This Startup Is Making Long Distance Real Estate Investing Possible For Millennials

Millennials are in a unique position financially speaking. They entered adulthood at the most inopportune time - during the 2008 housing crisis and subsequent recession, and have now weathered another recession from the pandemic.

This has put most millennials far behind their parents and grandparents, who had a nice nest egg plus plenty of real estate owned by their age. In fact, an Urban Institute study showed that millennials are 8% less likely to own a home than their Baby Boomer and Gen X relatives. 

But this doesn’t need to be all bad news. Even though millennials are steps behind their relatives financially, they can still become homeowners, including investment homeowners using the Roofstock Marketplace.

What Is Roofstock Marketplace?

Roofstock Marketplace is an online platform for buyers and sellers of turnkey properties or properties with renters occupying them. Roofstock has hundreds of homes for sale in all price ranges and throughout the country. You’ll find properties starting at just $52,000 all the way up to $1 million homes.

Roofstock has a low barrier to entry, charging only 0.5% of the sales price to buyers, and does all the legwork, so buyers know exactly what they’re getting, allowing them to invest sight unseen in many cases.

How Does It Work?

Roofstock is an online real estate platform. It brings together buyers and sellers from around the country. 

As a buyer, you can sort the listings by list price, neighborhood, location, age, average school rating, lease status, and more. Here’s the great thing about Roofstock - you don’t have to do any of the legwork because they do it all.

Roofstock does:

• Certifies each home - Roofstock doesn’t accept just any real estate listing. They certify it first. A certified home meets all Roofstock requirements and has all repairs recommended by a professional inspector. Certified homes don’t have any liens, and all other common area issues are cleared.
• Provides homes with tenants - This is a large benefit. Knowing you can buy a home and make cash from day one is huge. You don’t have to worry about carrying costs or losing money because you can’t find tenants.
• As a buyer, it’s easy to invest using these steps:
• Search for a property based on your parameters - Be as picky or as broad as you want in your search. Roofstock makes it easy to find the perfect property based on your needs and risk tolerance.
• Analyze your options - You may come up with a handful of options, but Roofstock makes it easy to analyze. Carefully look through all pictures, videos, property valuation reports, title search reports, lease information, and neighborhood information.
• Make an offer - Once you choose your perfect property, make an offer in Roofstock. Sellers can accept, decline, or negotiate.

How Roofstock Helps

It may seem overwhelming looking at all the information and figuring out your first steps, even after choosing a home. But Roofstock is there for you every step of the way.

• Take advantage of open house opportunities - Roofstock offers an ‘early look,’ giving buyers a chance to submit a bid in the first 24 hours a house is listed. If you’re one of the first to bid, you may have a higher chance of securing the property.
• Get pre-approved - Roofstock knows you have a better chance of a seller accepting your bid when you’re pre-approved. They work with partner lenders to get you pre-approved and ready to buy a home.
• Get property management - Buying a house halfway across the country makes it hard to manage, but with Roofstock, you can buy property management from a Roofstock partner and have peace of mind.

You can use as much or as little of Roofstock’s help as you want. If you’d prefer to use the marketplace to find a property but handle the rest yourself, you are free to do so. But know that Roofstock’s assistance is just a click away.

What Does It Cost?

For buyers, Roofstock is cheap, but it’s even low-cost for sellers too. Selling a home with a traditional real estate agent costs 6% of the sales price in most cases. With Roofstock, it costs 2.5% for sellers and just 0.5% for buyers.

If you’re buying a $150,000 home, that’s just $750, which is nothing compared to the cost of many other investments.

Who Qualifies?

Real estate investing seems out of reach for most people. It’s a common misconception that you need a large amount of capital and great credit. Neither is true when working with Roofstock. You don’t need to be accredited and can get by with a low down payment, even borrowing money from your primary residence if you have the equity. 

The bottom line is that anyone qualifies and can invest with Roofstock. It helps if you get pre-approved either by a partner lender or one you find yourself, though.
Pros and Cons of Roofstock Marketplace
As with any investment, there are pros and cons of using Roofstock Marketplace. Knowing both sides of the equation helps you understand if it’s right for you.

Pros

• Roofstock does the legwork - This is huge for buyers. Vetting a property takes a lot of time and work. If you already have a full-time job, it could feel impossible to find the time. By the time you do, the property could be snagged by another buyer. Roofstock vets all properties before they hit the marketplace, so you don’t have to do anything other than reading the information they provide.
• The homes have tenants - Finding tenants is just as much work as vetting a property. Roofstock does this for you by selling homes with tenants in them. When you buy the property, you take over the lease and collect payments from day one.
• Roofstock offers a money-back guarantee - Not too many investments offer your money back if you aren’t happy, but Roofstock does for 30 days. If you aren’t happy with the property or, for some other reason, need to back out, you can inform Roofstock in writing. They’ll relist the property and try to sell it. If it doesn’t sell in 90 days, they’ll buy it from you.

Cons

• You may need a large down payment - Roofstock doesn’t require it, but your lender may. Lenders often require 20% - 30% down on a property, which can be hard for some borrowers. 
• Investing in property is a big responsibility - Owning a home is one thing. Owning an investment property is an entirely different scenario. You are the landlord - the person in charge when anything goes wrong. If you invest long distance, you’ll need property management, so someone is always there to fix issues that come up.
• You may want to do your own legwork, too - Rootstock certifies properties, but what if there’s an aspect you want to inspect yourself, or there’s something Roofstock didn’t cover that you worry about? 

Qualifying for Investment Property Financing

Qualifying for any mortgage financing can be stressful, but millennials can secure financing.

Today’s mortgage programs are more lenient, allowing borrowers to buy investment properties and earn passive income. Each mortgage program is different, but here are a few things to consider:

• If you have great credit, you may not need a large down payment. Lenders want low-risk borrowers. If you have a low credit score and a low down payment, you’re at a higher risk. Try maximizing your credit score by making sure all payments are current, your credit cards have less than 30% of the credit line outstanding, and you don’t have any collections or public records.
• Stable employment helps you get approved. Lenders look for stability and reliability. If you’ve had the same job for two years and your income was steady or increased, you’re a better risk than someone who was unemployed or job hopped a lot.
• Reserves help your chances of approval. Lenders like it when you have money on reserve - mortgage payments put away for a rainy day. Lenders like investors to have six months of reserves on hand. Save money as early as you can, and you’ll improve your chances of approval. 

How Long Distance Real Estate Investing Builds Passive Income

If you’ve never invested in real estate, it can be hard to see how you’ll build a passive income. It sounds like a lot of work until this point, even though Roofstock does most of it upfront.

Here’s how you can make a passive income investing in long-distance real estate.

• Buying a property with a decent return and tenants in it. Focus on properties already outfitted with tenants. You’ll have cash flow on day one, which isn’t something most other investors can say. When you buy the home, you earn rent from the day you take ownership.
• Selling real estate on the marketplace. Once you invest in properties, you can sell them too. Whether they didn’t turn out like you’d hoped or you want to keep growing your portfolio, you can sell on Roofstock. If you sell, watch your tax liabilities, or take advantage of the like-kind exchange the IRS allows by investing the money directly into another investment property.
• Earn equity in the home. As you pay down the mortgage (if you borrowed money), you’ll earn equity in the home. You’ll see on your amortization table from the lender how much equity you’ll build each month. All you have to do to earn it is pay the mortgage with the rental income.
• Make home improvements. You can speed up the appreciation by improving the property. Whether you do major renovations or a bunch of small ones, you can improve a property’s value, which is more cash in your pocket when you sell. You may even be able to charge higher rent depending on the changes you make.

Roofstock Marketplace FAQ

Is Roofstock a Good Investment?

If you’re looking to invest in real estate, Roofstock is a great place to start. A majority of its investors are new investors because Roofstock does the legwork, making it easier to make decisions with a low barrier to entry.

How Does Roofstock Make Money?

Roofstock charges for each transaction. On the buyer’s side, it’s 0.5% of the sales price, and for sellers, it’s 2.5% of the sales price.

Can Roofstock Help You Make a Passive Income?

Yes, millennials learn how to use Roofstock to make a passive income just by buying a home through the marketplace and collecting the rent. While other fees are involved, especially if you need a property management company, most investors come out with a profit, earning passive income.

Does Roofstock Show the Potential Rental Income?

Yes, Roofstock makes it easy to make decisions. If you know how much financing will cost upfront and monthly, you can compare it to the monthly and total rents you’ll earn with a Roofstock property. It’s then easy to decide if a property is a good investment. 

Long Distance Investing Is Possible for Real Estate Investors

Roofstock Marketplace makes long-distance investing possible. You don’t need to be an investment expert or an accredited investor. With the Roofstock platform, everything you need is at your fingertips.

Go through the information, compare properties, and choose the one that’s right for your first investment. Enjoy the passive income, and as you get comfortable, expand your portfolio so you can become a successful real estate investor too. 
 

Read more about Roofstock: Roofstock Review

Photo by Courtney Corlew on Unsplash