Roofstock has acquired RentPrep, a tenant-screening company, as it tries to build a one-stop shop for buying and managing single-family rental properties.
The Oakland company’s purchase of RentPrep was completed this month for an undisclosed sum.
The deal marked Roofstock’s third acquisition in two years and fourth since its founding in 2015. The company’s recent acquisitions include property manager Great Jones and Stessa, which helps investors manage their real estate portfolios.
“The company is a natural fit for Roofstock as we continue to expand our platform,” Roofstock CEO Gary Beasley said of RentPrep.
RentPrep was founded in 2007 by former Marine Steve White, who led the company as CEO and will remain with Roofstock as head of screening operations.
“Roofstock has almost 800 employees, with a deep bench of industry experts, and it’s fascinating the speed at which they can move,” White told Buffalo Inno, an affiliate of the San Francisco Business Times. “To me, it is exciting to start innovating in a way we could not as a bootstrapped company.”
Roofstock raised $240 million in March at a valuation of almost $2 billion. The company has raised more than $400 in venture capital.
“The first thing that attracted us to RentPrep was their laser-focus on accuracy,” Beasley said in a company blog. “Not only do they provide the same types of background checks and credit reports common throughout the industry but they’ve invested in screeners — real people, what a novel idea — to fact-check the data for compliance.”
Roofstock was founded on the premise of helping individuals invest remotely in tenant-occupied single-family houses. The Wall Street Journal this week looked at a tech worker who invested in the Jackson, Mississippi, area while he was a Bay Area resident. That investor was on a familiar journey for Roofstock clients. A January 2020 investor seminar at Roofstock’s Oakland headquarters featured a chart showing a flood of capital flowing from investors — largely from the Bay Area with its pricey housing market — going into rental investments in lower-cost cities, often in the Midwest and South.
There’s a backlash brewing against out-of-state investors, including more institutional investors, buying up houses to rent. Tech employees, often relying in part on their stock-based compensation to invest remotely, are also blamed for bringing increased price volatility in popular markets for remote investing.
Roofstock is not alone in the race to facilitate remote real estate investing through technology and in-market real estate agents and property managers.
Seattle-based Arrived Homes, founded in 2019, helps individuals invest as little as $100 in shares representing one single-family rental, based on a real estate investment trust structure.
Arrived, also featured in this week’s Wall Street Journal story, allows nonaccredited investors to invest in far-flung markets such as Bentonville, Arkansas, and Tuscaloosa, Alabama, in addition to more popular rental markets such as Atlanta and Nashville.
Roofstock offers Roofstock One, a service that allows accredited investors to put money into REIT-based securities representing portfolios of single-family homes in various markets. Roofstock One requires a $5,000 minimum investment. (Both Arrived and Roofstock count Salesforce co-founder Marc Benioff among their early investors.)
Beasley has said his goal is to eventually expand Roofstock One beyond accredited investors, but he hasn’t shared a timetable for reaching that goal.
“We’re striving to remove every pain point,” Beasley said.
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