Technology has made it easier than ever to be an investor. Platforms like Robinhood and Coinbase have made trading stocks and cryptocurrencies as easy as ordering take-out. The result has been a wave of new investors looking to ride the wave of appreciation that has been constant in almost every asset class over the last decade. But this same trend has yet to take hold in real estate. The complexities of property investment and the need for investors in real estate portfolios to be accredited (according to their income and/or net worth) has kept the same kinds of progress from happening in real estate.
While accreditation requirements don’t look like they will change anytime soon, there are new investment options for accredited investors. It’s estimated that 10.6 percent of American households were accredited in 2020 and those households controlled roughly $73.3 trillion in wealth. For these fortunate individuals, there are a number of companies that are offering fractional ownership of real estate property.
Real estate investing can be an attractive option because it’s relatively stable, historically outpaces inflation, and can add diversification to one’s portfolio. When it comes to what kind of properties a new generation of investors feels the most knowledgeable about, the clear winner is the same type of property that the majority of them have spent most of their lives in, single-family homes. Even multifamily investors are increasingly branching out into SFR investment due to signs of growth in the sector, encouraged by the renters’ desire for more space than a traditional apartment allows and the appeal of avoiding a long-term and expensive commitment. Additionally, recent census data shows that 72.5 percent of single-unit rental properties are owned by individuals, compared to only 30.5 percent of properties with 25 or more units.
Accredited investors can now explore investing in the SFR asset class without the responsibilities of traditional property management. Roofstock One allows accredited investors to purchase shares of Tracking Stocks that track the economic interests of fully-managed, targeted SFR property portfolios. Through this unique REIT structure, investors can explore the SFR asset class with low capital requirements, spread across multiple markets and properties. This also increases portfolio diversification and may reduce the risks associated with owning a single property. Investors can also choose Common Stock, which represents the residual equity interest in Roofstock One, Inc., for maximum diversification through exposure to all the properties owned by Roofstock One. Finally, these investors receive 1099s rather than K-1s.
The team at Roofstock One does the work of securing and managing the properties, including maintenance and tenant issues. This allows investors to access the SFR asset class without the traditional responsibilities of property management. The team also ensures that the property is well maintained and takes care of paying taxes, insurance, and related HOA fees. This is an interesting opportunity for investors seeking hands-off, passive income. Those who invest in SFR Tracking Stocks can benefit from potential cash flow and overall asset appreciation without the day-to-day challenges of property management. As explained by Gary Beasley, Roofstock CEO, “We’ve come up with a structure that is much more scalable and cost-effective to manage. It’s kind of a sports car built on a REIT chassis. You get this tried and true chassis and then it’s tricked out with all the bells and whistles.”
Stocks are easy to purchase these days, thanks to technology, but investment pathways that allow accredited investors to utilize investment strategies normally reserved for institutional-caliber investments are catching up. For accredited investors seeking easy, cost-effective, and diversified investment options, Roofstock One’s SFR Tracking Stocks might be an attractive next move.
Successful initiatives in today’s world need to be accessible, user-friendly, and powered by technology. Robinhood’s number of users grew from around 500,000 in 2014 to 22.4 million in 2021 as word about the platform grew and excitement about investment from the comfort of one’s one home and based on one’s own insights skyrocketed. Roofstock One is working to make their platform equally as accessible as Beasley continued, “We’ve got a 10-year plan of making it really, truly liquid and broadening access to everybody.” Investment in single-family rental real estate through available technology platforms may soon be a popular option for investors with attractive opportunities for success