Roofstock One offers an entirely new way to diversify your real estate investment portfolio—but is the platform all it’s cracked up to be?
Discovering a new residential real estate property to invest in can be a challenge for investors. And the fact that investing in an entire property can cost too much for someone just getting into the game doesn’t help, either.
It is why Roofstock One was developed in the first place—to make investments in real estate easier for the inventors. The primary goal was to lessen the burden from mortgages and expenses compared to the original Roofstock and reduce the hassle of the entire process.
So, today, we will discuss Roofstock One and how real estate investors can use the platform to their advantage.
Table of Contents
- What Is Roofstock?
- What Is Roofstock One?
- Roofstock One and Mashvisor: Can They Be Used Together?
- Best Locations to Invest in Rental Property in 2022
- Bottom Line
Continue reading for more information about the real estate platform.
What Is Roofstock?
Let’s start by explaining what Roofstock is, shall we?
Roofstock is a relatively new marketplace platform designed for individuals looking to invest in a single-family property. Investors can buy—or sell—a property already occupied by tenants on the platform.
For investors looking to buy properties for rent, Roofstock provides several financing plans, from cash to mortgage. However, the main thing that makes Roofstock a popular way to invest is that the platform finds you a property manager, making your new investment genuinely hassle-free.
And yes, there are similar ways to invest in a rental property, but they are essentially REITs (real estate investment trusts). Roofstock can be the perfect alternative for investors who aren’t interested in putting their money in trusts or real estate funds.
With Roofstock, you’re not investing in a trust, and you’re buying real estate property to receive profits from in the future. What’s even better is that every property listed on their marketplace is thoroughly inspected and reviewed before the listing. And it, in turn, allows investors to feel a lot more confident about their purchase.
Another advantage is that many rental properties are already occupied—which removes the strenuous search for tenants for your newly-acquired home from the equation. The platform also offers investors better financing options with competitive interest rates, saving time and money for the real estate investors using it.
However, you should always remember that a simplified process of investing doesn’t mean a completely hassle-free one. If the property you purchased is not rent-ready, you’ll need to hire contractors and overlook the entire process before you can reap the benefits of your investment.
Related: What Is Roofstock & How Does It Work for Real Estate Investors?
Roofstock Features: Overview
Investors can sell or buy property—meaning you can invest in real estate or a portfolio of multiple properties, or introduce your property to the marketplace. It’s worth noting that the portfolio option includes additional metrics, like average monthly rental income, operating income, the location of the properties, etc.
If you want to sell your real estate on the platform, Roofstock will review the property first. And if you get approved, you’ll get set up with a real estate agent. The agent will guide you through the entire process of listing on Roofstock, removing the complexities of selling real estate.
Roofstock’s most prominent feature would be the “Open House” option. It opens the door for investors to get the first look at a new property one day before it’s listed on the platform. Within 24 hours before listing, investors can view the property and, if they so choose, make an offer before anyone else—giving them a significant advantage on the market.
Another feature that deserves mention here is the so-called “Lease-Up Guarantee.” Roofstock essentially protects investors from the inability to find tenants for single-family homes. The platform guarantees to cover rent costs for up to a year if your potential tenants don’t sign a lease within six weeks of you purchasing the rent-ready home.
Furthermore, there’s the self-directed IRA, enabling investors to buy rental property and assign it to their IRAs. Investors can even roll over their existing IRAs or 401(k) retirement plans to the New Direction Trust Company.
Once you do the rollover, you can enjoy the tax benefits of maintaining an IRA while investing in one rental property or an entire portfolio of rental properties. So, in essence, your rental income will become part of your retirement savings.
What Is Roofstock One?
Roofstock One is a new platform for investing in residential real estate from Roofstock’s team. It was launched in 2019, with the primary goal of making investing in real estate more cost-effective than the original Roofstock platform.
In essence, a real estate investor using Roofstock One can opt to invest in a portion of a property rather than buying the whole thing. It allows investors to purchase an investment property without using all their money.
Better yet, the investors can use all of their funds and invest them in a few different properties in different locations. Such a move reduces the risks associated with the fluctuations in the local real estate market, as the investors receive income from several properties.
Roofstock One gained traction because it proved to be an efficient alternative to direct investing, allowing investors to take only a portion of the mortgage burden because they aren’t purchasing the entire property. And the platform, again, decreases the risk and financial burden while still promising passive income.
Roofstock One Features: Overview
Roofstock One packs plenty of features designed to simplify the entire process for the investor, allowing them to be protected against the risk of changes and fluctuations in the real estate market.
Investors can track how the property they invested in performs daily, and each investor can reap the benefits from built-in financing.
Customization of the property search is a valuable feature, too. Investors can select the specific neighborhoods and locations they’re interested in. Even more so, they can also get professional management for their property right there on the platform.
Investors can also decide for themselves about the structure of their investment, choosing between a targeted portfolio of tracking stocks or diversification using common stock.
It brings us to the next point:
A prominent feature of Roofstock One is stock tracking. The platform releases stock tracking in a specific property, allowing investors to check if the property is performing as well as expected. It combines every stock share into an investment portfolio, making it possible to oversee a few individual strategies at a time.
Stock tracking is rather effortless. An investor needs to select the real estate they are eyeing, and that’s it—they get to build their own portfolio. On the other hand, common stock diversification is a diversified variant of stock tracking.
The common stock is essentially what is left of the shares used in stock tracking. Investors may repeatedly invest in common stock or support all at once. How the common stock performs on the market entirely depends on the overall performance of the said real estate, though.
Pros & Cons of Using Roofstock One for Investing
Before you decide if Roofstock One is a platform you’re interested in using, you should gather a bit more info about it. Below, we’ll talk about the advantages and disadvantages of using Roofstock One for real estate investing.
The most enticing thing about using Roofstock One is the fact that you don’t need to invest in an entire property; you can choose to invest in a portion of it. So, with your investment funds, you can buy a bit of a few different properties, which puts you at a significant advantage. Why?
It allows you to diversify your real estate portfolio and protect yourself—and your money—from changes in the real estate market. Owning a portion of a few properties is much safer because, putting it simply, It’s far less likely you’ll lose money on your investments.
Another significant benefit is that the process is virtually hassle-free. Every investor doesn’t need to take out a mortgage to purchase the property. And to add the cherry on top, investors aren’t liable for repaying the entirety of the debt should something go wrong.
Going with Roofstock One for investing in rental property also promises greater liquidity. Investors can choose to liquidate after six months. It’s an option provided that the investor can sell their percentage of the real estate property to someone else or use the redemption scheme, if applicable through Roofstock, for the said property.
Moreover, the mortgage is at a 50%-60% loan-to-value (LTV) ratio, which most smaller and medium-sized investors will undoubtedly appreciate. Roofstock One also promises to invest in the said property with its own 10% for one year.
Simplified financing and lower fees are undoubtedly a significant advantage of the platform—but do keep in mind that you still need to make a substantial down payment of 20% to 30% for your property.
Roofstock One and Mashvisor: Can They Be Used Together?
Using Roofstock One can be a great way to diversify your portfolio and purchase real estate without much effort. Here’s where Mashvisor comes in. Our tools can help you find a property, analyze it, and establish whether the real estate you want to invest in is indeed worth it.
So, Roofstock One and Mashvisor can essentially be used together to the investor’s advantage.
Mashvisor’s tool, the Real Estate Heatmap, can help you identify the hottest locations for a real estate investment. The Heatmap allows you to see profitable areas, with real estate located in up-and-coming neighborhoods. Furthermore, it enables users to analyze the location and factor in crucial metrics—like monthly rental income, cash on cash return, median property price, cap rate, etc.
Once you’ve found the ideal location—or locations—for your investment, you can then move on to find the right property on Roofstock’s platform. Real estate investments carry far less risk when you can predict the neighborhood prices and estimate your potential return on investment.
Related: What Is a Good Cash on Cash Return?
Best Locations to Invest in Rental Property in 2022
Finding the ideal rental property to invest in takes time and effort—that’s true for beginners as it is for experienced investors. In particular, when you are investing in a rental home, it’s primarily about finding a suitable location.
And with that in mind, we figured we should take a moment to highlight some of the best locations for investing in rental property in 2022.
So, here are the top-rated locations with a high cap rate, arranged from highest to lowest, according to Mashvisor’s latest data.
1. Wilmington, DE
- Median Property Price: $391,593
- Average Price per Square Foot: $199
- Monthly Traditional Rental Income: $1,703
- Traditional Cash on Cash Return: 54%
- Traditional Cap Rate: 67%
- Walk Score: 80
2. Lafayette, LA
- Median Property Price: $382,238
- Average Price per Square Foot: $158
- Monthly Traditional Rental Income: $1,416
- Traditional Cash on Cash Return: 48%
- Traditional Cap Rate: 62%
- Walk Score: 85
3. Jonesboro, AR
- Median Property Price: $305,993
- Average Price per Square Foot: $116
- Monthly Traditional Rental Income: $1,270
- Traditional Cash on Cash Return: 30%
- Traditional Cap Rate: 43%
- Walk Score: 21
4. Panama City, FL
- Median Property Price: $416,826
- Average Price per Square Foot: $212
- Monthly Traditional Rental Income: $1,783
- Traditional Cash on Cash Return: 29%
- Traditional Cap Rate: 39%
- Walk Score: 74
5. Summerville, SC
- Median Property Price: $396,065
- Average Price per Square Foot: $198
- Monthly Traditional Rental Income: $1,717
- Traditional Cash on Cash Return: 22%
- Traditional Cap Rate: 30%
- Walk Score: 69
Roofstock One platform is a new go-to solution for real estate investors to build their portfolios without purchasing an entire property. If you aren’t sure how to invest in real estate, Roofstock One can certainly help you with the process.
It is an excellent alternative to buying a single property; you get to invest in a portion of multiple different properties at once. It carries less risk and allows for tracking prices on the real estate market.
Along with using Mashvisor’s tools, Roofstock’s platform can help you kickstart your new real estate venture with its effort-free investing and financing options.
Mashvisor’s tools allow investors to find the best rental property in top-rated areas and the most in-demand cities in the US. The tools use the cap rate, cash on cash return, and other relevant metrics you can select yourself to find your new property investment opportunities.
Click here now and start your free 7-day trial with Mashvisor.