Single-family rentals are expected to see strong demand this year and beyond from both tenants and investors alike.
Rental real estate is tangible, may provide a steady rental income, and can act as a hedge against inflation and stock market volatility.
In today’s hot real estate market some of the best rental properties can be found in smaller secondary and tertiary markets and many people are investing in real estate remotely using online platforms like Roofstock.com and Morrisinvest.com.
In this article, we’ll take a look at how each company works and review key differences between the two to help you decide if Roofstock or Morris Invest is better suited to address your unique goals and strategies.
Key takeaways
- Both Roofstock and Morris Invest aim to make investing in rental property easier.
- Roofstock is the #1 marketplace for investing in single-family rental homes.
- The Roofstock Investment Property Marketplace has hundreds of single-family and small multifamily properties listed for sale.
- Morris Invest finds, fixes, and sells rental properties to its clients employing what some real estate professionals consider to be a fix-and-flip strategy.
How Roofstock and Morris Invest work
Roofstock and Morris Invest strive to make investing in income-producing rental property easier. However, they do this in completely different ways.
Roofstock operates the #1 marketplace for investing in single-family rental homes, with more than $4 billion in transactions completed in less than 6 years. The platform is an online investment property marketplace or listing service specifically for SFR real estate investors.
At any one time, there are hundreds of single-family rentals and small multifamily properties listed for sale in more than 70 markets across the United States--many of which are already tenanted. Investors can browse property listings, using search criteria such as list price, higher yield, neighborhood and school ratings, and price reduced.
After purchasing properties, investors have the option of connecting with property managers vetted by Roofstock and can sign-up for a free account with Stessa, a robust property management software program, to track real estate investments.
Morris Invest utilizes what some real estate professionals might describe as a fix-and-flip strategy. The company finds, fixes, fills, and manages rental properties. Instead of allowing investors to browse available properties, Morris Invest creates a customized portfolio based on the individual needs of each client, then showcases the properties when they become available.
The company operates in 14 states and over 40 cities.
Roofstock overview
Roofstock is a good choice for investors who want to control the entire transaction from start to finish. Investors can directly purchase single-family rental homes and small multifamily properties, buy a portfolio of homes in bulk, or purchase newly-built homes by Lennar.
Investors purchase homes on the Roofstock Marketplace directly from the seller. The Roofstock platform is simple enough that an investor can proceed without a real estate agent. However, if an investor wishes to be represented, they can use their own agent or ask to be referred to certified real agent in the locality where the property is located.
Buyers are able to analyze potential investments listed for sale on Roofstock and perform due diligence by vetting each real estate market and neighborhood-specific risks and benefits using key criteria such as employment rates, home values, neighborhood ratings, and school district quality.
Once the sale closes, buyers have the option to interview vetted property management companies, in case they’d like to hire someone to take care of the day-to-day details of tenant management and property maintenance, making it easier to invest in real estate remotely.
Fee structure
Roofstock charges sellers a competitive and transparent sales commission of 3% of the property sales price or $2,500, whichever is greater.
Once an offer is accepted, buyers pay a fee equal to 0.5% of the purchase price or $500, whichever is greater.
Feature summary
Roofstock makes researching a property easy by including pictures and street views, title reports, and if the property is tenanted, current lease information and a rent roll showing tenant payment history.
Investors can search for rental property using key metrics including:
- Location
- List price
- Price reduced
- New listings
- Square footage
- Number of beds and baths
- Minimum year built
- Neighborhood rating
- School rating
- Best schools
- Turnkey
- Occupancy
- Remaining months on lease
- Monthly rent
- 2-4 units
- Higher yield
- 1% Rule
- Gross yield
- Cap rate
- Annual appreciation
- Cash only
- Section 8
- Discount to valuation
Pros
- Hundreds of listings for single-family rentals and small multifamily properties at a wide range of price points.
- Data like Neighborhood Ratings and estimated market rent allow investors to compare multiple properties to make an informed investment.
- An opportunity for immediate cash flow if buying a tenant-occupied home.
- Low one-time transaction fees, referrals to vetted local property management companies, and closings are facilitated on the Roofstock platform.
Cons
- May not be the best option for investors looking for deeply discounted or value-add rental properties.
Morris Invest overview
Morris Invest may be a good option for investors looking for an easy way to invest in rental property without having to do the “tough stuff.”
The company finds properties, renovates to increase equity (or builds from the ground-up), helps investors to secure funding for the project, performs tenant screening and leasing, and refers investors to a property manager.
Instead of listing rental properties for sale on its website, the company utilizes a 3-step plan to answer questions and get a sense of an investor’s personal situation:
- Schedule a consultation via telephone so that a Morris Invest team member can learn about an investor’s goals.
- Get matched with one or more properties from one of Morris Invest’s rental markets as soon as they become available.
- If an investor decides to buy, Morris Invest will walk the investor through the entire transaction process from pre-purchase and beyond.
Fee structure
Morris Invest does not include a specific fee structure on the FAQ’s section of its website.
When describing how the company makes money and the fees charged, Morris Invest says it is able to purchase and develop new construction properties in bulk, allowing production in higher volume versus higher margin.
The company claims this enables them to offer clients more services and benefits without charging additional fees to have access to the Morris Invest team and products.
Feature summary
Morris Invest does not provide a list of properties on its website. Instead, clients receive a customized portfolio that showcases properties available once Morris Invest believes it adds value and provides clients with solutions that will make the greatest impact.
- The company operates in 14 states and over 40 cities
- Properties are located in landlord-friendly states with the highest job growth and lowest vacancy rates
- Each market is studied for at least 12 months prior to Morris Invest beginning its lengthy development process
Pros
- Morris Invest takes care of the renovations for an investor, so they don’t have to find vendors and project manage for themselves.
- Morris Invest says it has relationships with over 60 different lenders offering conventional financing, portfolio financing, International financing, IRA financing, and non-resource financing.
Cons
- Investors depend on Morris Invest to create a portfolio of potential rental property investments, rather than being able to choose from hundreds of listings.
- Buyers rely on Morris Invest or its partners to perform property renovations properly so that equity is actually increased.
- Opaque fee structure on the company’s website makes it difficult to understand how much money Morris Invest makes on each transaction.
Roofstock vs Morris Invest: How to decide?
Both Roofstock and Morris Invest focus on making real estate investing easier, but they do it in completely different ways.
The Roofstock Marketplace allows investors to perform their own research by browsing, analyzing, picking, and choosing among hundreds of single-family rental homes and small multifamily properties in more than 24 states.
On the other hand, Morris Invest creates a customized portfolio of potential rental property investments after speaking with a client to get a sense of their personal situation. The company utilizes what some real estate professionals might describe as a fix-and-flip strategy, by finding undervalued homes, fixing them up, then flipping them to the investor.
Before investing in a rental property, investors may wish to conduct their own due diligence and financial analysis by:
- Verifying the value of the property is correct by looking at the sales comparables of nearby homes and ordering a property appraisal.
- Ensure that current tenant rents or rents used in a pro forma analysis are at market, and not over or understated.
- Review property taxes in the county the rental property is located in, and see if property taxes will increase if the home is used as a rental instead of a primary residence.
- Make sure that the property management cost is factored into the profit and loss statement, especially if there is “free” management offered for the first year of ownership.
- Include a realistic capital expense (CapEx) reserve based on the property condition, and an accurate vacancy factor based on actual current market vacancy rates.
