Real estate investing can be highly lucrative, but oftentimes the best deals are simply not in your backyard. Long-distance real estate investing, despite it’s word-of-mouth bad reputation from a story or two you’ve heard, has drastically changed in recent years. So much so, that there is a burgeoning industry of real-estate companies popping up to help individual investors with long-distance ownership.
Unlike the other companies on this list, Roofstock is a marketplace for investors to purchase and sell single-family homes (SFHs). These are direct transactions where an entire home is purchased to rent it out in a traditional monthly income process.
The site is vertically integrated – allowing for a suite of services including financing; hiring property management companies; title management; and other features that make it a close to one-stop-shop for investors.
The site is free and almost anyone can transact business. There are useful search features across the 70+ markets available on roofstock. You can view photos, detailed descriptions, and street-views of the property before you decide to pull the trigger on moving your deal to the next offer stage.
While this more traditional and vertically integrated approach is great for many investors, those without as much cash to manage can take advantage of Roofstock One. Through this service, investors can buy shares in properties that are managed already avoiding many of the responsibilities of being an individual real estate investment owner.
The marketplace is powerful but still leaves screening tenants, collecting rents, and choosing a property management company up to the individual investor. This can still be a bit of work, but if done right with the correct property management company, you can find a fantastic deal.
On the more efficient side of the site, Roofstock takes up the duty of performing a Roofstock Certification and their Full Property Analysis procedures. This provides buyers with Pricing Appraisals, Title Reports, and Inspection details which are a part of the service. Additionally, Roofstock performs negotiations on your behalf regarding property management support which can slash your management fees below what you thought possible.
If you’re interested in owning a single family home asset full out, Roofstock is the best option and they help you find the best deal possible, if you know how to evaluate a deal.
PeerStreet, unlike Roofstock, isn’t actually focused on owning properties outright – it’s focus is on lending out real-estate loans to borrowers within its crowdfunding platform.
PeerStreet’s marketplace is a specialized marketplace that helps open up lending to those who may not otherwise be able to borrow. For instance, if someone has multiple mortgages traditional banks are unlikely to support additional mortgages, making this borrower the kind that would seek funding elsewhere. Loans also regularly go out to those looking for rehabilitation costs. As an investor, you have direct access to the loan which you’re investing in, unlike REIT assets.
There are automatic investing features allowing you to extend more and more money on a regular basis into the market. Thankfully, this may be worth it to you as PeerStreet claims high returns above 5% APR.
Fundrise is one of the more popular long-distance real estate investing platforms around. Mainly because it has an extremely accessible user interface and automated investing options for small investors. Minimum investments start at $500 as opposed to other platforms on this list most of which start at $1000. Fundrise has assets across commercial, residential, and single-family homes and has offerings in debt, equities, and preferred equity investments.
Investors can jump into three plan types including the Supplemental Income, Balanced Investing, and Long-Term Growth plans. Each of these has different asset types as well as objectives for the investor. The Supplemental Income investment has a focus on cash-flowing property assets with dividends. Balanced Investing has the broadest portfolio setup including Supplemental Income and Long-Term Growth assets. Long-Term Growth is a plan designed for long-run high returning investments, so you shouldn’t expect a return here in the short term.
Your money gets put into REITs which contain real estate investments all across the US market. Once you get investing you can expect dividends to be delivered quarterly as well as some asset appreciation, which is based on long-term holdings so those won’t show up in your portfolio for some time.
Accounts can be setup for self-directed IRAs and after-tax accounts as well. You can also direct directly in eREITs and eFunds.
Some criticisms of Fundrise, include the large amounts of conflict of interest clauses in their legal documentation which can potentially put your money at risk.
HomeUnion is an end-to-end real estate investing solution. It allows funding options through traditional financing, cash, 1031 Exchange or 401ks to purchase the home. It also has the option to manage rehabs to get the property rent-ready.
HomeUnion will market your home for you, find tenants, collect rents and act as all around property manager for your investment. The fees for this service are not low with a 3.5% acquisition fee and a 10.5% management fee for the monthly rent.
This is the closest service to RoofStock on our list as it helps acquire properties. However, they have a much wider net of properties to pull from. The benefits of the service are that you can diversify your real estate investment assets across a wide variety of locations in the US. This is a huge advantage to those living in high-cost areas where buying a rental property with strong cash-flowing fundamentals wouldn’t work.
There is always the option to do it yourself which is obviously the harder way of going about it. However, just because it is hard to do doesn’t mean it can’t be done and done profitably.
There are plenty of resources on how to manage your long-distance real estate investments. Our best recommendation is the book Long-Distance Real Estate Investing: How to Buy, Rehab, and Manage Out-of-State Rental Properties by BiggerPockets.
This book helps you and how to find tenants using online platforms.
The acquisition of real-estate assets shouldn’t be taken lightly. However, the online platforms providing long-distance real estate investing allow for diversification of assets across geography and asset types that can broaden your portfolio.
They’re a great addition to a portfolio and above all we recommend Fundrise and Roofstock of the services we’ve evaluated due to their service integration.