An online crowdfunding platform that helps both accredited and non-accredited investors acquire, manage, and sell single-family rental properties.
Roofstock is an online platform where both accredited and non-accredited investors can evaluate and invest in quality single-family rental (SFR) properties in 27 states throughout the U.S. The company offers an impressive array of analytical tools and services, making it a good choice for someone who is itching to invest in single-family rentals and wants to minimize the headaches of being a landlord.
Pros & Cons
Pros
- Roofstock adds new resources every year
- Minimum investment as low as $5,000
- Valuable information and services available
- Low transaction fees
- Investments available for purchase with self-directed IRA funds
Cons
- Subsidiary-related customer service issues
- REIT securities offered to accredited investors only, with no secondary market
Pros Explained
- Roofstock adds new resources every year: The company was founded in 2015 and has grown impressively each year. Roofstock has acquired companies to help it offer a vertically integrated suite of services that most SFR investors will need to use.
- Minimum investment as low as $5,000: The minimum amount an investor must be prepared to make is $5,000. While this isn’t a high sum for this type of investing, investors should know that the money may be tied up in a property for several years.
- Valuable information and services available: The website has an impressive array of information available, including comparison information, title search, and valuation calculators to help analyze a property for potential investment.1
- Low transaction fees: The fees for buying an SFR investment property begin at $500 as a minimum, but rise higher if the purchase of the property is more than $100,000.
- Investments available for purchase with self-directed IRA funds: Roofstock partners with New Direction Trust Company, a custodial agent for self-directed IRA accounts, to make SFR investments available for purchase with self-directed IRA funds.2
Cons Explained
- Subsidiary-related customer service issues: A close read of Trustpilot.com reviews for a key subsidiary, Great Jones (the property management service company), shows that many tenants, not necessarily clients of Great Jones, complain about poor performance.3
- REIT securities offered to accredited investors only, with no secondary market: Roofstock does offer REIT shares to accredited investors, but they are not publicly traded and there is no secondary market available for them.
Company Overview
Roofstock was founded on the premise of making single-family real estate investing less expensive for individual investors who can weather the risks and challenges of this investment class. It does this by using data, technology, and efficiency to help investors acquire, manage, and sell SFR properties faster and with less hassle than more conventional methods.
| Roofstock At a Glance | |
|---|---|
| Open to Non-Accredited Investors? | Yes |
| Acquisition Fees | $500 or 0.5% (whichever is higher) |
| Sales Fees | $2,500 or 3% (whichever is higher) |
| Investment Minimum | $5,000 |
| Investment Selection | SFR properties REIT shares (accredited investors only) |
| Dividend Frequency | Monthly |
| Website Transparency | Strong on information, calculators, analysis tools, and integrated services Education was previously offered for separate fees through Roofstock Academy, but the site shows it is not accepting new students at this time.4 |
| Available Customer Support | Toll-free phone support, email, two physical offices |
How Does Roofstock Work?
Roofstock provides investors data and analysis tools, acquisition help, management services, and a platform for selling SFR investments. Each step is designed to help the investor move more efficiently through the investment cycle.
First, the company collects all the information it can find about single-family homes that are already rental properties, but are also for sale. Then they provide valuation analysis and calculators to help work through the details an investor needs to know.
This helps investors answer questions like, “Does this property meet the 1% rule?” The 1% rule is a time-worn guideline stating that an investor should strive to find deals where the mortgage payment is less than 1% of the property value—including needed repairs—because that is likely close to the going rate for a rental in the area. Guidelines such as this one are more relevant in some years than others. Yet no matter what proportion of rents and mortgage payments an investor needs, Roofstock’s web-based analysis tools can help them discover which properties are more likely to be profitable over time.
Once an investor selects a few targeted SFR investments, they can work with Roofstock as a broker or an agent to help them acquire the property. They can also secure accounting and property management services all at the same time, making for a smooth process that saves time and effort for most investors.
As well as the process works, it isn’t suitable for everyone. For accredited investors who might want to assemble a more sophisticated, hassle-free investment experience, Roofstock offers shares in real estate investment trusts (REITs) that are fashioned around ownership of one or more SFR properties.5
Key Features
Roofstock offers the most comprehensive collection of resources available for SFR investors. It has worked aggressively since 2015 to untangle the inherent information gaps within this asset class. The website requires a free sign-up to get full access, but once you do, Roofstock’s high-value resources are at your command.
- Available to non-accredited investors: Roofstock caters directly to individual or small partner investors looking for SFR investments. This asset class is not restricted to accredited investors, so as long as the investment meets the minimum requirements, anyone can take advantage of the properties for sale.
- Investment minimum: Roofstock requires a minimum investment of $5,000; however, SFR properties often require a substantial down payment, so the minimum amount needed for investment greatly depends on the property you want to buy. For example, if you wanted to acquire a $100,000 home and your lending institution required a 30% down payment, your minimum investment would be $30,000, plus any closing costs6
- Ease of use: Roofstock is very easy to use and is organized by the type of information you are pursuing: exploring properties for acquisition, managing your accounting, managing the property, selling the property, and so forth. Many of the website’s tools are free to access and simple to navigate.
- Curated portfolios: Roofstock offers curated portfolios to accredited investors only through a product called Roofstock One. It requires a $5,000 minimum investment and a five-year commitment.
- Customizable portfolios: Roofstock does not over customizable portfolios.
- Reinvestment opportunities: Roofstock does not offer dividend reinvestment services.
- Countries where accounts are available: Roofstock currently allows accounts to be open within the U.S. only. The majority of U.S. real estate crowdfunding platforms do not allow international investors to invest in the platform. International investors should look to real estate crowdfunding platforms such as Cityvest and DiversyFund to get into the space.
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Fees
The fees for buying an SFR investment property begin at $500 as a minimum, but rise higher if the purchase of the property is more than $100,000. From that point the fees are 0.5% of the purchase price. Investors can also sell their property on Roofstock, for which the company charges 3% of the purchase price (minimum $2,500).7
Transparency
While Roofstock is highly transparent about the process of acquiring or selling SFR properties, the details about property management and accounting management services tend to be a bit more opaque. That’s partly because there are many variables at play with each property and its circumstances, and partly because these services are offered through companies Roofstock has acquired along the way.
Liquidity
SFR investment is constructed of illiquid assets such as residential properties or shares in structured REITs. Neither Roofstock One’s REIT offering nor the individual properties should be considered liquid, though the company makes every effort to help investors enter and exit SFR properties as smoothly as possible. The REIT fund requires a commitment of five years minimum.
Investment Selection
Roofstock differs from other real estate crowdfunding platforms as it allows both accredited and non-accredited investors to invest in physical properties. Each property comes equipped with a helpful calculator to better understand the investment obligation, however, it also covers the macro and micro analysis of the location to give the investor a holistic view of the investment.
Roofstock also offers Roofstock One, a REIT that allows accredited investors who want a hands-off experience to buy shares of privately held SFRs controlled and operated by Roofstock. When investing in Roofstock One, investors have the potential to benefit from both income generation and capital appreciation. Although due diligence is recommended when investing in REITs, it is not as intensive as investing in physical properties.
Similar to most of the companies we reviewed, Roofstock currently does not offer any other alternative investments such as wine, art, legal, private equity, or venture capital. Investors looking for a variety of unique investment offerings should look to Yieldstreet.
Sectors and Domains
The main focus of Roofstock is acquiring, managing, and selling single-family homes in the rental sector. Investors looking for passive income with residential rental properties may find Roofstock to be an enticing platform. However, investors should expect to conduct a large amount of research to ensure their investments yield the intended passive income they are expecting. Investors looking to invest in commercial, industrial, and multi-family properties will want to look elsewhere, as Roofstock is not present in any of those sectors.
Educational Offerings
The company offers a blog with useful articles and previously had established an educational site named Roofstock Academy. As of January 2024, the academy doors are closed to new students.8
| Education Resources | Roofstock | HappyNest | Realty Mogul |
|---|---|---|---|
| Introductory Topics | Yes | Yes | Yes |
| In-Depth Articles | Yes | Yes | Yes |
| Annual Forecasts | Yes | No | No |
| Videos | No new students | No | No |
| Webinars | No new students | No | No |
| Live Training | No new students | No | No |
Customer Support
Customer support is available through email, chat form, live chat, and a toll-free phone number. The company also has two physical offices (in Oakland, California, and Dallas).
The Bottom Line
Roofstock offers a narrow focus on SFR investment. It has broken down the process into four major areas: acquisition, accounting, property management, and property sales. The resources on the website help make each of these areas simple to navigate and more efficient than conventional methods. Roofstock’s fees are reasonable, lower than a conventional broker, but not as low as other alternatives that offer low, flat-rate commissions for selling real estate. The company’s data analysis and valuation tools help an investor get a clearer picture of how an SFR investment might perform. Overall, the process is a major step forward in the technological improvement of single-family real estate transactions.
Why You Should Trust Us
Investopedia analyzed 19 real estate crowdfunding companies and scored each based on eight major categories and 38 criteria that are crucial in evaluating the offerings and usability of these platforms. We used this data to review each company for their fees, investment selection, transparency, and other features to provide unbiased, comprehensive reviews to ensure our readers make the right decision for their needs. Investopedia launched in 1999 and has been helping readers find the best real estate crowdfunding platforms since 2020.
What Is Roofstock?
Roofstock is a real estate crowdfunding company that integrates data and technology to create a more efficient process for investors looking to own single-family real estate investments. Roofstock’s service model goes beyond acquiring shares in a typical fund, by offering both acquisition and sales assistance of physical properties, along with management services to investors who want to be more hands-on with their investments.
How Does Roofstock Work?
Roofstock provides data and analysis tools, acquisition help, management services, and a platform for selling an SFR investment. Each step is designed to help the investor move more efficiently through the SFR investment cycle.
Is Roofstock Legit?
Yes. Founded in 2015, the company has received five rounds of funding and has the backing of large, reputable investors including Bain Capital and Lightspeed Ventures.9 It has serviced thousands of customers doing over $6 billion in transactions.
How Does Roofstock Make Money?
Roofstock offers an alternative to doing business with a conventional real estate agent and therefore offers reduced fees by comparison. Property acquisition fees are $500 or 0.5% (whichever is higher). Property sale fees are $2,500 or 3% (whichever is higher). Property management fees are not disclosed on the website.
What Is the Average Return With Roofstock?
Roofstock does not disclose typical returns of investors. Each SFR property can vary greatly, but it does analyze the potential capitalization rate of properties on its site. Some rates are above 12%, but most are below 10%.10
How We Review Real Estate Crowdfunding Platforms
To evaluate and review real estate crowdfunding platforms, Investopedia’s team of researchers, data collectors, and industry experts spent nearly two months conducting in-depth industry research, company survey data collection, and hands-on evaluations of 19 companies. We grouped the 38 criteria that we collected, like investment selection and minimums, holding periods, and curated portfolios, into eight categories. We then scored these criteria and weighted the categories in order to determine which real estate crowdfunding platforms are best for both accredited and non-accredited investors:
- Fees: 15%
- Account Services: 15%
- Investment Selection: 15%
- Liquidity: 12.5%
- Transparency:12.5%
- Sectors and Domains: 12.5%
- Customer Support and Usability: 10%
- Educational Offerings: 7.5%
Through this all-encompassing data collection and review process, Investopedia has provided you with an unbiased and thorough review of real estate crowdfunding platforms. Read our full process for more information on how we review real estate crowdfunding platforms.