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It is reported that Roofstock, a digital real estate platform, has cut 27% of its workforce again. Five months ago, it cut 20% of its workforce, aiming to adjust its scale in an effort to reduce its money burning rate and ensure that it has sufficient capital before the market finally shifts.

Digital real estate platform Roofstock layoffs again 27%

1. Introduction
2. Understanding Roofstock’s business model
3. Why Roofstock has been cutting workforce again?
4. Industry trends affecting Roofstock’s business
5. Concluding thoughts
6. FAQs

Roofstock Sheds 27% of Its Workforce Again – Why?

Roofstock, a leading digital real estate platform, has once again slashed its workforce by 27%, the second time in just a matter of months after it laid off 20% of its staff last year. Roofstock had to make these difficult but necessary decisions in a bid to remain efficient in their business and ensure they have enough capital to keep the business running successfully. Roofstock’s employees learned about the decision in a widely circulated email sent by the co-founder and CEO, Gary Beasley, in which he thanked the affected employees for their dedication and work done at Roofstock.

Understanding Roofstock’s business model

Roofstock is a modern real estate platform that specializes in direct purchasing of rental properties. The platform was launched in 2015 with the aim of disrupting the traditional method of buying and selling rental properties by offering investors a way to buy rental properties online, which are listed by sellers from across the United States.
Since then, Roofstock has continuously expanded, and the company now has a presence in all 50 states, with properties listed on the platform varying from single tenant homes to multi-family units. The platform is very user-friendly and provides all the necessary information that potential buyers need to make informed decisions. Roofstock’s modern approach has made it easier for investors to buy and sell rental properties through single click transactions, saving them huge amounts of time and money.

Why Roofstock has been cutting workforce again?

Roofstock just completed a round of funding where it raised $50 million in investment. However, in the wake of the COVID-19 pandemic and subsequent economic setbacks, maintaining liquidity has become critical for all businesses, including Roofstock. The company’s decision to downsize further has seen it cut about 53 employees from various departments, their San Francisco office being the most affected. This is a further step in reducing the company’s expenses to sustain and ensure the company is well positioned for long-term growth.

Industry trends affecting Roofstock’s business

The outbreak of COVID-19 has posed numerous challenges for businesses in various industries. Unfortunately, the real estate industry is no exception, and this has had a severe impact on Roofstock’s operations which has forced them to downsize to remain profitable. The real estate industry generally runs on low profit margins and relies mainly on commissions, which have fallen drastically due to the lockdowns and reduced mobility. With fewer people buying, selling or investing in real estate, platforms like Roofstock have been forced to offload employees in the wake of the unprecedented economic downturn.
Another trend that has affected Roofstock’s business is shifting industry preferences. The real estate industry is facing a significant shift in customer preferences from large rental investments to smaller properties. Unfortunately, Roofstock’s model is geared toward renters looking for large rental investments rather than smaller properties. Additionally, in the rental investment space, significant purchasing activity has slowed down, especially in physically located purchases. Given these industry trends, downsizing workforce is becoming a norm in the industry, with businesses seeking to streamline their operations and ensure efficiency.

Concluding thoughts

The real estate market is going through a challenging phase, and companies in this space, like Roofstock, are finding it hard to adjust their business models. Despite the current struggles, Roofstock’s futuristic approach to real estate has been a shining light in an industry long overdue for technological interventions. The recent layoffs have been very unfortunate, but the company’s top leadership and investors are optimistic that they will bounce back and continue to offer excellent real estate solutions to their loyal clients.

FAQs

1. Will Roofstock cut employees again?
There has been no official communication from the Roofstock leadership team that they will undertake a further downsizing of its workforce. However, it is important to note that companies in the real estate industry are still facing challenges due to the pandemic, and any further economic downturns might force them to undertake further cost-cutting measures.
2. How stable is Roofstock’s business model?
Roofstock’s business model is sound, appreciating that the traditional property market limits investment choices for people interested in making rental investments. Roofstock has helped in democratizing investment in the rental sector, but its financial stability can be affected by external economic factors.
3. How will downsizing affect Roofstock’s customers?
It is unlikely that Roofstock’s customers will see any immediate significant changes in the company’s operations. However, this might affect the level of service that they are used to, given that the reduced workforce might lead to a lower level of customer service support.
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