Contenders (6 out of 10 stars)
Review and Ranking
What is Roofstock?
Note: this is a review of the original Roofstock platform. Click here to see the information on the newer Roof Stock One instead.
IMPORTANT 2021 COVID-19 UPDATE: The investment repercussions of the global pandemic continue to change and evolve with unusual speed. As such, this review might be dated, no longer accurate, irrelevant and/or missing crucial information necessary to making an effective investment. For the latest and greatest information on analyzing investments in this new era, see the latest article in the series: "How will Covid-19 / Coronavirus Affect my Alternative Investment Portfolio?"
Roofstock specializes in residential real estate equity.
They may not be what you would typically think of as a crowdfunding site, because you purchase the entire house on your own (rather than sharing the investment with others). However, they do use crowdfunding regulations to make their investments public, and we got substantial feedback from investors on them, so we are including them in the rankings.
Roofstock has a very substantial $70 million in venture capital funding, and boast one of the lowest fees in the industry at .05% (and the first time it is discounted even more to just $99). Also, they have one of the largest volumes of any site (73 open when we looked) which was a substantial increase from the 40 open investments last year.
However, since you own the whole house yourself, this requires a larger minimum investment than most sites. We saw a few older investments with $55,000 minimums. The majority were between $80,000 and $120,000. You can lessen the minimum by taking out a loan on the house, which reduces the minimum to around $20,000 ($15,000 investment in property plus $5000 reserve for repairs etc). This has the additional dual sided effect of increasing your return if things work out, or increasing your risk and potential for loss if they don't.
Roofstock does a good job of giving you a detailed inspection report of each property, so you can have a good idea of what you are getting into. On the other hand, the yields we saw were somewhat mediocre (10-12% gross yield, meaning that none of the hefty expenses were deducted). Based on a 60% expense+ capital expenditure reserve rule of thumb, we might expect a 4-6% return.
In contrast, many of my own rental properties return 7-11% after all fees and expenses. On the other hand, I happen to be in a very solid market, and not all investors have that advantage. In my opinion it's important to weigh the trade-offs and choose what's best for yourself.
2017-10-24 An investor expressed dissatisfaction with a “Roofstock certified" property they purchased, and claimed there was about $5k in missed or un-reported problems (which the investor claimed they had to pay for themselves after the sale). They alleged basic issues were missed such as a mailbox in such poor repair that iwas duct taped to a post to keep it from falling off. They also alleged the inspection did not look at or discover a rotting fence that had to be replaced, an inadequately maintained pool that was expensive to correct and overgrown foliage "all over the property" that was more money to fix etc.On its website, Roofstock claims that all such properties undergo a “A property inspection conducted by an experienced national inspection firm”.
Advantages: $13.25M in venture capital funding, extremely low fee of 0.5% (discounted to $99 for the first investment), and enormous volume (73 open investments when we looked).
Disadvantages: High minimum investment of $55,000 (or $20,000 if taking on a loan) with many requiring more, you don't share the investment with anyone else, yields are not as high as a knowledgeable investor can obtain if they are local to a solid market.
*Starred sites are tied and are shown in alphabetical order.
For more raw data on the site (including investor and sponsor fees, legal structure etc.), or to easily compare it with the data of competitors, see the feature by feature comparison matrix.
Where can I discuss other RoofStock deals?
You can do this with thousands of other investors in the private investor club. While the club is free, membership is restricted to investors who have no business connections to sponsors or platforms. Also, all members must agree to keep all club info confidential by signing a nondisclosure agreement. Click here to join or get more info.
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About Ian Ippolito
Ian Ippolito is an investor and serial entrepreneur. He has been interviewed by the Wall Street Journal, Business Week, Forbes, TIME, Fast Company, TechCrunch, CBS News, FOX News, USA Today, Bloomberg News, Realtor.com, CoStar News, Curbed and more.
Ian was impressed by the potential of real estate crowdfunding, but frustrated by the lack of quality site reviews and investment analysis. He created The Real Estate Crowdfunding Review to fill that gap.
Code of Ethics: To maintain objectivity, I do NOT accept any money from any outside sponsor or platform for ANYTHING (including but not limited to affiliate ads, advertising etc.). See code of ethics for more.
Personal opinion only: All info is my personal opinion only as an investor. I am not an attorney, nor an accountant, nor your financial advisor. Always do your own due diligence and consult with your own licensed professionals before making any investment decision. Information is believed to be correct but may have errors, so use at your own risk. If you find an error, please let me know.
Ratings are general: In my opinion, every investor comes from a different risk tolerance and financial situation, so there's no such thing as a single investment or platform that's great for everyone. There are many deals that aggressive investors love, which I won't touch, and vice versa. And every investor has their own way of doing due diligence. I believe there's no one right way to do it.
So, the site ratings are based on criteria which I feel are important to the broadest range of investors (transparency, volume, bankruptcy protection, etc). And even though I have my own personal, conservative, due diligence method (and talk about how the site's deals measure up in the "deep dive section"), I don't use my personal criteria as a factor in the ratings. So for example, a high ranking/rating doesn't mean that I would personally invest in a site (and vice versa). Click here to see what's in my own portfolio.
Have you used the above site before? What was your experience?
This site has been ranked and reviewed as part of our in-depth, 100+ site industry review. All data is believed to be correct, but may have mistakes. Please contact us if you notice one. All non-data (including rankings, investor comment summaries, etc.) are my opinion only. I'm just an investor and not an attorney, accountant, or certified financial advisor. To maintain neutrality: I do not own a portion of any of the companies reviewed.