Doorvest review

• Doorvest is a full-service real estate investing platform offering resident-occupied properties in the Houston area.
• Doorvest offers turnkey property management, including placing tenants, managing maintenance and repairs, and ensuring the home is in good condition.
• Despite relatively high fees, Doorvest offers a 12 month guarantee on both rental income and renovation work.

Are you looking to enter the real estate investment market? Many would-be investors assume that they don’t have the time required to vet a real estate deal and manage the complexities of finding and maintaining tenants. If that sounds like you, then Doorvest is a new startup you should check out. The company offers potential real estate investors the chance to diversify their assets while benefiting from a passive income stream.

Doorvest offers you pre-vetted real estate deals with all due diligence conducted by the Doorvest team. You don’t have to lift a finger with your investment; they handle everything from sale to exit. This review gives you everything you need to know about parking your money with Doorvest.

What is Doorvest?

Founded by two tech entrepreneurs from Silicon Valley, Doorvest is one of the latest startups taking advantage of the booming American real estate market. After launching in 2014, the startup purchased twelve single-family rentals over the following five years.

The company charged investors for sourcing the deal, renovating the property, sourcing tenants, and maintaining the tenant/landlord relationship. The company noticed during its initial years that entering the property market was challenging for new investors.

Many investors have the capital available, but they lead busy professional lives. As a result, completing the research and due diligence on sourcing, financing, renovation, and managing an investment property put them off the idea.

The Doorvest model simplifies the process. The company onboards clients that want to invest in real estate but don’t have the time. These investors are willing to pay Doorvest a fee for managing the investment and rental management process.

After the investors give Doorvest the green light to acquire a property according to their financial capacity, the team sources the property and completes its due diligence on the investment. If approved, Doorvest helps you purchase and finance the property using your own or their partner lenders.

Once the property closes, the Doorvest team completes the renovations, securing all the financing for the deal. They make all financing and renovation costs completely transparent and available to the investor. After refurbishing the home, Doorvest sources a tenant and manages the landlord duties on behalf of the investor.

While Doorvest creates excellent investment opportunities for new or busy accredited investors, it charges fees for managing the process.

Who is it designed for?

Doorvest suits accredited investors looking to put their capital to work, but they don’t have the time to handle their investment themselves. Doorvest makes it possible for any investor to take the leap into property management with a hands-off strategy.

Who would not be a good fit for Doorvest

Investors that may need access to the cash in their investments should stay away from using Doorvest. Pulling money out of the investment isn’t possible until you sell. Therefore if you need liquidity in your portfolio, look at other options.

How does it work?

The reality is that investing in property takes work. The best real estate investors claim they visit at least 10 properties before closing on a fair deal. The work done in evaluating the potential cash flow from the property and the capital appreciation takes hours on each property. Most people don’t have the time or energy for that.

With Doorvest, you get a team of expert property professionals working on your investment. They charge a fee for their services, ensuring you get a pre-vetted deal that has the best chance of producing positive cash flow right from the start.

When you decide you want to exit from the investment, Doorvest takes care of all the sale details, and you reap the benefits.

Doorvest’s investing strategy

Doorvest takes the strategy of investing in income-producing properties. They look for an undervalued deal, with the average investment cost being $150,000, of which the minimum down payment by the investor is 20%.

After locating the property, Doorvest finances the agreement on your behalf. The property is financed directly by you and with whichever lender you choose, with no restrictions from Doorvest on the choice of lender, method of financing, or loan structure. Most investors borrow under a conventional 30 year fixed loan with a 20-25% down payment. Once the transaction closes, Doorvest completes all renovations on the property to make it suitable for rental.

Doorvest’s strategy is a buy, renovate, and rent model, with an eventual exit if you want to sell the asset in the future. Doorvest collects fees for everything it does in managing the investment process. They also take fees for managing the tenant relationship when renting out the property.

The result is a hands-off investing strategy into real estate for accredited investors. If you don’t have the time to start investing in real estate, let Doorvest do it for you.

Performance

Doorvest has a good track record, with all their past deals netting profits for their clients. The company recently rapidly expanded its offering, and new clients can expect the same excellent results from working with the company.

Doorvest lets investors benefit from capital growth in the property, and monthly rental cash flow, without lifting a finger in the investment process.

How much does it cost?

Typically, if you’re going to have someone manage a tenant relationship for you, the property management company charges between 6% and 8% of the monthly rental. They may also charge fees for tenant sourcing, writing up leases, and other tasks.

However, with Doorvest, you pay 15% on the management fee side of things. For that fee, they guarantee rent for the first 12 months of ownership so you will get rental income every month regardless of whether a resident is paying or not. On the renovation side, Doorvest will cover repair costs for the first 12 months of ownership.

Though the fees may seem high in comparison to property management, Doorvest is the only company offering a genuinely hands-off investor experience.

How to sign up

Visit the company’s official website and start the application process. You’ll have to give them some personal information online so they can verify your accredited investor status.

Pros & cons

Alternatives

There are several alternatives to Doorvest. This fintech primarily gets competition from crowdfunding real estate websites. These sites offer partial ownership in real estate deals, and some of them even work with unaccredited investors.

• CrowdStreet. Offers commercial real estate investment opportunities to new investors who don't have the time or experience to research investment properties. Accredited investors can go all-in on a single deal or choose to spread their risk and portfolio across several investment options for a minimum investment of $25,000. In exchange, they receive regular cash flows from an appreciating asset.
• Fundrise. With a low investment minimum of $500, Fundrise is suitable for even non-accredited investors. However, CrowdStreet's management fees are considerably lower.
• Diversity Fund. This crowdfunding real estate platform offers investors real estate investment opportunities with zero fees and a $500 account minimum.
• Streitwise. This firm offers investors the chance to put money into a high-yielding real estate investment trust. The trust is like an ETF, cobbling together income-producing properties into a business model that pays dividends to investors. Like CrowdStreet, it's also a somewhat illiquid investment with high minimums, but investors get cash flows through dividends.
• RoofStock. Open to non-accredited and accredited investors to invest in crowdfunded real estate deals. RoofStock provides partial "ownership" in an income-producing investment, with cash flows shared according to the specific investment percentage.

Verdict

If you currently have a well-diversified and liquid portfolio and are looking to invest in an appreciating asset with a passive income stream, Doorvest may be right for you. They offer turnkey services for investors without the time to conduct their own research or manage an investment property. Doorvest offers investors the chance to buy a relatively newer single family home into the Houston market, while Doorvest takes care of renovation, tenant management, and property maintenance. The initial 12 month guarantee on rental income and renovations ensures the first year performance.

However, investors should be aware of the key risks including a high management fee structure, the cyclical and relatively illiquid real estate market, and concentration in one geographic region.