs

 Summary List Placement Roofstock is an online real estate marketplace that lets you buy or sell single-family rentals. You can also invest in properties through self-directed IRAs. You don't need a minimum to begin, but accredited investors need at least $5,000 to buy shares of rentals. Click here to open an account with Roofstock. Table...

Roofstock Invest Review

 Summary List Placement

  • Roofstock is an online real estate marketplace that lets you buy or sell single-family rentals.
  • You can also invest in properties through self-directed IRAs.
  • You don’t need a minimum to begin, but accredited investors need at least $5,000 to buy shares of rentals.
  • Click here to open an account with Roofstock.

Table of Contents: Masthead Sticky

Is Roofstock right for you?

Roofstock is best for active investors interested in collecting regular rental income by purchasing single-family rental properties. It’s essentially an online marketplace that lets you buy or sell rental properties. If you choose the buying route, the company allows you to finance properties or pay with cash, and it also matches you with a vetted property manager that handles the day-to-day responsibilities of your property.

Roofstock is completely different from companies like Fundrise and DiversyFund, as both primarily offer real estate investment trusts (REITs) or electronic real estate funds. With Roofstock, you aren’t passively investing in REITs; you’re investing in an actual property. If you prefer the retirement account route, you can use a self-directed IRA to invest in one of Roofstock’s listed properties.

One thing to look out for is that fees are largely determined by the property (or properties) you’ve invested in. Your down payment varies depending on the price of the investment property you’ve chosen, but the one fee that generally remains the same is Roofstock’s management fees. Roofstock charges $500 or 0.5% of the contract price, whichever is higher.

Roofstock Logo
Editor’s rating 4.2 out of 5
Fees $500 or 0.5% of the contract price for offers on properties. 
Account minimum $0 ($5,000 for Roofstock One)
Promotion Get $1,000 when you buy or sell a property.
Open account

Roofstock pros and cons

Pros

  • No minimum deposit; access to 70 markets
  • Roofstock matches you with a property manager that helps oversee your investment(s)
  • Company offers the option to buy, sell, or bring your own property to the table
  • Investment options for passive real estate investors

Cons

  • No automated or passive investment options for non-accredited investors
  • Investing in actual properties may be more costly than taking the REIT route
  • No mobile app

How does Roofstock compare?

Roofstock Logo Crowdstreet Logo Fundrise Logo (stacked)

Min. Investment

$0 ($5,000 for Roofstock One)

Min. Investment

$25,000

Min. Investment

$500

Fees

$500 or 0.5% of the contract price for offers on properties

Fees

0.50% to 2.5%

Fees

1% (extra $125 for IRAs)

Open an account Open an account Open an account

Ways to invest with Roofstock

Buy or sell single-family properties 

Roofstock currently offers investment properties in roughly 27 states. While there’s no account minimum to get started, Roofstock charges $500 or 0.5% (whichever is higher) of the contract price for offers on properties. Down payments and fees will also vary per rental, but the process for buying a property is different than that for selling one. 

If you’re a buyer, you’ll have three options: Invest in a property, invest in a portfolio of multiple properties, or bring your own property. Whether you’re investing in a single rental property or multiple properties, Roofstock displays a series of real estate rentals in different cities and states.Each portfolio lists things like total price, cap rate, average monthly rent, net operating income, locations, and more.

In addition, Roofstock has an “Open House” feature that lets you take an early look at properties that haven’t yet been listed on its marketplace for transactions. This is a 24-hour window that gives buyers the option to make an offer at, above, or below the open house price. Roofstock says it then gives sellers 24 hours to review each offer and decide whether to sell, negotiate, or list on the Roofstock marketplace.

The “bring your own property” account option allows you to submit the address of a rental property that isn’t listed on Roofstock’s marketplace. Roofstock will screen the property, and if it’s approved, Roofstock will pair you with a local real estate agent who can guide y0u through the entire process.

Roofstock also gives you a better idea of the properties’ surrounding areas by providing neighborhood ratings and school ratings. In addition, its 1031 exchange services offer investors tax perks when they reinvest returns in new properties of equal or higher value.

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Managed investments

In 2019 Roofstock launched Roofstock One to offer managed investments for accredited, hands-off investors (accredited investors are generally individuals with a net worth of $1 million or annual income of $200,000). The account lets you purchase 1/10th shares of single-family rental properties while Roofstock manages everything for you. 

You’ll need at least $5,000 to set up the account, but the minimum deposit grants you access to professional in-house property and asset management, according to Roofstock’s website. In addition, Roofstock One customers have multiple liquidity options once the initial six-month holding period has ended.

Specifically, investors may be able to sell their home interests to another accredited investor or redeem shares when fractional interests fall below 90%. 

Retirement accounts

You can also invest in real estate offerings if you have a self-directed IRA or solo 401(k). In other words, Roofstock’s self-directed IRAs actually allow you to purchase rental properties and assign your IRA as the title holder.

To take advantage of this offering, you’ll need to open an IRA account with New Direction Trust Company. You can roll over or transfer plans if you have an existing IRA or employer-sponsored plan retirement plan

Once you’ve set up your account, you maintain the tax perks of your IRA while using it to choose one, or multiple, investment properties. If you have any other questions, Roofstock offers an IRA investing transaction guide, a real estate investment guide, and a real estate owners guide.

Is Roofstock trustworthy?

The Better Business Bureau has given Roofstock a B+ rating. Since the BBB rates companies using a grade range of A+ to F, this implies that Roofstock interacts fairly well with its clients. In addition to customer complaint history, the bureau also considers a company’s time in business, advertising issues, and licensing and government actions.

It’s important to note that the BBB’s ratings don’t necessarily indicate that a company will be reliable or perform well. Since the bureau mainly looks at customer interaction data, it’s best to do your own research as well.

Roofstock hasn’t acquired any major lawsuits since its founding. The real estate app has closed one complaint in the last three years and one complaint in the last 12 months, according to BBB data. 

What is Roofstock?

Roofstock is a real estate investing marketplace that connects buyers to sellers of single-family rental properties. The app also offers self-directed IRAs and, in 2019, it launched Roofstock One to let individuals passively invest in fractional or full rental property interests.

Headquartered in Oakland, California, Roofstock has earned several awards over the past three years. In 2018, Benzinga recognized Roofstock as the Best Real Estate Platform. Forbes also included Roofstock on its 2019 and 202 Fintech 50 lists. 

Roofstock was founded in March 2015 by Gary Beasley, Gregor Watson, and Rich Ford. According to its website, the company has surpassed $2 billion in transactions.

Rickie Houston is a wealth-building reporter at Personal Finance Insider who covers investing, brokerage, and wealth-building products.

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