Roots has built a presence in the fractional real estate space with its social-impact mission and "Live In It Like You Own It" program, through which renters can earn rewards that may be invested into the fund alongside investors. As of its July 10, 2026 community update, Roots reports a 12.01% trailing-twelve-month return and an 85.30% cumulative total return since July 1, 2021, and its current investment page identifies a 13.13% since-inception compound annual growth rate across a portfolio of 626 properties comprising 761 doors in five markets across four states, with net asset value of approximately $134.29 million. Those headline numbers sit alongside structural features that shape investor outcomes, from a compensation structure that pays the manager on acquisitions, operations and dispositions, to a portfolio concentrated in a small number of markets. Before allocating capital, it helps to understand exactly what you are buying into. This guide breaks down the structure, trade-offs and considerations involved, so you can make an informed decision about whether this platform fits your real estate investing strategy.
Disclaimer: The information provided in this guide is for educational purposes only and does not constitute financial, tax, or legal advice. Always consult with a licensed professional before making any financial or investment decisions.
Key Takeaways
- Roots uses a pooled, blind-pool REIT structure. Investors do not choose which properties their capital purchases. Acquisition, renovation, operating and exit decisions rest with the manager, and member approval is not required to liquidate assets.
- The portfolio is geographically concentrated. Approximately 64.4% of Roots' properties by count sit in Atlanta, GA, and Roots' offering circular discloses limited-region and geographic-concentration risk.
- The fee and related-party structure is disclosed in the circular. The manager may earn a 3% acquisition fee, recurring management compensation that the circular describes in more than one way, and a 3% disposition fee, none of which is expressly conditioned on achieving a minimum investor return.
- Quarterly liquidity operates under defined terms. Ordinary redemptions of units held less than one year are currently processed at 92% of the applicable NAV, an 8% reduction, and the manager may suspend the redemption program at any time, without notice, for any reason or no reason.
- NAV is determined by the manager. Roots calculates NAV internally each quarter using estimates and subjective judgments. Third-party appraisal or valuation-expert input may inform the process, and management makes the final determination, with reported NAV potentially differing from the amount obtainable in a market transaction.
Understanding the 'Fractional' in Fractional Real Estate Investing
The term "fractional real estate" covers multiple distinct structures, and Roots operates differently from platforms that offer direct property selection. Roots functions as a Regulation A Real Estate Investment Trust (REIT) whose offering is described as a blind pool, pooling investor capital into a single fund that the manager then deploys across residential rental properties.
What this means for investors:
- Property selection rests with the manager: You do not choose which properties your capital purchases. The manager makes all acquisition decisions, including property type, location, renovation scope, and purchase price.
- Market allocation is set by the manager: Rather than building a customized portfolio across different cities, investors have capital allocated according to the manager's investment guidelines, currently concentrated in Sun Belt markets.
- Exit timing is determined by the manager: The manager controls all disposition decisions, and member approval is not required to liquidate assets.
This structure differs from fractional ownership models in which investors select specific properties and hold membership interests in a property-specific LLC. The pooled approach may suit investors who prefer a fully delegated experience, while property-level selection allows investors to construct a portfolio aligned with their own risk tolerance and market views.
Convenience and Control
Roots' structure delegates investment decisions to the manager. For some investors, that simplicity is appealing: no individual property analysis is required. Investors who prefer to evaluate assets one at a time, using published underwriting for each property, typically look for a structure that allows selection at the asset level.
Liquidity Considerations: The Secondary Market Factor
Real estate is inherently less liquid than stocks or bonds, and liquidity is worth planning around in any structure. Roots' redemption terms set out how and when capital can come back out.
Roots' redemption terms:
- 8% NAV reduction on units held under one year: Roots' help center and its May 2026 offering circular specify that ordinary redemptions of units held for less than one year are processed at 92% of the applicable NAV, an 8% reduction.
- Quarterly redemption windows with caps described in more than one way: The detailed redemption-plan provision states that Roots intends to limit redemptions to 5% of the weighted-average units outstanding during the prior calendar year, generally 1.25% per quarter with unused capacity carried forward. The summary and FAQ portions of the same May 2026 circular instead describe up to 5% of issued and outstanding units being redeemable each quarter. The limit is expressed in units, not "fund value."
- Pro-rata processing and no automatic queue: If Roots cannot honor a request, the investor may either withdraw it or request consideration in a future quarter. Carry-forward is not automatic and remains subject to redemption limitations and available funds.
- $100,000 maximum per quarter per investor: Even after the first year, larger positions are redeemed over multiple periods.
- Discretionary suspension: Under Roots' contractual terms, the manager may suspend the redemption program at any time, without notice, for any reason or no reason. This authority is not limited to periods of market stress.
The 8% first-year reduction is worth factoring into holding-period planning. Investors can request redemption during the first year, and any honored ordinary redemption is currently subject to that 8% NAV reduction, available cash, applicable caps and manager discretion. Measured against the 12.01% trailing-twelve-month return reported for July 10, 2025 through July 10, 2026, an 8% reduction is roughly equivalent to eight months of return at that simple annual pace. That is a rough mathematical comparison rather than a calculation of any individual investor's realized outcome.
For investors prioritizing exit optionality, platforms developing secondary marketplace features may offer additional flexibility. mogul, for example, says a secondary trading market is coming soon, through which investors would have the option to sell shares at fair market value calculated monthly using third-party appraisal-level data.
Evaluating Projected vs. Actual Returns
Roots' current investment page reports a 13.13% since-inception compound annual growth rate, and its July 10, 2026 update reports a 12.01% trailing-twelve-month return alongside an 85.30% cumulative total return since July 1, 2021. Those figures are strong, and context matters, because they are distinct metrics that should not be used interchangeably.
Key return considerations:
- Historical results versus forward guidance: Roots targets annual returns of 12% to 15%, below some of its earlier reported annualized results. Roots does not, in its published materials, expressly attribute that target to an expectation that 2021 to 2024 Sun Belt conditions will not recur.
- Fund-level rather than asset-level reporting: Because Roots reports fund-level rather than property-attributed returns publicly, investors are not able to readily determine how much individual acquisitions, revaluations or dispositions contributed to total performance. Roots' May 2026 circular reports no disposition fees in either 2024 or 2025, though that does not by itself establish that no properties were disposed of.
- Different measurement conventions tell different stories: A cumulative total return, a compound annual growth rate and a trailing-twelve-month return answer different questions. Compare like with like before drawing conclusions.
Understanding Roots' Reported Return Metrics
Roots' published figures are described as cumulative total return, trailing-twelve-month return and compound annual growth rate. They are not identified as internal rate of return. That distinction matters, because internal rate of return (IRR) is a money-weighted return measure that reflects the timing and magnitude of cash inflows and outflows. It differs from a time-weighted return, which measures compounded investment performance while neutralizing the effect of external cash flows.
IRR is also sensitive to timing of contributions and distributions, and certain conventional interpretations imply reinvestment at the calculated rate. Wherever an IRR is quoted by any sponsor, it is best evaluated alongside cumulative return, cash yield, equity multiple and the underlying valuation methodology rather than in isolation. Looking at both headline return metrics and actual cash distributions received gives a fuller picture of performance. For a side-by-side view of the two most common measures, see IRR vs ROI.
Real estate markets fluctuate, vacancies occur, and economic conditions change. The question is not only how a platform has historically performed, but how the structure supports investors through different market conditions.
mogul addresses this with a member protection feature that pooled REIT structures do not typically offer: up to $10,000 in loss coverage for new members in their first year, funded from mogul's own balance sheet.
Geographic Concentration and Diversification
Roots' 626-property portfolio is concentrated in a single primary market. As of July 10, 2026, the reported counts are:
| Market | Properties | Share of portfolio by property count |
|---|---|---|
| Atlanta, GA | 403 | approximately 64.4% |
| Augusta, GA | 87 | approximately 13.9% |
| Nashville, TN | 80 | approximately 12.8% |
| Oklahoma City, OK | 44 | approximately 7.0% |
| Charlotte, NC | 12 | approximately 1.9% |
An important measurement caveat applies. These percentages are calculated from the number of properties, not from NAV, equity, acquisition cost, debt exposure or fair market value. Roots does not publicly identify Atlanta's corresponding share of portfolio NAV in the sources reviewed, so the property count should not be treated as an equivalent measure of invested capital or portfolio value.
Concentration is disclosed in the offering documents. Roots' offering circular notes that investing in a limited number of regions creates geographic-concentration risk, including exposure to local economic downturns and natural disasters. All five current markets are commonly characterized as Sun Belt markets, though "Sun Belt" has no single legally controlling boundary.
Why geographic diversification matters:
- Economic downturns do not affect all markets equally
- Local employment shifts, such as major employer closures or industry declines, create concentrated vacancy risk
- Regional regulatory changes can impact entire portfolios
- Natural disasters such as hurricanes and floods affect specific geographies
- Location drives long-run rent and value performance within and across markets
For comparison, platforms offering individual property selection allow investors to build diversified portfolios across multiple markets, property types, and investment strategies. This approach reduces correlation risk and adds protection against localized downturns.
Operating Costs and Fee Structure: Understanding the Full Cost of Investment
Roots' May 2026 offering circular discloses compensation to the manager arising from acquisitions, operations and dispositions, none of which is expressly conditioned on achieving a minimum investor return. Two points deserve particular attention: the recurring management fee is described in more than one way within the same document, and the full schedule of fees and charges is broader than a short four-line summary conveys.
Investor-level and manager compensation as currently disclosed:
| Fee or charge | Category | Rate as disclosed | Contingent or mandatory | When applied |
|---|---|---|---|---|
| Acquisition fee | Manager compensation | 3%, which the manager may receive | Contingent | On property acquisitions. Waived in 2024; $68,520 paid in 2025 |
| Recurring management fee | Manager compensation | Described three different ways in the same circular: 10% of monthly company revenue; 10% of monthly rents collected; and 3% to 4% of monthly company revenue | Recurring | Monthly, on revenue or rents depending on the section consulted |
| Disposition fee | Manager compensation | 3%, which the manager may receive | Contingent | On property sales. No disposition fees reported for 2024 or 2025 |
| Leasing fees | Manager compensation | $500 for each new lease; $250 for a renewal | Contingent on lease activity | Per new lease or renewal |
| Manager-performed or subcontracted work | Manager compensation | Market rates, and the manager may perform or subcontract the work at a profit | Contingent | As performed |
| Sponsor built-in gain on curated properties | Sponsor gain | Sale price to the REIT minus the sponsor's all-in cost | Contingent on related-party transfers | Approximately $1.49 million in 2024 and $9.27 million in 2025 |
| Maintenance and repair reserve | Operating expense | Fixed monthly reserve averaging approximately $180 per property | Recurring | Monthly. Approximately $552,646 reported in 2025 |
| Capital improvement and turnover costs | Operating expense | Actual cost, payable by the REIT | Contingent on condition and turnover | As incurred. Approximately $876,615 reported in 2025 |
| Expense reimbursements | Operating expense | Specified organization, offering and operating expenses | Recurring | As incurred |
| Investor transaction fee | Investor-level fee | $5 one-time / $3 recurring, currently waived for Roots+ participants | Contingent on Roots+ enrollment | Per investment |
Two clarifications are useful when reading this table. First, the circular's descriptions of the recurring management fee differ by section: the offering summary states a monthly 10% fee on all company revenue, the related-party section states a monthly 10% fee on rents collected, and the management-compensation table states a monthly 3% to 4% fee on all company revenue. The reported dollar amounts for 2024 and 2025 are the same in the latter two sections, while the stated rate and base differ. Second, acquisition and disposition fees represent contractual eligibility rather than automatic charges, which is why the amounts actually paid differ from the headline rates.
The "built-in gain" provision: The sponsor identifies, acquires and renovates "curated" properties before selling them to the REIT. Under the disclosed policy, the manager engages a certified real estate appraiser, and the property may then be sold to the REIT at or below the appraised fair market value, potentially allowing the sponsor to realize a built-in gain. In the circular's own illustration, a $100,000 property with a $50,000 renovation and a $200,000 appraisal could produce a sponsor gain of up to $50,000, but only if the property is transferred at the full $200,000 appraised value. A lower transfer price produces a lower gain. Roots reports built-in gains of approximately $1.49 million in 2024 and $9.27 million in 2025 on sponsor-to-REIT property sales.
These fees and related-party transactions are disclosed as potential conflicts, because compensation can arise from acquisitions, operations and dispositions independently of total investor returns. Roots' circular acknowledges conflicts of interest among the REIT, the manager and their affiliates. It is worth stating precisely what the evidence does and does not show: the disclosed structure creates incentive-conflict risk, the available evidence does not establish that management has in fact prioritized transaction volume over investor outcomes, and the recurring management fee is based on revenue or rents rather than transaction count.
For balance, Roots' circular states that its sponsor and the manager's management team have invested "side-by-side" with members. The circular does not quantify the amount invested.
Platforms in which management co-invests in each offering create a degree of economic alignment. mogul states that it invests or co-invests in every property offered on its platform, which places mogul capital alongside investor capital in each deal.
Tax Implications of REIT Structure vs. Property-Specific LLC Interests
Roots' REIT structure has specific tax consequences that differ from holding a membership interest in a property-specific LLC taxed as a partnership.
REIT tax treatment:
- Distributions may be characterized as ordinary REIT dividends, capital-gain distributions, or return of capital. It is not accurate to say every distributed dollar is ordinary income.
- Ordinary REIT dividends generally do not receive the preferential qualified-dividend rate, although eligible taxpayers may generally deduct up to 20% of qualified REIT dividends under Section 199A.
- Capital-gain distributions are generally taxed as long-term capital gains, and return of capital generally reduces tax basis rather than being immediately taxable, until applicable basis limitations are reached.
- Investors do not directly claim depreciation from each underlying property.
- Individual investors generally cannot use a Section 1031 exchange to exchange REIT units, because Section 1031 is limited to qualifying real property and does not apply to stocks, securities or similar interests. Roots itself states it intends to use 1031 exchanges where possible at the fund level when disposing of qualifying underlying real estate. For background on the mechanics, see 1031 exchange basics.
- Roots is taxed under the REIT regime, having elected REIT taxation beginning with the tax year ended December 31, 2022, rather than as a conventional partnership pass-through. Investors generally receive Form 1099-DIV treatment rather than direct allocations of each property's income, depreciation and losses.
Property-specific LLC interests taxed as a partnership:
- An LLC taxed as a partnership may allocate depreciation and other tax items to investors on a Schedule K-1.
- Those allocations may shelter current rental income, subject to the entity's tax classification, the operating agreement and allocation methodology, the investor's tax basis, at-risk limits, the activity loss limitations described in IRS Publication 925, business-interest limits, and depreciation recapture on disposition.
- Depreciation can defer or shelter current taxable income, and it also reduces basis and may increase later taxable gain.
- Broader tax considerations may more closely resemble those of direct real estate ownership, though results always depend on individual circumstances.
The tax difference can matter over multi-year hold periods. The ordinary-income portion of a REIT distribution may be subject to an investor's marginal federal rate, which can reach 37% in 2026, although the Section 199A deduction may reduce taxable qualified REIT-dividend income for eligible taxpayers, and state taxes, net investment income tax and individual circumstances may change the result. None of this is tax advice; consult a qualified tax professional about your own situation.
Why mogul Stands Out for Fractional Real Estate Investors
The structural features of a blind-pool REIT highlight why property-specific fractional ownership appeals to investors seeking selection control, asset-level underwriting visibility, and co-invested management. mogul is a fractional real estate platform club founded by former Goldman Sachs executives, built for investors who want to choose the assets they own.
mogul's structural advantages:
- Individual property selection: Browse available properties, review detailed underwriting that includes investment rationale, property and market overviews, projected returns, capital structure and legal documents, and choose which assets fit your portfolio strategy rather than being allocated to a pooled fund.
- Property-specific LLC interests: mogul creates a property-owning LLC, or "PropCo," for each property. Investors purchase membership interests in an investment-club LLC tied to an identifiable property, rather than receiving individually deeded title to the underlying real estate. Investors may receive proportional net rental distributions monthly once the property is operational, retain voting rights on major decisions, and may receive K-1 allocations that include depreciation, depending on the offering and their individual tax circumstances.
- Goldman Sachs background: Founded by former Goldman Sachs executives Alex Blackwood and Joey Gumataotao, with $10 billion in combined deal experience. Joey built Goldman Sachs' single-family rental platform from $0 to over $1 billion of AUM in under 12 months.
- Selective diligence and co-investment: mogul states that less than 1% of reviewed properties pass its diligence process, and that it co-invests in every property offered. Members access professionally vetted and managed properties, with mogul capital alongside their own.
- Member protection: mogul covers up to $10,000 in losses for new members in their first year, funded from mogul's own balance sheet, a form of downside protection that pooled REIT structures do not typically provide.
- Reported performance: mogul reports an 18.8% average annual return (IRR) as of April 2025, the highest average IRR of platform assets among the fractional platforms it tracks, and its current About page reports a record monthly yield of 2.6% as of June 1, 2026.
- Property-level governance: Major decisions are subject to investor voting under supermajority rules, while licensed property managers handle day-to-day operations, keeping the experience headache-free for members.
mogul's property-specific structure offers exposure to appreciation, monthly income from net rental distributions, tax advantages, and the benefits of leverage where a particular offering uses a mortgage. Leverage is accretive when asset returns exceed financing costs and other incremental expenses. Investors weighing the case for real estate can evaluate each opportunity on its own underwriting. What the structure offers, relative to a blind pool, is asset-level selection and underwriting visibility on every deal.
mogul's investment property calculator is free and analyzes any U.S. address, including properties not currently listed for sale. It lets users adjust hold periods, financing, leverage, interest rates and rental strategy, presents base, bear and bull scenarios, and estimates rental income, ROI, IRR, MOIC, cash-on-cash yield, appreciation, comparable-property information, and levered versus unlevered returns, all built on institutional-grade data. Investors focused on short-term rental strategies can run the same analysis through the Airbnb calculator.
Disclaimer: The information provided in this guide is for educational purposes only and does not constitute financial, tax, or legal advice. Always consult with a licensed professional before making any financial or investment decisions.
Frequently Asked Questions
What happens if Roots' quarterly redemption requests exceed the applicable cap?
When redemption requests exceed the applicable limit, Roots may process them pro rata, meaning investors receive only a partial redemption proportional to total requests. Roots' May 2026 offering circular describes the cap in more than one way: the detailed redemption-plan language states a 5% annual limit on weighted-average units outstanding, generally 1.25% per quarter with unused capacity carried forward, while the summary and FAQ sections describe a 5% quarterly cap on issued and outstanding units. An unfulfilled balance is not automatically queued. An investor whose request is not honored may withdraw it or request that it be considered in a future quarter, subject to redemption limitations and available funds. The manager may also suspend the program entirely at any time, without notice, for any reason or no reason.
How does Roots' "Live In It Like You Own It" program actually work?
Roots' renter program allows renters in portfolio properties to earn rewards for actions such as paying rent on time, maintaining the home and renewing their lease. Those rewards may be invested into Roots REIT units. This is an important distinction: participating renters acquire an investment interest in the fund, not deeded ownership equity in the individual home they occupy. As of its July 2026 update, Roots reports that renters have saved and invested $1,820,881.26, which its impact page rounds to more than $1.8 million. That figure is issuer-reported.
Can I transfer Roots units to another investor privately?
Roots units are not listed on any exchange and there is no current secondary trading market. Roots' May 2026 offering circular states that units are generally freely transferable, subject to securities laws, REIT ownership restrictions, the operating agreement and required documentation, and further states that Roots cannot reject a transfer when all applicable requirements are met. Transferability and market liquidity are different concepts. Because there is no exchange or active secondary market, the quarterly redemption program will likely be the most practical exit route for many investors, while compliant private transfers may be permitted.
What disclosures does Roots provide to investors about individual property performance?
As a Tier 2 Regulation A issuer, Roots files annual and semiannual reports with the SEC, and its annual financial statements are audited. Those public filings are principally consolidated and portfolio-level and do not provide a comprehensive property-by-property return-attribution schedule. Roots says additional property information and an interactive portfolio map are available through its investor portal. SEC qualification of a Regulation A offering does not constitute SEC approval of the investment's merits or of the accuracy of the offering circular.
How does Roots determine property valuations?
Roots calculates NAV quarterly through an internal process using estimated property values and other balance-sheet components. Third-party appraisal reports or valuation-expert input may inform those estimates, and management makes the final quarterly NAV determination rather than the independent expert. Related-party curated-property purchases separately require a third-party certified appraisal under the disclosed policy. Roots notes that reported NAV involves estimates, assumptions and subjective judgments and may differ from exchange value, liquidation value or the amount obtainable in a market transaction, in either direction. The accurate observation here is structural rather than conclusive: related-party property transfers combined with a manager-determined NAV mean valuations are estimate-based rather than transaction-tested.