Roofstock | Proptech Talk Thursday #7 - a podcast by Spencer Hsu, MBA Tech Realtor
from 2023-12-14T09:44:00.341171
Welcome to my new PropTech Talk Thursday series to take a look and provide my candid thoughts on new Proptech businesses. These could range from products to companies leveraging technology to improve all facets of real estate. The Real Estate industry is one of the slowest to adopt technology but there are many opportunities along with money chasing these opportunities. This week let me introduce you to Roofstock.
Based in Oakland, CA, Roofstock has raised $50M earlier this year for a total of $133M. They started their business in 2016 and have become a great option for people to be exposed to the world of owning single family rentals throughout the US. So what do they actually do? They are a platform where buyers can purchase properties from sellers. They have done over $2B in completed transactions.
What’s special about them? They make it really simple to see available properties that are potential homes to purchase in over 70 markets. They show you the financial projections and the homes are typically already being rented out to generate income minimizing the need to find a new tenant and start cashflowing. They also showcase information about the area which is very helpful for those that are not familiar with the location.
What are things to be aware of? Let’s analyze their business model. They take 2.5% from the sell side, and 0.5% from the buy side. If they have done over $2B in transactions, they generated $60M in revenue over the last 4 years which is no small feat. However, they also raised a total of $133M so where is that money actually going? The cost of the platform isn’t that complex, but it must be a huge cost to market for people to come to the platform to buy investment properties, but also sellers to sell here instead of selling through the traditional route with using Realtors. Their client acquisition cost must be pretty insane.
What they are doing here isn’t unique for those that are familiar with this business model. They are a basically a massive online turn key provider which proposes an easy solution for investors that want exposure to rentals out of the area. However, you want to be careful with all of their projections. It’s really convenient for investors to be able to see all these properties but how good are these properties really?
Even in a high appreciation market like the Bay Area which does between 5-6% a year on average over the last 40 years, this town in Texas is projecting 4.4% which is pretty aggressive. If you connect with local turn key providers that don’t have this kind of marketing budget, you may be getting better deals with more meat on the bone. The benefit of Roofstock is that they are a big brand so familiarity may help get you started into the space but to keep building up your rental portfolio might be a different matter.
If you are looking to get your foot into the door of investing in out of state, this is a great option as it’s a big brand that simplifies the process. However, if you want better returns, it may be better to connect and compare with some local provider, that would not have this same kind of premium on homes. You can simply Google turnkey (city) to find them.
So what do you think? Is this an option that you would consider? Leave it in the comments with your thoughts and if you would just buy a home yourself, and do your own renovations.
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My Background: Born and raised in the Bay Area, I spent 11 years as Technology Sales Manager before becoming a Realtor. Having personally invested and done renovations through house flips in the Bay Area, I wanted to help busy professionals in the Bay Area tech industry find their dream home by leveraging tech, data and local insights. Our team specializes in creating trusted frameworks of buying, selling, and investing in the Bay Area. In 2022, we are thrilled to share that we have helped 80 clients in the Bay Area with their moves, which positions our team as the Top 1% groups in the country. Looking forward to helping you into your next home and save/earn you more money!
Spencer Hsu, MBA, Realtor
408-547-4590
EXP Realty DRE #02077253
https://www.homesbyspencerhsu.com/
#BayAreaRealEstate
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