Roofstock, Crowdstreet and Fundrise share a real estate investment offering. However, the three main differences to look out for are fees, investment minimums, and investment options.
If you're particularly interested in real estate funds or REITs, Crowdstreet and Fundrise are better options. Just remember that CrowdStreet's fees range up to 2.5%, while Fundrise's fees are 1%.
Roofstock, however, is best for those looking to generate rental income from tenant-occupied properties.
Ways to invest with Roofstock
Buy or sell single-family properties
Roofstock currently offers investment properties in approximately 27 states. While there is no minimum account to get started, Roofstock charges $500 or 0.5% (whichever is higher) of the contract price for property transactions. Down payments and fees will also vary by lease, but the process of buying a property is different from selling it.
If you are a buyer, you will have three options: invest in a single 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 features a variety of rental properties in various cities and states. Each portfolio lists things like total price, cap, average monthly rent, net operating income, location, and more.
In addition, Roofstock has an Open House feature that allows you to get an early look at properties that are not yet listed for transactions on their market. This is a 24-hour window that allows buyers to bid above or below the open house price. Roofstock says it then gives sellers 24 hours to review each offer and decide whether to sell, trade or list on the Roofstock marketplace.
And if for some reason you buy a property and later decide you're not happy with the purchase, Roofstock offers a refund if you let us know within 30 days of the rental purchase.
The Bring Your Own Property account option allows you to submit a rental property address that is not listed on the Roofstock marketplace. Roofstock will appraise the property and if approved, Roofstock will connect you with a local real estate agent who can guide you through the entire process.
Roofstock also gives you a better idea of the property's surrounding areas by providing neighborhood and school ratings. In addition, its 1031 exchange services offer tax advantages to investors when they reinvest the proceeds in new property of equal or greater value.
In 2019, Roofstock launched Roofstock One to offer managed investments to accredited investors who are not engaged (Accredited investors are typically individuals with a net worth of $1 million or an annual income of $200,000). Although not currently available, Roofstock says it will relaunch Roofstock One soon.
Previously, the account allowed you to buy a 1/10th share of a single-family rental property while Roofstock managed everything for you.
It included a $5,000 minimum, but a minimum deposit gives you access to in-house property and asset management, according to the Roofstock website. In addition, Roofstock One has provided customers with multiple liquidity options once the initial six-month holding period has expired.
In particular, investors had the option to sell their own interest to another accredited investor or to redeem the shares when the fractional interest fell below 90%.
You can also invest in real estate if you have a self-directed IRA or individual 401(k). In other words, Roofstock Self-Directed IRAs actually allow you to purchase a rental property and designate your IRA as the owner.
To take advantage of this offer, you must open an IRA with New Direction Trust Company. You can switch or transfer plans if you have an existing IRA or employer-sponsored retirement plan.
After you set up your account, you'll preserve the tax benefits of your IRA while you use it to select one or more investment properties. If you have other questions, Roofstock offers an IRA investment transaction guide, a real estate investing guide, and a real estate owner's guide.
Is Roofstock trustworthy?
The Better Business Bureau has given Roofstock an A- rating. Since the BBB rates companies with an A+ to F rating, it implies that Roofstock works well with its customers. In addition to customer complaint history, the bureau also takes into account how long the company has been in business, advertising issues, and state licenses and operations.
It is important to note that BBB ratings do not necessarily indicate that a company is reliable or performing well. Since the office primarily analyzes customer interaction data, you'd better do your own research as well.
Roofstock has not received any serious claims since its inception. The real estate app has closed one complaint in the past three years and no complaints in the past 12 months, according to BBB data.
Roofstock is best for active investors looking to buy or sell real rental properties. The company also has an option, Roofstock One, for accredited investors interested in a more passive approach to real estate investing, but you'll need at least $5,000 to get started.