Looking to invest in real estate but don’t have the time or money to buy a property outright? Groundfloor may be the perfect solution for you. Groundfloor is a crowdfunding real estate investing and lending platform that allows investors nationwide to invest in pre-vetted real estate projects. In this Groundfloor review, we’ll cover everything you need to know about this platform, from its history and how it works to the investment options available and who should consider investing with Groundfloor. We’ll also compare Groundfloor with other popular real estate investment platforms to help you decide if Groundfloor is right for you.
History of Groundfloor
Groundfloor was founded in 2013 by Brian Dally, former CFO of LendingHome. Groundfloor is the first and only crowdfunding platform for real estate that is available to non-accredited investors.
What is Dally’s background: Groundfloor was founded in 2013 by Brian Dally, former CFO of LendingHome. Groundfloor claims it is the first and only crowdfunding platform for real estate that is available to non-accredited investors. It is headquartered in Atlanta, Georgia.
Through crowdfunding, Groundfloor allows investors to pool their money together to invest in pre-vetted real estate projects.
Groundfloor got its name from the concept of investing at the ground level. The platform allows investors to get in on real estate deals early, before the property is developed or renovated. This can give investors the potential to earn higher returns, as they are taking on more risk than someone who invests later in the process.
Groundfloor was launched with the mission of giving more people access to investing in real estate. The platform allows anyone, regardless of accreditation status, to invest as little as $100 in a real estate project. Groundfloor is also open to international investors, which sets it apart from other crowdfunding platforms that are only available to U.S. citizens.
What is Groundfloor?
Groundfloor is a crowdfunding platform that allows accredited and non-accredited investors to invest in short-term, high-yield real estate loans. Groundfloor is an alternative to traditional lending institutions like banks and credit unions, which typically have higher lending standards and longer loan terms. With Groundfloor, investments are typically made in the form of a first-position lien, which means that investors are repaid before any other creditors if the borrower defaults on the loan.
Groundfloor claims to have lower lending standards than traditional financial institutions, which allows it to offer higher yields to investors. The average Groundfloor loan has a term of 12 months and an interest rate of 12%. Groundfloor also charges a one-time origination fee of up to two percent.
How Groundfloor works
Groundfloor operates as an online marketplace, connecting borrowers with investors. Borrowers apply for loans on the Groundfloor website and must provide information about themselves, their properties, and the loan amount they are requesting. Groundfloor then vets the borrower and the property to determine if the loan meets its standards.
If Groundfloor approves the loan, it posts the listing on its website for investors to review. Investors can then decide how much they want to invest in the project and at what interest rate. Groundfloor typically keeps a minimum of $100 in each investment, but investors can commit more if they choose.
Groundfloor claims that all of its loans are backed by the underlying value of the property, which provides a measure of protection for investors in the event that the borrower defaults on the loan. Groundfloor also offers a secondary market where investors can sell their investments to other Groundfloor investors.
Features of Groundfloor
- Groundfloor Investments: Groundfloor offers two types of investment products: equity and debt. Equity investors receive a share of the profits from the sale of the property. Debt investors are repaid the principal plus interest, regardless of whether the property is sold.
- Groundfloor Equity Investments: Groundfloor equity investments are investments in a specific property.
- Groundfloor Debt Investments: Groundfloor debt investments are loans that are used to finance the purchase or renovation of a property.
- Minimum Investment: The minimum investment on Groundfloor is $100.
- Fees: Groundfloor charges a one-time origination fee of up to two percent for each loan. Groundfloor also charges a service fee of $0.25 per month for each $100 invested, which is deducted from the interest payments made to investors. There is no charge to sell an investment on the Groundfloor secondary market.
Groundfloor also offers a “participation feature” for debt investments, which allows investors to share in any profits above and beyond the initial loan amount. This feature is only available on select loans, and Groundfloor does not guarantee that it will be offered on all future loans.
Groundfloor only offers first-position loans, which means that investors are repaid before any other creditors if the borrower defaults on the loan. Groundfloor also charges a one-time origination fee of up to 2 percent.
How to get started investing with Groundfloor
Investors can create an account on the Groundfloor website and fund their account with a minimum of $100. Groundfloor does not charge any account fees. Once an account is funded, investors can browse the available investment listings and choose which ones to invest in. Groundfloor will then provide the investor with a promissory note for each investment.
Groundfloor will also provide the investor with a first-look feature, which allows the investor to be notified of new investment opportunities before they are made available to the general public.
Groundfloor does not have a minimum investment amount, but it does charge a service fee of 25-cent per month for each $100 invested, which is deducted from the interest payments made to investors.
What are the benefits of investing with Groundfloor?
Groundfloor claims that its platform provides access to high-yield, short-term real estate loans that are not available through traditional lending institutions. Groundfloor also offers a secondary market where investors can sell their investments to other Groundfloor investors.
Another benefit of investing with Groundfloor is that the platform is open to accredited and non-accredited investors. This makes Groundfloor accessible to a wider range of investors than some other crowdfunding platforms.
Groundfloor also claims that its loans are backed by the underlying value of the property, which provides a measure of protection for investors in the event that the borrower defaults on the loan.
What are the risks of investing with Groundfloor?
As with any investment, there are risks associated with investing with Groundfloor. These risks include the possibility of default by the borrower, illiquidity (meaning that investors may not be able to sell their investments on the secondary market), and the potential for fraud or other unethical behavior by Groundfloor employees or borrowers.
Groundfloor is a relatively new platform, which means that it has a limited track record. Groundfloor also relies on data from third-party sources, which means that the information on the platform may not be accurate or complete.
Who should invest in Groundfloor?
Groundfloor is best suited for investors who are looking for high-yield, short-term investments and are willing to accept the risks associated with these types of investments. Groundfloor is also best suited for investors who are comfortable with the risks inherent in investing in real estate.
Who shouldn’t invest in Groundfloor?
Groundfloor is not a good investment for investors who are looking for guaranteed returns or who are not willing to accept the risks associated with high-yield, short-term investments. Groundfloor is also not a good investment for investors who are not comfortable with the risks inherent in investing in real estate.
Are there alternatives to Groundfloor?
There are several alternatives to Groundfloor, including RealtyMogul, Fundrise, and Modiv.
- RealtyMogul is a crowdfunding platform that offers investment opportunities in both commercial and residential real estate. RealtyMogul has a minimum investment amount of $500 and charges a service fee of one percent.
- Fundrise is a crowdfunding platform that offers investment opportunities in both commercial and residential real estate. Fundrise has a minimum investment amount of $500 and charges a service fee of one percent.
- Modiv is a lending platform that offers loans for investments in commercial real estate. Rich Uncles has a minimum investment amount of $500 and charges a service fee of two percent.
Is Groundfloor legitimate?
Groundfloor is a legitimate crowdfunding platform. Groundfloor is registered with the Securities and Exchange Commission (SEC) and is a member of the Financial Industry Regulatory Authority (FINRA). Groundfloor is also a member of the National Crowdfunding Association (NCFA) and the Better Business Bureau (BBB).
Groundfloor has not faced any significant complaints or lawsuits.
Is Groundfloor a good investment?
Groundfloor may be a good investment for investors who are willing to accept the risks associated with high-yield, short-term investments. However, Groundfloor is not a good investment for investors who are looking for guaranteed returns or who are not comfortable with the risks inherent in investing in real estate. Groundfloor is also not a good investment for investors who are not comfortable with the risks inherent in crowdfunding.
Before investing in any company like Groundfloor, it's important to consult with a financial advisor to ensure that the investment is right for you. It's also important to thoroughly research the company and the investment before making a commitment.
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