Groundfloor Finance Review 2024

What is Groundfloor?

Groundfloor is a leading real estate crowdfunding platform, offering fractional real estate investing with no fees and just $10 to get started. This enables all investors — both accredited and non-accredited — to pool funds and invest in real estate projects. Individuals earn repayments in properties relative to their investment.

Open to both accredited and non-accredited investors, Groundfloor presents a unique opportunity for anyone to delve into private real estate investing. Here’s how it works:

• Groundfloor assesses the loan’s risk to determine the interest rate for borrowers.
• Investors, whether accredited or not, transfer funds on a one-time or recurring basis, with a $10 minimum. These funds are automatically invested and diversified across dozens of loans. Users pay no fees to invest on Groundfloor.
• Once a loan garners full support from investors, the developer receives the funds and commences the project. Upon completion, the loan gets repaid, with investors earning both the loan interest and any capital gains. With Groundfloor’s instant diversification, you can see repayments in as little as seven days.
• Historically, Groundfloor boasts a strong record, with over 900 loans successfully repaid, indicating a dependable investment avenue.

Real estate developers apply for loans from Groundfloor for specific projects. Groundfloor borrowers have repaid over 900 loans, so there is a track record of success and safety.

Groundfloor At a Glance

External Groundfloor Reviews & Ratings

How Groundfloor Started

Groundfloor was founded in 2013 and is the first real estate crowdfunding company to get SEC qualification, which means it’s a trusted firm. It was founded in North Carolina by Brian Dally and Nick Bhargava and was initially financed through angel investors and seed funding before Series A brought the total investment to $7.5M. Every year Groundfloor originates more loans, and over 900 have been repaid, so the business model is tested and proven. It has won numerous awards, including the Forbes Fintech 50.

Groundfloor Investment Options

Groundfloor offers a dynamic real estate investing platform, highlighting numerous investment options for those keen on real estate debt investments. Its short-term loans appeal to both developers seeking renovation projects and average investors wanting to diversify their portfolios.

A significant feature of Groundfloor is its provision for Self-Directed IRAs, allowing investors to integrate traditional IRAs, Roth IRAs, SEP IRAs, and other types into their investment criteria. There are three primary ways to fund these IRAs: through a check, transferring from another IRA, or rolling over money from retirement plans like a 401(k). Yet, with these accounts, investments are limited to LROs and notes.

Real estate debt investments form the bedrock of Groundfloor’s services. It finances real estate developers, converting these loans into LROs, which are fractional real estate debt investments.

Developers looking for short-term funding for their renovation or new construction projects can apply for these loans. Every loan application undergoes an analysis process where it receives a risk grade, guiding potential investors about the associated risk. Once vetted and graded, these loans are presented on the platform, allowing even non-accredited investors a piece of the action.

For developers, Groundfloor has become a beacon of opportunity. With loan amounts ranging from $75,000 to $750,000 and terms typically spanning 12 to 18 months, it caters to a wide range of investors.

Groundfloor is changing the landscape of short-term real estate investments, providing an array of investment opportunities tailored to meet various risk profiles. Whether you’re a seasoned developer or an everyday investor, Groundfloor’s investment securities and options offer a pathway to enter the lucrative world of real estate.

Groundfloor Pricing & Fees

Groundfloor offers a unique approach in the real estate crowdfunding arena. Unlike other platforms, they charge no fees to their investors. Yes, you read that right: zero investor fees. Instead, Groundfloor’s revenue comes from the borrowers.

Borrowers are levied a fee ranging from 2.75% to 4% of the loan amount, plus a $495 application fee. For investors accustomed to inevitable fees, this model presents a refreshing change and a clear advantage.

Groundfloor Features

• Ease of Use: Groundfloor offers a user-friendly platform and mobile app, perfect for both accredited and non-accredited investors. Registration and funding are straightforward. Your funds can be automatically invested, and then reinvested, with the Auto Investor Account.
• Education: Recognizing the importance of investor education, Groundfloor provides a robust educational segment. Clicking the “Learn” tab reveals sections like FAQs, Support, and the informative “Foundations” blog with over 100 posts. A highlight is their Education Hub — which helps you learn how to manage, grow, and budget your finances — and their Groundfloor Investment Wizard simulation, letting investors gauge potential returns across different risk strategies. Moreover, the FAQ section is optimized for user queries, categorized for easy navigation. Notably, the platform offers live chat support, a boon for both seasoned and new investors. Keep in mind that with the Auto Investor Account, you are automatically invested and diversified, so no prior real estate knowledge is required.
• Investment Offerings: Beyond the primary focus on fix-and-flip and new construction real estate loans, Groundfloor offers diverse investment options. They venture into selling shares in their notes and convertible debt notes, further diversifying their range. With an enticing minimum buy-in of just $10, it broadens accessibility to a wider investor base.
• Returns: Groundfloor boasts an impressive average return of 10% across its offerings. This return showcases the quality and potential of its investment platforms, though it’s paramount to consider the inherent risks with every individual investment option.
• Mobile App: The Groundfloor mobile app ensures investors aren’t tethered to desktops. Available for both Android and iPhone, it offers detailed insights in your portfolio’s health, including your accrued interest, annualized return, a detailed repayments breakdown, and more.
• Debt Investment Structure: Distinct from equity-based real estate investments, Groundfloor allows you to invest in loans. This structure assures knowledge of interest rates and terms upfront, eliminating the need for property value appreciation. The typically shorter loan terms ensure quick returns, making it a preferred choice for those avoiding long lock-in periods.
• Groundfloor Notes: These offer investors a unique advantage – control over the timing of investments. Designed against a pool of Groundfloor loans, these Notes come with variable maturities and interest rates, often surpassing traditional investment securities like CDs or bonds.

Groundfloor Performance

Since 2013, Groundfloor investors have earned an average of 10% return on their investment. This is a great way to diversify against a turbulent stock market and take advantage of a healthy real estate environment.

Strengths and Weaknesses

The strengths are obvious – as a nonaccredited investor, you can access the lucrative private equity real estate market for a low initial investment while also picking precisely what you want to invest in. No fees and short expirations mean you can preserve your capital gains and collect them quickly.

The biggest weakness is one inherent in loan origination. The borrower could always go bankrupt and be unable to repay part or all of the loan. Groundfloor manages this by extensive due diligence into the borrower and project before assigning a risk rating. It also almost always puts itself into a first lien position on its loans and works to find a solution for both investors and borrowers — foreclosure is a last resort. It is up to the investor to determine what level of risk/reward tradeoff he is comfortable with.

You also can’t buy or sell your stake – you do have to wait it out until the project is completed and capital plus interest is returned. But, since you can choose your maturity, there is at least predictability in income.

Groundfloor Finance Review Final Thoughts

Groundfloor is a safe way to invest in real estate and generate interest income. Even though your investment isn’t very liquid, you can predict the maturity schedule and tailor your selection to your liquidity needs. Their high returns are a huge selling point, especially as the stock market tanks. Groundfloor is a fantastic opportunity to get into the booming real estate market for an average, non-accredited investor.

Click here to start your real estate journey.