What is Doorvest and how does it work?
Doorvest is an online platform that streamlines real estate investment by handling the entire process, from finding and buying properties to managing them as rental homes. It focuses on single-family homes, which are typically 3 bedrooms, 2 bathrooms, and have a 2 car garage, due to their potential for long-term value appreciation and attractiveness to stable tenants.
The company selects cities with stable real estate markets expected to appreciate in value, such as Houston, Dallas, and Atlanta, among others. Doorvest's model is built on leveraging its network to find and renovate properties, manage them, and deal with tenants on behalf of the investor. It aims to reduce the time, cost, and risk usually involved in real estate investment.
Doorvest promises to manage financial aspects, such as income and expenses, and provides tools to help speed up the property search process. It guarantees that the homes are renovated and have tenants from the start, which theoretically should provide immediate rental income. The company also offers products that it claims can increase monthly income from these investments.
In essence, Doorvest attempts to offer a way for individuals to invest in real estate without the need to be actively involved in the day-to-day management of properties, making it a potentially passive investment option.
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How risky is Doorvest?
3/5— Moderate Risk
Investing with Doorvest, like any real estate investment, carries inherent risks that can include market fluctuations, changes in economic conditions, and the specific risks associated with individual properties.
While Doorvest aims to streamline the investment process and manage properties effectively, investors should be aware that the real estate market is subject to cycles of boom and bust, which could affect the value of their investments. Additionally, the platform's operational model and the specific strategies it employs to mitigate risks have not been detailed, implying that investors should conduct their own due diligence and consider their financial situation and risk tolerance before investing.
It's also important for potential investors to understand the legal and financial mechanisms Doorvest uses to protect investments and how these might perform under various stress scenarios, including economic downturns or unexpected market changes.
How liquid is Doorvest?
1/5— Minimum Liquidity
Doorvest offers a way for investors to achieve liquidity by allowing them to sell their homes back to the platform. Interested sellers need to contact a client partner for more details on this process.
However, the platform does not provide additional specifics on how this process works, including any potential fees, timelines, or conditions that must be met for the sale to occur.
How volatile is Doorvest?
3/5— Moderate Volatility
Real estate assets on Doorvest are subject to market volatility, meaning property valuations can fluctuate significantly due to factors like economic conditions, changes in interest rates, and local market trends. These fluctuations can impact the value of investments on the platform, especially for those looking for short-term gains, as adverse market conditions could lead to a decrease in investment value.
What is the average rate of return for Doorvest?
18 %— High Return
The reported average annual return on investment through Doorvest is 18%. This figure represents the typical yearly profit percentage investors might expect from their real estate investments on the platform, factoring in elements such as rent income, property appreciation, and the leveraging of mortgage financing.
Investors can expect varying returns based on the initial investment, with projected values for an average rental home priced at $225,000 showing returns of 19% ($10,792) in 1 year, 108% ($60,835) in 5 years, and 275% ($154,951) in 10 years.
These projections are based on a 25% down payment, a 30-year fixed mortgage at a 7.00% interest rate, and assume an annual home appreciation of 3%.
However, actual returns will vary based on factors such as rent, property tax, insurance, and maintenance costs, as well as market conditions like property tax rates and home appreciation rates.
It's important to note that past performance does not guarantee future results, and investors should consider these projections as potential outcomes rather than assured returns.
What is the minimum investment amount for Doorvest?
The minimum investment required on the Doorvest platform is a 25% down payment on the purchase price of a rental home.
Given that the average rental home on the platform is priced at $225,000, this translates to an average down payment of $56,250.
However, the purchase prices of homes on Doorvest range from $160,000 to $350,000, indicating that the minimum investment could vary based on the specific property being purchased.
What is the investment time horizon for Doorvest?
Investors engaging with Doorvest should anticipate a time horizon typically ranging from several years to potentially decades, as the model is built on the appreciation of real estate values over time and the accumulation of rental income.
This investment framework is structured with the understanding that real estate is a long-term asset class, which may not be suitable for those seeking short-term gains or immediate liquidity.
Who can invest in Doorvest?
To invest with Doorvest, you primarily need to be in the U.S. or have arrangements to sign documents in the U.S., such as at a U.S. Embassy, due to the requirement to physically sign and complete the purchase documentation.
This process is crucial to avoid delays in closing, especially as embassy appointments can be scarce. International buyers may face higher mortgage rates, potentially leading to a net loss, making an all-cash purchase a more viable option unless they have income denominated in USD.
Is Doorvest regulated or audited?
Doorvest adheres to the Texas Real Estate Commission (TREC) consumer protection notice requirements, which is a regulatory measure designed to ensure transparency and fairness in real estate transactions. This notice provides consumers with information about their rights and the duties of real estate professionals in Texas.
While this indicates Doorvest's compliance with specific state-level regulatory requirements, the platform does not provide detailed information about audits or broader financial regulations it might be subject to. Unlike some investment platforms regulated by federal entities like the SEC, Doorvest focuses on the real estate transaction aspect, and the mention of the TREC notice suggests compliance with real estate industry standards rather than securities regulations.
Is Doorvest insured?
Doorvest ensures that each rental home investment is safeguarded through homeowner's insurance. This coverage is comprehensive, extending from the physical structure of the rental property to potentially covering personal belongings within the property and medical bills in the event of an injury occurring on the premises.
Maintaining an active homeowner's insurance policy is not only a protective measure but also a requirement by mortgage lenders to secure the investment against various forms of damage. However, it is important for investors to understand the specifics of their insurance coverage and any limitations it might have, as certain scenarios or types of damage may not be covered.
Does Doorvest distribute payouts?
Doorvest provides investors with rental income returns, which can be seen as the equivalent of dividends in real estate investment. This income is primarily derived from the rent collected on the properties managed by Doorvest.
To enhance the stability of these returns, Doorvest offers a Rent Guarantee, which includes vacancy and non-payment protection for the first three months post-closing. If the property is rented for less than the guaranteed amount, Doorvest will cover the difference for up to 12 months, provided rent is being collected. Investors also have the option to extend this coverage for a full year when reserving a home.
Additionally, Doorvest offers a Renovation Guarantee, covering repair costs for the first 12 months of ownership, which can help mitigate any unexpected expenses that could impact the rental income. While these guarantees provide a layer of protection against some of the risks associated with property rental, the actual returns to investors are directly linked to the performance of the rental property, including factors such as occupancy rates, rental prices, and maintenance costs.
What are the annual fees for Doorvest?
Doorvest generates revenue through two primary channels and maintains a transparent fee structure for investors:
- Monthly Rent Percentage: Doorvest charges a recurring fee, which is a percentage of the monthly rent collected from the rental properties. This fee is comprehensive and covers the full scope of property management services, including but not limited to maintenance and resident placement. Importantly, Doorvest emphasizes the absence of hidden fees, maintenance markups, or additional charges beyond this percentage, aiming for clarity and straightforwardness in its fee structure.
- Home Sales Margin: In the process of selling homes, Doorvest earns a margin. However, it is important to note that homes are sold at fair market value, ensuring that the pricing is transparent and fair for both the buying and selling parties. This approach allows Doorvest to align its interests with those of the investors by focusing on the appreciation of property value over time.
How do I handle my investments in Doorvest?
Through Doorvest’s Investor Portal, investors have the capability to manage and monitor their investments efficiently.
This online platform provides access to essential documents, such as tax documentation, alongside regular updates on rental income and property expenses. It offers detailed insights into the rental income received, the costs associated with the property, the total rent collected, and the overall value of the investor’s portfolio.
This tool enables investors to maintain an overview of their investment, facilitating informed decision-making and strategic planning for their real estate assets.
How does Doorvest get taxed?
Doorvest simplifies the tax filing process for investors by supplying all essential tax documentation needed for homeowners to acc
urately report their investment income and expenses during tax season. This support ensures investors have the necessary information at hand to comply with tax obligations related to their real estate investments.
How many investors are on Doorvest?
As of January 2024, Doorvest has not disclosed the number of users on its platform.
It manages an inventory of 27 homes, with property prices ranging from $160,000 to $350,000 and requires a 25% down payment. The projected returns over ten years range from 62% to 767%.
Who is the CEO of Doorvest?
Andrew Luong is the Co-founder and CEO of Doorvest. He has spent the last eight years combining his experience in passive real estate investment and working in the tech industry. His journey through real estate investment has contributed significantly to his personal wealth and financial independence, inspiring him to establish Doorvest with the aim of making real estate ownership accessible to a wider audience.
Justin Kasad is the Co-founder and CTO of Doorvest. He is a full stack software developer and entrepreneur with a background in creating websites for medium-sized businesses and has hands-on experience in taking startups from the initial idea and MVP stage to market distribution and marketing of a finished product.