I'm Donny. I'm a world traveler, investor, entrepreneur, and online marketing aficionado who has a big appetite to compete and disrupt big markets. I thrive on being able to create things that impact change, difficult challenges, and being able to add value in negative situations.
Groundfloor operates as a crowdfunding real estate lending platform and savings account that pools investor capital to provide short-term residential renovation loans, with individual investors making money on loan interest payments.
- Low minimum investment
- Opportunity for high returns
- Short-term with high-yields
- No investor fees
- Debt investments come with risk
- Lack of liquidity
Is your bank account craving growth, but lacking the capital that most real estate investment options require to start?
Groundfloor is a crowdfunding platform offering everyday people the opportunity to invest in real estate projects, with average returns of 10.5 percent.
Real estate crowdfunding is a relatively new alternative investment option, and crowdfunding platforms have lower minimum investment requirements than traditional real estate investment trusts (REITs).
Before you invest in a platform such as Groundfloor, you will want to consider the platform’s functionality, risk level, dividend structure and minimum investment terms.
Here is a comprehensive breakdown of the pros and cons of Groundfloor’s investment and savings services.
What is Groundfloor?
With the 2008 housing crisis putting a new perspective on real estate debt, Brian Dally and Nick Bhargava founded Groundfloor in 2013 with the idea that non-accredited investors should be able to build wealth through debt investments.
In this regard, Groundfloor offers the lowest minimum investment terms of all the real estate crowdfunding platforms, in addition to a savings app with returns backed by real estate projects.
Investing in real estate debt instead of equity offers lower risk. Groundfloor exclusively deals with short-term real estate debt investment.
Investing short term puts the average investor obligation at just six to twelve months. The core values of the Groundfloor platform are evident in its partnering with the affordable housing-oriented entity PadSplit to actively reduce metropolitan gentrification.
The main focus of this initiative is the founder’s home city of Atlanta, Georgia.
How Groundfloor Works
Borrowers receive short-term financing from Groundfloor to flip houses and other residential real estate ventures.
The expert Groundfloor analysis team exercises meticulous due diligence by exhaustively evaluating each borrower and real estate investment project to ensure its security and profitability.
A risk analysis algorithm assigns a grade to each loan that transparently shows the individual risk level. Grade A loans carry lower risk and lower returns; at the other end of the spectrum, Grade G loans bring higher risk and higher returns.
As an individual investor, Groundfloor allows you to choose investments that suit your risk tolerance. What you are actually investing in is a Limited Recourse Obligation (LRO), which is a SEC-qualified debt security in which Groundfloor offers fractional investments.
Once you decide which real estate projects you want to invest in and the investment amount, the funds feed into the parallel LRO.
Some LROs are independent, and some are series LROs, meaning there are varying lien positions corresponding with the loan.
The profile of the LRO correlating with each real estate investment option is available on the Groundfloor platform on the Loan Detail page.
Groundfloor loans offer risk diversification for individual investors, and Project Specific Risk Factors are available on the investor dashboard.
After borrowers finish paying off each Groundfloor loan, investors receive payouts from the interest payments, which they can immediately withdraw or reinvest into new real estate loans manually or through the auto-investing program.
Groundfloor offers extensive automation services that allow individual investors to set up recurring withdrawals, auto investing that fits their risk tolerance and the option to open a Groundfloor self-directed Individual Retirement Account with dividend funds.
One of the areas where Groundfloor distinguishes itself from its lender competitors is by offering a loan repayment structure with deferment.
Deferred payment structures allow borrowers to put off interest payments until the financing term ends, which means Groundfloor investors receive returns in a lump sum.
Groundfloor’s investment security lies in its exclusive debt investment system. Other real estate crowdfunding platforms, such as Fundrise, operate around equity investment, which carries much more risk.
Another notable difference between this platform and others of its kind is the Groundfloor team’s regular reporting on the investment health of each real estate loan given to its investors.
The company’s main values center on empowering investors, of which keeping them well informed is a key component. Most REITs deal in commercial real estate and offer long-term investments.
Groundfloor operates exclusively in short-term investment periods so that individual investors can cash out in less than twelve months or reinvest funds in future residential real estate projects.
Above, I have outlined some of the unique services Groundfloor provides. Here is a closer look at these services.
Short-term High-yield Investments
Groundfloor makes investment portfolio diversification accessible by allowing anyone to invest in real estate projects with an extremely low minimum investment of $10.
With the loan terms coming in at twelve months or less, the payoff comes much quicker than traditional REIT investing.
The high-yield dividends come in after that twelve-month-or-less period, with an average of 10.5 percent return.
Traditional REITs yield an average return of 10.6 percent over the course of 15 years. Some benefits of short-term investing include flexibility, risk balance and diversification.
The money you invest with Groundfloor frees up quickly, allowing you to move from one investment to the other with ease.
If one investment doesn’t meet your performance expectations, you can quickly place those funds into a different project that might yield better returns.
You can also shift your investment strategy into different markets or project types (such as switching from single-family to multifamily homes) to ensure investment portfolio diversification.
Stairs Saving App
Groundfloor provides an application-based savings account that works within its real estate securities-backed debt investment system.
This makes profiting from real estate investment even more accessible than the full investment program.
There is a one-dollar minimum to open an account with the Stairs Saving App, with zero fees and the ability to withdraw funds at any time.
The yearly interest rate of return is four to six percent, which is 80 times that of traditional banks. The Stairs Saving App is an excellent option for people who want to keep their risk tolerance as low as possible, since it removes the factor of waiting for loan repayment to see returns.
The money in the savings account collects interest daily, and payouts happen every five days.
Private Money Lending
The Groundfloor platform provides private money lending services to borrowers, which means it is a nonbank entity that gives real estate loans to entrepreneurs.
Groundfloor offers fix-to-rent and fix-to-flip financing options. Fix-to-rent loans apply to both single-family and small multifamily properties, where a flipper needs to finance the purchase and renovation of a home to maintain it as a part of their rental portfolio.
Groundfloor’s fix-to-rent financing is designed to aid flippers gain maximum rental leverage. Fix-to-flip loans allow borrowers to finance up to 100 percent of a property purchase price and renovation, from purely cosmetic updates to total reconstruction, to flip for profit.
The deferred repayment structure is a critical advantage for borrowers. Property flippers also benefit from a high percentage of after-repair value for loan amounts and terms.
Borrower experience also influences loan terms.
Groundfloor Fees & Investment Minimum
|Account Fees||No Fees for Investors|
Who Should Use Groundfloor?
As a crowdfunding alternative investment option, the Groundfloor platform works best for individual investors that fit within certain circumstances.
It is an excellent investment option for someone with less initial capital. It is far less risky to make real estate debt investments than it is to invest in equity, or physical property, which makes Groundfloor the perfect investment option for beginners or those with a low-risk tolerance.
As a Groundfloor investor, you can expect to benefit from short-term, high-yield investments in various real estate projects, a comprehensive suite of automation and data-centralizing technical services, and personal control over your wealth-building strategy.
As a borrower, the Groundfloor platform is best for property flippers with a credit score of 640 or higher who can clear a five-year experience look-back and have a minimum of $75,000 to finance their real estate project.
How Does Groundfloor Compare?
| || || |
None for investors
.85% to 1%
0.25% - 1.0% setup fee
Getting Started with Groundfloor
- Create a free account. Select whether you are investing as an individual investor or a business, enter your location and disclose whether you are an accredited investor.
- Fund your account. Connect a bank account to the Groundfloor platform to fund your first investment.
- Choose to invest manually or automatically. You can set your risk tolerance and allow the system to choose investments for you or go through them manually.
- Start getting returns on your investments. Watch your bank account grow as each loan term closes.
I have been investing in Groundfloor for more than seven years. They keep my informed of what’s going on with the properties where I have my money and are always coming up with new products. This has been a simple way for me to invest in small amounts and grow my money gradually. My returns have been so much higher than any bank could offer.Cecilia, Verified Trustpilot user
I am an earlier adopter. I am not a financial advisor. I am an investor. As an early early adopter and investor, I lean into risk. Sometimes the risk pays off and other times, not so much. With Ground Floor, I can say my gut and due diligence has literally paid. Very glad to be invested with Ground Floor.Ken, Verified Trustpilot user
Is Groundfloor a Good Investment?
Real estate investing used to be inaccessible to non-accredited investors. With securities-backed debt investments in heavily vetted, short-term real estate projects, investing with Groundfloor is a low-risk investment option that allows anyone the opportunity to build wealth.
Crowdfunding platforms require far less capital than traditional REITs, while also providing high-yield dividends.
Groundfloor has unique aspects to it that provide additional benefits, such as an industry-low minimum investment requirement.
More advantages to choosing Groundfloor as your crowdfunding real estate investment platform are lump-sum return payments — due to a deferred repayment structure — and a wide variety of services such as a saving investment app and centralized investor dashboard.
The liquidity that comes with the short-term real estate loans Groundfloor finances is extremely valuable. Individual investors maintain risk balance, investment portfolio diversification and flexibility.
In addition, you will receive continuous reporting on the health of your active investments.
Is Groundfloor legit?
Yes, Groundfloor is an accredited business with the Better Business Bureau. It offers bank-level security despite being a nonbank entity and lists all of its SEC filings on the website for transparency.
Can you really make money with Groundfloor?
Yes, the Groundfloor platform offers high-yield returns through crowdfunding real estate debt investments.
The average return on these investments is 10.5 percent, and it has earned over $12.5 million in total interest since its inception in 2013.
What are the requirements for joining Groundfloor?
Anyone can join Groundfloor as an individual investor as long as they meet the $10 minimum investment.
You can join as a non-accredited investor.
Groundfloor is a new financial tool for retail investors. They open the door to short-term, high-yield returns backed by real estate.
Groundfloor is a crowdfunding platform offering everyday people the opportunity to invest in real estate projects.
Product Brand: Groundfloor
I'm Donny. I'm a world traveler, investor, entrepreneur, and online marketing aficionado who has a big appetite to compete and disrupt big markets. I thrive on being able to create things that impact change, difficult challenges, and being able to add value in negative situations.More Posts