Groundfloor vs PeerStreet 2024: Which is the best Real Estate app?

Jeremy Biberdorf
By: Jeremy Biberdorf
 
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In the rapidly evolving world of real estate crowdfunding, two industry leaders have emerged at the forefront: Groundfloor and PeerStreet. As investors seek alternative methods to diversify their portfolios and gain access to potentially lucrative real estate opportunities, these two platforms have come to dominate the market.

Groundfloor is Better for:PeerStreet is Better for:
Short-term real estate investingLonger-term real estate investing
High-risk, high-reward investmentsLower-risk, more stable investments
Direct investing in individual loansIndirect investing in loan portfolios
Accredited and non-accredited investors acceptedAccredited investors only

But how do they stack up against one another? In this article, we’ll delve deep into a comprehensive comparison of Groundfloor and PeerStreet, examining their offerings across three key factors: investment opportunities, risk management, and platform usability.

Whether you’re a seasoned investor or just beginning your foray into real estate crowdfunding, read on as we explore the strengths and weaknesses of these two powerhouse platforms.

Groundfloor PeerStreet
Minimum Investment $10 $1,000
Fees No management fees; 1-2% origination fee 0.25-1% management fee; 0.5-1% servicing fee
Asset Class Real Estate Debt (Short-term, Single-family) Real Estate Debt (Short-term, Single-family, Multifamily, Commercial)
Best Use Small investors, New investors Experienced investors, High net-worth individuals
Current Promotion

More Info

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Modest Money Overall Rating
4.5 rating based on 5 ratings
4.0 rating based on 5 ratings

Factor 1: Investment Opportunities

Groundfloor: Focused on Short-term, High-yield Real Estate Loans

  • Groundfloor emphasizes accessibility for non-accredited investors
  • Majority of investments involve residential fix-and-flip projects
  • PeerStreet: Diversified Real Estate Debt Investments
  • PeerStreet targets accredited investors with a wider range of projects

Groundfloor

Groundfloor is a real estate crowdfunding platform that focuses on short-term, high-yield real estate loans. Its mission is to democratize access to real estate investing by catering to non-accredited investors, with a minimum investment starting as low as $10. The majority of Groundfloor’s investment opportunities are residential fix-and-flip projects, where developers seek funding for property renovation before selling at a higher price. Groundfloor’s loans typically have terms of 6 to 12 months, allowing investors to see returns in a relatively short time frame.

PeerStreet

PeerStreet, on the other hand, is a platform that offers a more diversified range of real estate debt investments, targeting accredited investors who meet specific income and net worth requirements. With a minimum investment of $1,000, PeerStreet provides access to a wider variety of projects, including residential, commercial, and mixed-use properties. The platform offers short-term loans, typically ranging from 12 to 36 months, as well as longer-term debt investment opportunities. PeerStreet’s focus on a broader range of property types and loan durations allows for greater diversification of investment portfolios and potential for higher returns. PeerStreet’s investment opportunities are typically backed by collateral, such as a lien on the property, which provides added security for investors.

Factor 2: Risk Management

Groundfloor: Loan Grades and Transparent Information

  • Groundfloor assigns a letter grade to each loan based on risk
  • PeerStreet: Rigorous Underwriting and Diversification

Groundfloor

Groundfloor puts significant emphasis on risk management by assigning a letter grade to each loan, ranging from A to G, with A representing the least risky loans and G indicating the highest level of risk. This grading system helps investors understand the risk-reward ratio associated with each project. Groundfloor also provides transparent information about each investment opportunity, including borrower profiles, property details, loan terms, and project timelines. This enables investors to make well-informed decisions when choosing which projects to invest in.

PeerStreet

PeerStreet prioritizes risk management through a rigorous underwriting process, ensuring that only high-quality loans are available on the platform. They employ a combination of data-driven analytics and expert underwriting to carefully assess each loan and its associated risk. PeerStreet also encourages investors to diversify their portfolios by offering a wide range of investment options across various property types and geographic locations. By spreading investments across multiple projects, investors can mitigate the impact of a single underperforming loan on their overall portfolio returns.

Factor 3: Platform Usability

Groundfloor: User-friendly Interface and Educational Resources

  • Groundfloor offers a simple, intuitive platform for easy navigation
  • PeerStreet: Advanced Filtering and Automated Investing

Groundfloor

Groundfloor is designed with a user-friendly interface, making it easy for investors to navigate and find investment opportunities that align with their goals. The platform also offers educational resources, such as articles, webinars, and FAQs, to help novice investors understand the nuances of real estate crowdfunding and make informed decisions. Groundfloor’s commitment to simplicity and education makes it an appealing choice for investors who are new to the world of real estate crowdfunding.

PeerStreet

PeerStreet’s platform is tailored to meet the needs of more experienced, accredited investors. It offers advanced filtering options, allowing users to narrow down investment opportunities based on factors such as interest rate, loan term, property type, and location.

This level of granularity helps investors find projects that align with their specific investment preferences. Additionally, PeerStreet offers an automated investing feature, which enables investors to set their investment criteria and let the platform automatically invest in matching opportunities. This hands-off approach simplifies the process of building a diversified real estate debt portfolio.

Groundfloor vs PeerStreet: Our Summary

While both Groundfloor and PeerStreet offer unique benefits for investors, Groundfloor emerges as the clear winner in our comparison. The platform’s focus on accessibility, risk management, and user-friendly interface makes it an ideal choice for investors seeking a reliable real estate crowdfunding platform.

One of Groundfloor’s key advantages is its commitment to democratizing real estate investing by catering to non-accredited investors. With a minimum investment starting as low as $10, this platform opens the door to real estate investing for individuals who may have been previously excluded due to high investment barriers.

Groundfloor’s investment opportunities are centered around short-term, high-yield real estate loans, primarily involving residential fix-and-flip projects. With loan terms typically ranging from 6 to 12 months, investors can expect to see returns in a relatively short time frame.

In terms of risk management, Groundfloor offers a comprehensive grading system that helps investors understand the risk-reward ratio associated with each project. The platform also provides transparent information about each investment opportunity, empowering investors to make well-informed decisions.

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Jeremy Biberdorf

About the Author:

Jeremy Biberdorf is the founder of Modest Money. He’s a father of 2 beautiful girls, a dog owner, a long-time online entrepreneur and an investing enthusiast.