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With rental prices on the rise, more and more Americans are looking to expand their portfolio by investing in real estate. But making money from a rental takes time. In addition to finding a property, you also need to find and verify tenants, manage property maintenance, and more.
Enter Doorvest, a full-service real estate investment platform that streamlines your rental process. Doorvest helps you with everything from buying rental property to finding tenants and managing the property, all for a fee.
With Doorvest, investors can expand their real estate portfolio without knowing the ins and outs of owning a home. Let’s find out more about this up-and-coming real estate company and whether it makes sense for busy investors in this Doorvest review.
Commissions and fees – 7
Customer service – 6
Ease of use – 8
Number of offers – 7
Due Diligence – 8
7
total
Doorvest takes the hassle out of buying and renting a single-family home. But with a 20% down payment requirement and high management fees, this may not be the right option for everyone.
Pros Cons
pros
- Hands-free approach to real estate.
- Doorvest finds and renews the lease for you.
- One year renewal guarantee.
- 12 month rental income guarantee.
- No fees for placing tenants.
- Doorvest finds and researches tenants on your behalf.
against
- A 20% down payment is required.
- Doorvest makes money from the sale of the property.
- Doorvest charges a 10% management fee which may be higher than other management services.
- Limited to only six markets in the US
- Real estate is less liquid than other types of investments.
- Other costs are associated with buying a property, such as insurance, mortgage payments, taxes and more.
What is Doorvest?
Doorvest was started in San Francisco by friends Andrew Luong and Justin Kasad. Their journey began in 2014 when the two turned to real estate to generate passive income and build long-term wealth. They built a portfolio of more than a dozen homes in five years. Then, with a mission to advance financial security for everyone, they created a platform to help people grow their wealth.
Doorvest was launched in 2018, providing an all-in-one solution for real estate investors. The team started with the Houston, Texas area and has since expanded to other cities in the US. Doorvest has more than $20 million in assets under management and raised $92.5 million in funding.
What does it offer?
Doorvest allows investors to buy residential properties in selected areas of the country. It currently only operates in a few locations, but plans to continue expanding. While the platform caters to the individual needs of its investors, it generally works with three-bedroom, two-bathroom homes with a two-car garage built after 1970. The firm says its data shows that this type of homes have historically appreciated the most.
Doorvest differs from other real estate platforms in that you can buy a single-family rental home directly through their website with a 20% down payment. The company has a purchase, renovation and rental model. They take care of everything for you while they buy and renovate the home, so it’s ready for a long-term tenant. Doorvest features include:
Investor portal
The investor portal is at the heart of Doorvest’s offering. Here investors get a full breakdown of their monthly cash flow from their rentals. They can see all past and current activity on the value of their property and portfolio. The Investor Portal allows investors to access legal documents and reports, such as expenses, net rent, etc.
Limited geographic availability
As of this writing, Doorvest is only in six markets: Columbus, Atlanta, Oklahoma City, San Antonio, Dallas and Houston. The company says it plans to expand outside of those markets, but doesn’t have a timeframe or mention which market it plans to expand to next.
You don’t have to live in one of these cities to buy a rental property through Doorvest. But this will limit investors who are interested in buying houses in other areas of the country.
Tenant’s guarantee
The platform has several guarantees, among them guaranteeing that you will get rental income in your first year. Doorvest never charges resident placement fees, so you’re only charged a management fee when you have a tenant.
The company is committed to refurbishing the property to be ready for your new tenant. They’ll even cover renewal costs incurred in the first year up to $25,000. However, there are some repairs they don’t cover, such as electrical problems.
What are the rates and limits?
Doorvest charges a 10% property management fee for using its service. In other words, they get a cut for finding and screening tenants, collecting rent, renovating the property, and other management tasks.
You also cannot negotiate the price of the home you buy through Doorvest and you must commit to a one-year management contract. After one year, the agreement will be renewed annually unless cancelled. After the first year, you can sell the property (including back to Doorvest), but you must stay invested for at least 12 months.
While you don’t need to be an accredited investor to invest with Doorvest, you do need enough money for a down payment. The amount required will vary by property. While there is no minimum investment amount, the company notes on its site that most homes cost an average of $225.00 with a down payment of $45,000.
Other costs are associated with buying a home, such as taking out a mortgage, property taxes, home insurance, repairs and maintenance, closing costs, and ongoing interest on your loan.
What is the investment process?
Doorvest says it helps investors with no prior real estate experience buy a single-family rental home. The whole process takes about four months.
First, answer a few questions about yourself and the type of home you want to buy. You need to register for an account and review a few slides to make sure you understand the down payment requirements. You can then indicate the type of home and price range you’re looking for, including the number of bedrooms and square footage.
You will then be asked about your investment approach and what type of property you want. For example, you may want a balanced approach between cash flow and appreciation, to focus on home appreciation, or to have higher yield and cash flow.
Before you start looking at potential homes, you are required to make a fully refundable $100 deposit, which Doorvest says is to make sure you commit to buying a home. Doorvest will put you on a waiting list for about three to four weeks and begin shopping for homes that fit your ideal investment.
Once you find the home you want to buy, you can reserve it. Doorvest will buy the house, renovate it and place a long-term tenant.
After that, you’ll work with Doorvest’s transaction team to close on the home at fair market value. Once the deal closes, the home is yours and will start generating cash flow. Doorvest will cover the management of the home for a 10% fee, and you will be able to access all relevant documents through the Investor Portal.
How can I contact Doorvest?
You can contact Doorvest online via their chatbot or email (hello@doorvest.com). They don’t have a phone number, but you can also contact them through their social media accounts on Facebook, Twitter, and Instagram.
Is Doorvest legit?
Yes, Doorvest is a legitimate company that launched in 2018. Based in San Francisco, the company has raised $92.5 million in funding from venture capital investors. He currently manages $20 million in real estate for his clients.
However, it’s important to note that Doorvest is a newer company, so there isn’t much data on the long-term returns on homes purchased through them.
There is also risk associated with any investment, including investing in real estate. There is no guarantee that you will get a return on your investment or that you will continue to receive payments from tenants past the first year.
Plus, buying a home through Doorvest locks you into a one-year contract with them. It is a less flexible process and costs more than if you had bought the property yourself. Doorvest offers a passive and easy way to earn rental income, and you pay a premium for this service.
Read more >>> Which Passive Investing Strategy Is Right For You?
Better alternatives
If you want to invest in real estate but aren’t sure if Doorvest is for you, a few other companies offer similar services.
ceiling
ceiling has been around since 2015 and allows investors to buy and sell single-family rental properties across the country for a fraction of the price of a real estate agent. ceiling charges 0.5% or $500, whichever is higher, when you buy a property on their platform. They also offer rental property management, but it’s optional rather than mandatory, so you can manage your properties yourself if you prefer.
Read more >>> Roofstock Review 2022: Invest in Single Family Rental Properties
Arrivals at the houses
With Arrived Homes, you can invest in residential real estate for as little as $100. It’s a real estate crowdfunding company where you can buy shares in rental properties. It’s open to non-accredited investors and is a good option for investors who want exposure to single-family rental homes but can’t afford the down payment and want to invest in real estate with little money down.
Read more >>> Arrived Homes Review 2022 – We tried it
The bottom line
Doorvest offers investors a passive way to make money in real estate. For investors who want to buy a rental property but don’t want to be bothered by the effort it takes to find and renovate a home and then vet tenants and do ongoing maintenance, Doorvest could be a practical option. This is especially true if you don’t mind paying the extra fee and are okay with being locked into a management contract for a year.
For investors who want a more hands-on approach to real estate investing, it may make sense to look at other options without a management contract, such as Roofstock. And for those who can’t afford the high upfront costs of real estate but still want market exposure, an alternative like Arrived Homes is worth considering.
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