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Roofstock vs. Fundraise – Who’s Ready for Real Estate?

Free stock trading apps, a booming financial market, and a COVID-19 lockdown from which we are only now emerging, like benumbed creatures from Rainer Maria Rilke’s “bright unbound forest” – these are all ingredients for a massive increase in the popularity of stock trading in the coming years. And, while investing in stocks, bonds, and electronically traded funds (ETFs) is becoming increasingly popular among mom-and-pop businesses, real assets are becoming increasingly overlooked.

Precious metals, land, equipment, natural resources, and real estate are examples of real assets. Real assets also include financial assets. It is worthwhile to include real assets in any portfolio, even if it is only for the sake of diversification. Real assets, because of their low correlation with financial assets, help to ensure that your portfolio is protected from any turbulence that the world markets may experience.

When it comes to diversifying into alternative assets, real estate is the first place we look. Even though stocks tend to appreciate more quickly than real estate, this is not necessarily a cause for concern. What real estate provides is a consistent return that slightly outperforms the rate of inflation over the long term. Real estate is the most popular investment choice for Americans, according to Gallup’s 2020 Economy and Personal Finance survey, which found that real estate was the most popular investment choice in 2013.

Accessibility has always been a problem in the real estate industry. Nevertheless, trading applications such as Roofstock and Fundraise have changed the game, making the process of investing in commercial and residential real estate equally simple as it is in the case of stock market investments. Both platforms, according to Modest Money’s Bob Haegele, are “excellent opportunities for people who are interested in investing in real estate.” But what exactly are the real distinctions between them?

Roofstock and Fundraise are two programs that are fundamentally different from one another. The primary service provided by Roofstock is the ability for private investors to directly own properties. The Fundraise, on the other hand, is more of a crowd-funded operation with a manageable $500 minimum initial investment. To put it another way, everyone has their own set of rules. Roofstock vs Fundraise is a classic example of healthy competition.

But which program is the most appropriate for you? Let’s take a closer look at some of the industry’s top performers.

Roofstock – Own Your Property

With a single goal in mind, Roofstock was founded by business moguls Gary Beasley, Gregor Watson, and Rich Ford: to purchase rentable single-family homes accessible to the average investor. Roofstock’s research, analytics, and insights enable even the most apprehensive of investors to dive headfirst into the world of real estate without fear of repercussions or negative consequences.

Roofstock is sometimes lumped in with other types of crowdfunding projects, but it is fundamentally distinct from them. This is because, with Roofstock, you own properties directly rather than pool your money with other investors to make a profit. Roofstock does provide a crowdfunding option, known as Roofstock One, that allows you to purchase shares in rental properties owned by others.

Roofstock Features

Simpler Process: One of the main obstacles that prevent most investors from investing in real estate is the lengthy process of finding suitable properties, contacting management companies, and obtaining financing. Roofstock will take care of everything, including home inspections, for you. As a result, real estate investors now have a one-stop-shop for all their needs.
Real Estate Data: If you don’t have a lot of experience with houses, it can be difficult to know exactly what you’re getting into when you first start in the real estate business. Roofstock does all of the legwork for you, providing users with detailed information, photographs, neighborhood ratings, and inspection histories on every property they search for on the website.
Fees and Rates: Roofstock charges a flat fee that is easy to understand. When purchasing a home through Roofstock, there is essentially only one fee structure to contend with. Buyers must pay $500, or 0.5 percent of the sale price, and sellers must pay $2,500, or 3.0 percent of the sale price, to complete the transaction.

Fundraise – Rise Above the Ranks

Fundraise, on the other hand, takes pride in its crowdfunding DNA, as opposed to Roofstock. Fundraise, a Washington, D.C.-based company founded in 2010, is widely regarded as the world’s first company to crowdfund investment into real estate ventures, according to some. Ben and Dan Miller, the company’s co-founders, recognized an opportunity in the market and jumped at it with all their might.

Fundraise is at the forefront of the movement to democratize real estate investment by offering low minimum investments and a simple, user-friendly application.

Fundraise Features

Various Account Levels: Fundraise offers four different account levels, each with a different minimum investment amount, making it a platform for users of all backgrounds and financial circumstances. Taking as an example, their “Starter Level” requires only a $500 initial investment, whereas their “Premium Level” requires a whopping $100,000 initial investment.
Different Account Profiles: Fundraise, like many of today’s best robot-advisors, offers a variety of account profiles that allow investors to tailor their assets to their specific needs. Choose from three different investment strategies: income, balanced, and long-term growth.
Unlike Roofstock, Fundraise keeps its fees and rates simple: there is a 0.15 percent advisory fee, which is combined with a 0.85 percent asset management fee, attached to REITs and funds in your portfolio, and there is no minimum investment requirement. Essentially, this means that you’ll be charged a 1 percent annual fee for the service.

Roofstock vs. Fundraise – Which Platform Wins?

When comparing notable investing platforms, there is no clear-cut winner, as there has been in the past. Each has its own set of advantages and disadvantages, and it’s difficult to recommend one over the other to the average investor. The reality is that everything is dependent on your objectives in terms of real estate investment.

Users of Fundraise are likely to pay higher fees in the long run, but the minimum investment is only $500, making it an attractive option for those with limited starting capital.

Roofstock, on the other hand, allows investors to directly own properties, though the initial investment required is significant.

Both of these options provide much-needed diversification to your portfolio, as well as opportunities to generate supplemental income while establishing long-term growth.