Created by investors for investors in the USA, Roofstock is a new, more efficient way to buy and sell investment properties in the $2 trillion market for leased single-family rental (SFR) homes.
For sellers, properties can be sold without having to wait until tenants move out, avoiding the lost income while marketing a vacant home and the significant selling costs associated with traditional channels.
For buyers, Roofstock offers a proprietary inventory of leased, certified, professionally managed homes that generate immediate cash flow and future home price appreciation potential.
Roofstock provides analytical tools and diligence information to help investors evaluate and compare properties before buying them.
Closing is made easy by leveraging electronic document delivery and e-signatures, allowing transactions to close rapidly and securely.
“Investors routinely purchase about 1 million homes annually, but the existing channels are antiquated and don’t adequately serve buyer and seller needs today,” says Roofstock Co-founder and CEO Gary Beasley.
“Roofstock is turning the real estate market on its head – breaking down the barriers to investing – and opening local markets to investors across the country and around the world.”
Roofstock Chairman and Co-founder Gregor Watson adds the premise of the new platform has been developed from the fact that people would never vacate an apartment building to sell it.
“Why should rental homes be any different? Roofstock eliminates the hassles and reduces the costs and risks of buying and improving vacant properties,” he says.
Roofstock was started last year by SFR industry pioneers Watson, Beasley and Rich Ford, and serial entrepreneur Devin Wade.
Watson previously founded leading SFR investment firm 643 Capital Management.
As a managing director at Jefferies, Rich Ford was widely regarded as one of the leading investment bankers in the SFR industry, and among the first to embrace it as an institutional asset class more than five years ago.
Wade’s expertise is in payments and secure processing, having founded multiple successful start-ups.
And Beasley is the former CEO of Waypoint Homes and Co-CEO of public SFR REIT Starwood Waypoint Residential Trust, which collectively amassed over $3 billion of SFR assets during his tenure.
Beasley also spent five years building the online residential brokerage firm ZipRealty, now part of Realogy, which he took public in 2004 as its CFO.
“In a market starved for yield, single-family rental homes offer an attractive combination of current yield and growth, generating double-digit return on equity potential without the volatility associated with today’s stock market,” says Ford, currently Roofstock’s chief development officer
HOW ROOFSTOCK WORKS
Using independent, third-party experts to inspect and certify homes as part of the listing process, Roofstock brings transparency, liquidity and efficiency to create a new and better way to buy and sell leased rental properties across the US.
Buyers get access to vetted homes with current cash flow and professional property management in place.
Unlike a traditional real estate process, all homes on the site can be purchased at set prices, so there’s no wasted time in bidding or back and forth negotiations.
Moreover, prices factor in both market comparables and property-specific conditions, with buyers also benefiting from sellers’ being able to list for less and still net more given the efficiencies of the Roofstock marketplace.
Sellers, meanwhile, can sell their homes faster without having to vacate them, thereby avoiding the lost rent, renovation costs and high selling commissions typically associated with marketing vacant homes through traditional channels.
At opening, Roofstock is offering certified inventory in several markets in Florida. The company will add markets throughout the year to better serve the needs of its growing number of buyers and sellers.
BACKED BY PROS
Founded in 2015, Roofstock is backed by a group of notable investors.
The company’s $6.25 million Series A in May was led by Khosla Ventures and included financial technology venture firms QED Investors and Nyca Partners.
Also involved was Ron Conway’s SV Angel and Marc Benioff, founder and CEO of Salesforce.com, Rich Boyle, former CEO of Loopnet, Eric Wu, CEO of Opendoor and Jeff Fluhr, founder and former CEO of StubHub.
The company closed a $7 million Series A-1 round in December, led by Bain Capital Ventures, and included Grey Wolf and CSC Venture Capital.
“We like to back proven entrepreneurs with disruptive ideas addressing massive market opportunities,” says Khosla Ventures senior partner David Weiden.
“Right now, real estate is one of the largest sectors yet to be fully transformed by financial services technology innovation. Roofstock checks all of those boxes for us.”
Bain Capital Ventures Managing Director Matt Harris adds single-family rentals have become an institutional asset class, but as yet lack the type of market infrastructure that investors have come to expect.
“Roofstock solves that problem, and in doing so, creates the opportunity to expand into other segments of the multi-trillion dollar real estate industry.”