Frequently Asked Questions
What is Roofstock?
Roofstock is the first online marketplace and community created exclusively for investing in leased Single-Family Rental homes that generate cash flow day one. Created by investors for investors, Roofstock provides research, analytics and insights to evaluate and purchase independently certified properties. From viewing the homes and their diligence documents to choosing financing and property management services, Roofstock makes investing in U.S. real estate from anywhere in the world as simple and efficient as trading stocks.
Why is Roofstock so awesome?
As investors, operators and financiers in the SFR space, we created a platform that addresses all of the inefficiencies in the current market, reduces the transaction costs and brings transparency to the investment process. Roofstock offers a unique solution by taking the guesswork out of investing in residential rental properties, maximizing the value to investors by creating efficiencies in a historically inefficient and cumbersome process.
How much do I have to pay to join Roofstock?
Nothing! There are no membership or access fees to view properties on Roofstock. Registering for the site is absolutely free and there are no hidden fees or restricted access rights for registered members.
How can I be sure that the properties on Roofstock are a good investment?
At Roofstock, we are about transparency. We certify every property with our proprietary certification process. Unlike the traditional investment process, we make available a lot of information about a property before investors enter into a purchase contract. In addition, Roofstock offers Investors a Roofstock Guarantee on any property purchased through Roofstock. Please refer to “The Roofstock Guarantee” in the Roofstock Terms and Conditions.
What is a Roofstock Certified Property?
A Roofstock Certified Property is a property that has passed the Roofstock vetting and review process, which includes: (i) a property inspection conducted by an experienced property inspection firm, unless an inspection contingency is applicable, (ii) an estimate of the cost of major repairs necessary and “turn” costs, (iii) preliminary title report with no uninsurable encumbrances or liens and preliminary title commitments, where applicable, (iv) a valuation analysis of the property and market conditions in the local rental market, (v) review and summary of the lease terms and (vi) a review of the Tenant’s payment history. Certification is completed prior to close of transaction. [Learn more about the Roofstock Certification Process]
What is the Roofstock Guarantee?
Roofstock provides a 30-day guarantee to Buyers of Property purchased under a Roofstock Realty LLC Purchase and Sale Agreement via the Services. This guarantee applies if you, as a Buyer, are not satisfied with a Property purchased from a Seller via our Services and you notify Roofstock in writing of your dissatisfaction within 30 days of the closing. Certain other conditions apply such as there must be no material changes to the condition of the Property since the closing. Only one Property per Buyer is covered under this guarantee and only one guarantee claim may be made by any Buyer during any ninety (90) day period. Please refer to the Terms and Conditions for further conditions and details. [Learn more about the Roofstock Certification Process]
How do investors earn returns?
Returns are earned from the rental cash flow on your investment properties and any appreciation in the property value when it’s sold. If you decide not to self manage, a Property Manager can be appointed to collect rents, pay expenses and remit the net income to each investor.
How is the list price of a property determined?
Roofstock shows sellers comparable transactions as well as yields and other financial metrics buyers will look at to make an investment decision. Roofstock may provide recommendations, but the Seller determines the list price. Roofstock will not list a property if it thinks the property is not priced appropriately.
How does Roofstock estimate the valuation of a property in the marketplace?
Roofstock provides a valuation range which represents the highest and lowest adjusted values for comparable properties selected by Roofstock and analyzed by the HouseCanary model. The Comparable Value and the highest and lowest adjusted values used for the range are based upon at least 3 properties sold within the past 12 months and that are the most similar to the property in location, size, condition, age, style, and design, as selected by Roofstock and valued by the HouseCanary model. If a HouseCanary Comparable Value is not available for a property, the Roofstock valuation range is based upon a calculated weighted average of the valuation reports for the property with the width of the range being the combined precision of all valuation reports. All valuation reports can be found in the property vault.
Where do the properties in the Roofstock marketplace come from?
Roofstock does not own the homes listed on the site. Roofstock is an on-line marketplace connecting sellers and buyers. The properties listed are broadly sourced, all the way from small retail sellers to mid and large institutions. If you are interested in listing your property on Roofstock, please contact us for further details at email@example.com or call us at (800) 363-4154.
What type of properties are eligible for listing on Roofstock?
The properties eligible for sale on Roofstock are all Single-Family Rental properties that pass our certification process. Please contact us for further details at firstname.lastname@example.org or by calling (800) 363-4154.
If the Seller is a larger institution, why are the homes being sold?
Much like a retail investor, an institutional investor may have many reasons for selling a property. A few examples, but by no means all reasons may be:
- The seller was not able to accumulate enough homes in a specific geography to obtain the economies of scale desired
- The seller is reshaping the broader portfolio to focus on a more specific strategy or type of property
- The investors wish to have capital returned or to redeploy funds into other geographic areas or “fix-up” properties
Is my personal information safe?
Roofstock uses the latest available digital encryption technology to protect your information.
Is Roofstock a turn-key solution?
The choice is yours. Roofstock is a marketplace solution that allows investors to make the best decisions for each property and we believe you should make that choice based on an objective analysis. We provide access to Certified Property Managers for investors that choose not to self-manage their properties. Unlike traditional turn-key operators, we don’t require the use of an affiliated property manager for any of the properties listed on our site.
Does Roofstock own the properties that are listed for sale?
Roofstock does not own the properties that are listed on the site. We are a marketplace that connects buyers and sellers of rental properties through our Roofstock Community.
As a real estate agent or property manager, how can I use Roofstock to grow my business?
Roofstock makes it easy for real estate agents and property managers to collaborate with their clients through specific tools designed for agents and with a commission structure to support a long term working relationship with Agents-and-Clients and Agents-and-Roofstock. Please email us at email@example.com or call (800) 339-8511 to find out how to get started.
How is my credit card information stored and is it safe?
Roofstock never sees your credit card information and we do not store it. We use an industry standard credit card processing platform called Braintree that is trusted and secure.
How can I get a Roofstock Hoodie?
Roofstock Hoodies are a prize possession and a limited number of hoodies have been reserved for Roofsters. If you want to learn about how you can become a Roofster, email firstname.lastname@example.org.
If I stop by the office, what are the chances Bode will eat my lunch?
Is the Sales Price negotiable? Is there a way to make an offer or is it just “buy it now”?
Investors can secure all available properties at predetermined list prices, and there are also properties designated by sellers to accept offers from investors. Roofstock works closely with each seller to establish listing prices, determined by taking into consideration a multitude of factors, including local market conditions, market rent and the condition of the property based on the inspection. The valuation analysis is provided in the Diligence Vault for each property. The Roofstock process avoids the uncertainty and delays commonly encountered in buying investment properties at auction and allows investors to transact efficiently and with certainty of execution.
Why do you need my credit card if it’s free to make an offer?
In order to process your offer to the seller, we require your credit card information for 2 reasons:
- It assures the seller that you are serious about the offer. They are often considering multiple offers, and this puts everyone on the same even playing field.
- If your offer is accepted, your card is run immediately which assures that you will not lose the property by having someone else swoop in with a better offer. Properties remain on the market until the Marketplace Fee is paid.
Will I be able to tour/walk the house myself?
Roofstock, through a network of experienced third party partners and professionals, completes a full walk-through, inspection, valuation, property management verification, and tenant verification of each property, and makes all the reports available to prospective Investors. The Roofstock Property Certification allows prospective buyers to see the diligence on each property from home, office or while on the road without the need to enter each home. [Learn more about the Roofstock Certification Process]
Can I find these properties on the MLS?
No, the Roofstock inventory is exclusive and proprietary to Roofstock.com and will not be listed on the MLS.
Who can I contact if I have questions about a property?
We’re here to help. Please contact us by sending an email to email@example.com or call us at (800) 339-8511.
Can I use a real estate agent?
Yes, investors can engage with our local market experts or use their own agents. Agents can use our proprietary tools to collaborate with buyers on selecting the right investment property or on building a diversified property portfolio. If you have an agent you’re already working with, or you are an agent interested in establishing a commissioned arrangement with Roofstock, contact us at firstname.lastname@example.org.
Who performs the property inspections? How are the inspections done?
Roofstock, as part of certifying all properties before they are available on the marketplace, engages experienced third party inspection firms to complete a comprehensive visual inspection of the property, and will make this report available to you in the Diligence Vault. The company or individual performing the inspection will inspect the condition of the property, the major components and indicate items that need repair in a detailed property report.
What is an Appraisal? What is a BPO?
A Broker Price Opinion (“BPO”) is a valuation analysis performed by a local licensed real estate broker and takes into consideration the condition of the home and the local market activity. BPOs are often used by investors and lenders to value investment properties. A BPO is different from an appraisal which is performed by a local appraiser.
How do I know whether a listed property is available for purchase?
As long as a listed property is displayed without a Sale Pending or Sold designation on Roofstock, the property is available for investment. All properties available for purchase can be found in the “ All Properties” category on the Roofstock Marketplace Properties page and Filter list. Unlike the MLS, all of our information is updated in real time. “Sale Pending” properties have an active contract between a buyer and seller, and “Sold” properties have closed escrow with the buyer taking ownership.
Who manages the property that I purchase through Roofstock?
At Roofstock, we believe that you should have choices. You can choose to manage the property yourself, or choose from a list of Certified Third Party Property Managers (“RCPM”) in each market. The RCPMs are experts in their field and have passed a thorough diligence process prior to being certified. The RCPMs suggested for each property are familiar with that property already and can take on the property management on the closing date.
Will the current tenant stay in the home after I purchase the property?
Each home that is occupied by a tenant is subject to a lease. Each property page includes a lease summary listing the most important terms of the lease. In addition, at closing you will receive a copy of the lease for your records. The tenant is obligated under the terms of the lease to make their rental payments and as the new owner you will be purchasing the property subject to the current lease.
Can I re-sell my property on Roofstock if I decide I no longer want the property?
Any approved Seller can list properties that pass the Roofstock certification process. Roofstock is expecting to widen its reach of Sellers in 2016.
Can I use leverage (financing) to purchase a property?
Absolutely and we make it easy! Roofstock can refer you to several integrated lending partners offering investors diverse loan product options. You are also free to engage a lender of your choice, however, please note that there are no financing contingencies in the Purchase and Sale contracts.
What closing costs will be included in the purchase of a property?
Closing costs shall be paid as is customary in local markets, and shall include discounts negotiated by Roofstock to lower transaction costs for Buyers and Sellers. Closing costs often include transfer taxes, title search and title insurance fees, loan origination fees (if applicable), recording fees, association fees and document preparation/closing fees. A good faith estimate of closing costs is provided for the convenience of Buyers, and actual closing costs will be outlined on the closing statement. Please refer to a copy of the Purchase and Sale Agreement for specific details.
How quickly can I close on my property?
Roofstock intends to facilitate closings within 14 days of a signed purchase and sale contract for a cash sale (30 days for financed sale). The closing date shall in all events occur within 30 days from the contract date unless otherwise agreed by Buyer and Seller.
How are expected returns (yields) calculated?
Expected returns are calculated based on current rents, purchase price, and by incorporating likely costs associated with operating a single family rental. The likely costs are based on the input of industry experts and include vacancy, property taxes, property management, repair and maintenance, and a number of other contributing factors. While these estimates provide a solid baseline, investors are encouraged to use the financial calculator to test the sensitivity of their investment to these as well as other assumptions influencing the performance of their investment.
How do I purchase a property?
The purchase process is initiated by clicking the Add to Cart button or, on properties that are designated to entertain offers, you have the option to enter an offer amount and then click the Make Offer button from the property details page.
- Invest Now – you are agreeing to the property list price, and you will be prompted to secure the property by paying the Marketplace Fee. After payment of the fee, a Purchase and Sale contract will be delivered to you for electronic signature/execution. The Purchase and Sale Contract is usually signed in 24 hours by both parties and the Escrow or Closing Agent will initiate the closing process by setting a closing date and sending closing documents for execution.
- Make Offer – you are making an offer to the seller. The seller will have two business days to make a decision, which can result in either:
- Offer Accepted – The seller accepts your offer.
- Counter Offer – The seller has sent you a counter offer which you can either accept or respond with a counter offer of your own.
- Offer Declined – the seller declined your offer and has most likely accepted an offer from another investor.
What is the Marketplace Fee?
The Marketplace Fee is a fee payable at the time an investor is ready to purchase a property. The Fee, which is calculated as half of one percent of the Sales Price, is disclosed for each investment and upon payment of the fee, the property is marked as “Sale Pending” on the marketplace, and the closing process is initiated.
Can I invest through my Self-directed IRA or Solo 401K plan?
Self-directed IRA or Solo 401K plans that are linked to a bank account and give the owner checkbook control can be used to fund the purchase price of a property on Roofstock. Plans which necessitate custodian approval require additional steps and we recommend that you start the approval process early in order to minimize delays in closing.
Can I invest as a foreign investor?
U.S. and foreign investors can buy properties on Roofstock. Our marketplace, through the Diligence Vault and access to Certified Property Managers, is perfectly situated for investors that are not located in the property markets.
Can I invest through a limited liability company, trust or partnership?
Absolutely! You can invest through any vehicle which can hold title to real property. At closing you will have the opportunity to indicate how you would like to hold title.
Can I write my own offer?
You can accept a seller’s predetermined list price offer on all available properties. Also, some sellers designate certain properties to accept offers from investors.
How does Roofstock make money as a marketplace?
Roofstock charges a small marketplace fee, a fraction of the traditional real estate transaction cost, and in turn passes most of the savings on to the buyers and sellers.
What kind of updates will I receive about my property?
If you choose to have the property managed by a Certified Property Manager, you will receive a monthly property report showing all expenses, rents collected and other relevant information about each of your properties. In addition, as part of being in the Roofstock Community, you will receive periodic updates on your property value, the local market conditions and trends in market rents.
How do I know whether the tenant will continue making rental payments?
Part of the Roofstock Certification process is reviewing the payment history and selection criteria for each tenant. While we can’t guarantee that a tenant will never miss a payment, Roofstock will not list properties where the tenant is delinquent on their rent at the time of the listing is first posted.
When are new properties added to Roofstock?
New properties are being added to the site daily, so check back often or sign up to receive our new listing alerts.
What is the difference between Gross Yield and Net Yield?
Both Gross and Net Yield are metrics aimed at capturing the return on your investment. The difference being that Gross Yield focuses on the total income generated and does not incorporate expenses, whereas Net Yield accounts for expected operating costs. Gross Yield is calculated as the annual rent / total purchase price and Net Yield is calculated by subtracting estimated annual operating costs and capital expenditures from total annual rent collected / total purchase price.
How is appreciation calculated?
Appreciation is determined as an estimate based on property values and can be influenced by many factors, some specific to the local market and some the broader economy. The appreciation forecasts provided have been produced by well regarded forecasters in the housing markets. Despite the acumen of these forecasters, investors are encouraged to use the financial calculator to test the sensitivity of their investment to all assumptions.
How is the market rent determined?
Roofstock is about transparency, and we present data from multiple sources to help you evaluate your investment alternatives. For market rents, we present data from third-party data providers which estimate rents, as well as information from local property managers who know the local market. It is important to understand market rents as they could indicate compelling investment opportunities if the current rent is below market. Our calculator allows you to see how different rent assumptions could impact your returns.
Who is responsible for repair and maintenance expenses on each property?
The Property Manager is responsible for managing the repair and maintenance work that needs to be completed on any property. The Property Manager can withhold the cost of the repairs from the monthly rent, by applying the funds in the security deposit account (if applicable) or by invoicing the investor directly. The Property Management Agreement will describe the process of approving expenses.
Can anyone sell properties on Roofstock?
Roofstock is currently expanding the number of approved sellers, and would encourage you to contact us at email@example.com or by calling (800) 363-4154 to discuss this opportunity in further detail.
How much does it cost to sell my property on Roofstock?
One of our core principles is to reduce the costs in buying and selling rental properties. Unlike traditional brokers that charge 6% to sell a property, the Roofstock broker commission is only 2.5%. In addition, unlike the traditional sale process, there is no need to have the tenant vacate the property and the owner can continue receiving rents while the property is being marketed.
What are the advantages of selling my investment property on Roofstock?
The Roofstock listing and marketing process is designed to net Sellers more money and simplify the selling process. When investors want to sell investment homes they typically sell them vacant, which involves waiting for the tenant to move out, sprucing up the property to sell, and listing it on the MLS. Between the lost rent, carrying costs and commissions, the true cost of this process is often in the 10-12% range. Contrast that with Roofstock, where our all-in Seller fee is only 2.5%. Rents are received right up until closing, tenants can stay in the home, and there is no for sale sign in the yard.
How is listing a property on Roofstock different from listing on the MLS?
The MLS is a closed listing service that is primarily focused on buyers looking for homes to live in. Consequently, its primary focus is on vacant homes. If you buy a vacant home as an investment property, you may need to fix it up, then find a tenant and property manager to start generating revenue for you. By contrast, Roofstock is an investor marketplace focused on transacting in leased properties which are cash-flowing from day one. Many of our properties have been purchased, renovated and leased by institutional investors who regularly choose to sell homes to realize gains or recycle capital. We provide investors with a wealth of tools that make it simple to evaluate, diligence and build a property portfolio.
What is the “Featured Properties” category on the Properties marketplace page?
Roofstock has created categories to help investors find investment properties that meet their requirements. These properties are being featured by the Roofstock Advisory Client Services team. There are many reasons why a property may be highlighted, including: new construction, the list price is at a discount to it’s peak value, there is upside rental potential, it’s in a great neighborhood (taking into account schools, crime, income, etc.), the total return (combing yield and appreciation) is expected to be high, the time the property has been on the market, or a combination of various reasons which could cause our Advisors to feature a property. All users will see these featured properties and they are not recommended based on any individual investor preferences. [Browse Properties in the “Featured Properties” category]
What is the “Higher Yield” category on the Properties marketplace page?
Roofstock has created categories to help investors find investment properties that match their interests. These properties are considered higher yield relative to other properties because the gross return on investment, or income before expenses, is 11% or higher. Gross yield is calculated as the annual rental income divided by the list price of the property. [Browse Properties in the “Higher Yield” category]
What is the “Higher Appreciation” category on the Properties marketplace page?
Roofstock has created categories to help investors find investment properties that meet their criteria. These properties are considered higher appreciation relative to other properties on the Roofstock Marketplace based on the one year projections from our data partners. Browse the Higher Appreciation category. [Browse Properties in the “Higher Appreciation” category]
What is an Earnest Money Deposit?
Earnest Money is a deposit that is made by the buyer as a display of good faith in the transaction. It is held by the Title company, and the funds will be used as part of the buyer’s down payment or closing costs when the transaction is finalized. The deposit may be returned to the buyer, depending on the contingencies in the Purchase and Sale Agreement (PSA); otherwise, it will be remitted to the seller. The terms of the EMD are spelled out in the PSA.
How much is the Earnest Money Deposit? When and where do I send it?
The Earnest Money Deposit for properties on the Roofstock marketplace is $1,500. It is sent by the buyer via wire to the Title Company who holds it as a deposit as part of the escrow process. It must be wired within 3 days of signing the Purchase and Sale Agreement. If it is not received within 3 days, the property will be returned to the marketplace.
What are the construction standards for the Rent Guarantee program?
All homes are renovated in accordance with applicable health and safety standards and local building codes (in terms of structural integrity and operational systems). Finish-level varies by market, but is designed to enhance the rental value of the home. Depending on the home, improvements may include new/renovated flooring, cabinetry, countertops, appliances, paint and landscaping.