Roofstock vs. Fundrise: 2022 Real Estate Comparison

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August 8, 2022

Adam K. |

5 Minute Read

This article will compare Roofstock and Fundrise, two popular real estate investing platforms. We will take a deep dive into each company and help you decide which platform is right for you.

Real Estate

At a Glance:

Feature Roofstock Fundrise
OverviewMarketplace to purchase and sell single-family rental homes across the United States.REITs and Funds that are registered with the SEC but do not trade on national stock exchanges.
Type of InvestmentsSingle-Family RentalseREITs and eFunds
Minimum InvestmentVaries$10, but need to invest $5,000 to have access to most features
LiquidityNone1% early redemption fee if held less than 5 years. Does not guarantee liquidity.
FeesSellers pay a 3% fee of the sale price or $2,500 (whichever is greater)
Buyers pay a fee equal to 0.5% of the purchase price, or $500 (whichever is greater)
1% Management fee + fees buried in offering circular.
Retirement Account Investing?YesYes

Who should use Roofstock and Fundrise?

Roofstock is a good option for…

Investors are interested in a direct physical real estate investment and are not concerned with handling property management.

Fundrise is a good option for…

Individuals who want real estate exposure but aren’t interested in the stress associated with owning a physical real estate property.

PROs and CONs

Roofstock

PROS CONS
Enhanced vetting processA high amount of capital required
30-day money-back guaranteeLimited liquidity
Easy to find investment properties

Fundrise

PROS CONS
Lower correlation to the stock market compared to public REITsLimited liquidity
Historically higher returns than publicly-traded REITsThey don’t own and operate the investments
Investor tools to pick real estate investments

What is Roofstock?

Roofstock is an online marketplace where non-accredited and accredited real estate investors can browse, compare, and ultimately buy or sell Single Family Rentals (SFRs) across 27 states.

Roofstock also provides property management services to investment property owners and the ability to purchase shares of a managed rental property portfolio if you are an accredited investor through its RoofstockOne platform.

Roofstock’s goal is to make investing in Single Family Rentals accessible to all investors regardless of their geographical location.

Since its launch in 2015, Roofstock has facilitated over $5 billion in real estate transactions.

The company is headquartered in Oakland, CA.

What is Fundrise?

Fundrise offers non-accredited and accredited investors an alternative option to investing in real estate eREITs and eFunds without the stress and costs of traditional real estate investing.

Individuals can invest in a wide range of eREITs and eFunds with a minimum investment of just $10.

Fundrise boasts a wide variety of investment options and strategies, goal planning features, and a user-friendly investment dashboard.

More than 300,000 people use Fundrise today and have invested over $7 billion in properties throughout the U.S. Fundrise has had 21 consecutive quarters of returns, averaging 22.99% in 2021.

Fundrise was founded in 2010 and is based in Washington, DC. The company was founded by Ben Miller, who has over 20 years of experience in the real estate industry.

Read our full Fundrise Review.

How does Roofstock work?

When you are buying or selling through Roofstock, you are executing a transaction as you would with a traditional residential property transaction. But the main difference is that Roofstock acts as the facilitator of the deal but also offers a 30-day money-back guarantee and some properties offer vacancy protection if your property is not already occupied.

The main difference between Roofstock and purchasing from Zillow or any other real estate website is that Roofstock is a “one-stop shop” for gathering all the details required for investment properties.

For example, Roofstock makes the research process faster by providing pictures and street views, floor plans, property inspection reports, current tenant lease information, and tenant payment history.

This makes a once-piecemeal research process seamless because you can vet multiple properties without missing details or e-mail follow-ups.

Users can browse properties based on the following details:

  • Location
  • Price
  • Neighborhood rating
  • Reduced price
  • Cap rate
  • Gross yield
  • Monthly rent

All Properties listed for sale on the Roofstock marketplace are either occupied, which means you start earning cash flow as soon as you become an owner, or may come with vacancy protection, for which Roofstock ensures that you’ll secure a signed lease on your rent-ready home within 45 days, or they will cover your rent for up to 6 months.

How does Fundrise work?

With Fundrise, you are investing in either Fundrise eREITs or eFunds with a minimum investment of $10.

eREITs and eFunds comprise a basket of non-traded real estate properties, from multifamily apartments to industrial complexes. The eREITs and eFunds aim to seek a combination of dividend distribution and capital appreciation, depending on the strategy.

When you open an account with Fundrise, they offer a wide range of account levels; Basic accounts require a minimum investment of $10, and its Advanced Portfolio requires a minimum investment of $10,000. The premium level is reserved for accredited investors only with a minimum investment of $100,000.

However, Fundrise’s most popular account is the ‘Core’ portfolio, which has the most investment options and features. A Core account requires a minimum investment of $5,000.

You can create a customized investment strategy at the Core account level and above. Investors can customize their portfolio by diversifying across a wider variety of funds with specific objectives, such as income, growth, and balanced.

Head-to-Head Comparison

Roofstock vs Fundrise: Investment options

Roofstock and Fundrise offer two entirely different ways to invest and investment options.

With Roofstock, you can invest in single-family rentals across 27 states. You can get direct exposure to different real estate markets based on specific investment requirements you may have.

Meanwhile, Fundrise offers many investment options across its eREITs and eFunds.

The key difference is that with Roofstock, you are purchasing a physical property with direct control over the investment. With Fundrise, you are purchasing shares in a REIT or fund that is professionally managed and have zero control over the property management or investment strategy.

Fundrise and Roofstock both provide ways to invest in private real estate markets, which can be a great hedge against inflation and a way to diversify your investment portfolio outside of traditional stocks, bonds, and ETFs.

Roofstock vs Fundrise: Fees

Roofstock and Fundrise have different fee structures due to the type of investment and nature of the transaction.

Roofstock doesn’t have any sign-up fees or recurring fees. Fees are only charged once a property is bought or sold. Meanwhile, because Fundrise is a REIT, they charge a 1% management fee of assets under management.

Fundrise fees are in-line with other non-traded real estate crowdfunding platforms such as RealtyMogul.

Meanwhile, Roofstock’s fees of 3.5% all-in, which is about 1.5% – 2.5%, cheaper than using a traditional real estate agent. According to real estate firm Redfin, traditional real estate agents have a 5 – 6% commission.

Roofstock Fees

  • Sellers pay a 3% fee of the sale price or $2,500 (whichever is greater)
  • Buyers pay a fee equal to 0.5% of the purchase price, or $500 (whichever is greater)
  • No recurring fees

In addition, property owners are responsible for the other traditional property ownership costs such as:

  • Mortgage
  • Property taxes and insurance
  • Maintenance and repairs
  • Property management fees (if applicable)

Fundrise Fees

Fundrise charges a yearly asset management fee of 0.85% plus a 0.15% advisory fee, so 1%/yr. All dividends are net of fees. For every $1,000 invested, you will pay $10 in fees.

Fundrise does not charge transaction fees, sales commissions, or additional fees for enabling features on your accounts, such as dividend reinvestment or auto-invest. 

  • 0.85% management fee
  • 0.15% advisory fee
  • 1% early redemption fee (if an investment is sold prior to being held or 5 years)

Any redemptions processed before an investment is five years old will be subject to a flat 1% penalty. After five years, investors can request to redeem their shares at any time for their full value, with no penalty applied.

Roofstock vs Fundrise: Ease of Use

Both Roostock and Fundrise have an easy sign-up process and a very friendly user dashboard.

It typically takes less than 5 minutes to create an account and begin investing with Fundrise. You can open an account via the Fundrise website or mobile app. Once you open an account and select your plan, Fundrise can build a portfolio with dozens of projects that match your desired investment profile.

From there, you can easily monitor and manage your investments from the Fundrise dashboard. The dashboard contains many helpful tools and features such as real-time returns, in-depth project updates, accounts goals, set up auto-invest, manual investments, and much more.

Fundrise Investor Dashboard
Fundrise investor dashboard

Meanwhile, Roofstock’s easy-to-use Marketplace dashboard makes browsing and reviewing properties a breeze. You can filter on quantitative metrics such as cap rate and gross yield and metrics such as school rating and neighborhood ranking.

Roofstock can also connect you with financing providers and provide neighborhood rankings, and financing calculator tools, making a seamless user experience.

Roofstock marketplace
Roofstock Marketplace

Which Platform is Better?

Roofstock and Fundrise offer two entirely different business models for investing in real estate. Roofstock is a good option if you are dead-set on a physical investment property. However, given the large amount of capital required, and limited liquidity options, I would not recommend Roofstock if this is your first foray into real estate investing.

On the other hand, Fundrise may be a more practical approach to starting real estate investing. Still, compared to publicly-traded REITs, there is limited liquidity, so you want to ensure you have a long-term investment horizon.

There is no “right” way to invest in real estate. It comes down to your time horizon, the amount of capital you have, and the type of strategy you are interested in.

There are plenty of ways to get rich through real estate.

Real World Investor.com

Adam

Adam is the founder of realworldinvestor.com, an investing website dedicated to helping discerning individuals make the best investment decisions.

Before starting Real World Investor, he was a Vice President at the 3rd largest investment bank in the US. He also spent time at prestigious firms like J.P. Morgan and Deloitte Consulting. He has over 10 years of experience working in financial services. His experience includes working with complex derivatives while spending many years working on a trading floor.

He has a bachelor's degree in Business Administration, majoring in finance. Adam is married and resides in New Jersey with his wife.