Groundfloor offers short-term residential property loans to investors and independent builders as well as online real estate crowdfunding. ground floor either sells the property or refinances, and then rents it out.
The Ground floor provides these loans to projects as a platform offering hard-money loans. The money that investors lend to finance projects is then returned to them as interest. Generally, hard-money loans are secured by tangible assets, such as real estate, which can be sold at a profit to bring the loan back on time.
A profit to bring the loan back on time. Retire Early With Real Estate. Saving 12 months’ expenses before giving up your job may be necessary when retiring early and relying on real estate investments.
WHAT IS THE GROUND FLOOR
Ground floor allows investors to go directly to lenders rather than self-financing, to partner, or using traditional banks or other hard money lenders.
Groundfloor is a crowdfunding platform for real estate investing (loans) where individuals can invest as little as $10 a loan in short-term, high-yield loans.
With Groundfloor, not only can accredited investors participate directly in lending for real estate investment, but also non-accredited investors are welcome. The low minimum requirement and high transaction volume of Groundfloor’s platform make managing your portfolio a breeze. By dividing your portfolio into parts with higher risk and parts with lower risk, you can achieve higher returns on average.
The ground floor provides a finance marketplace that enables investors and borrowers to find each other and make short-term loans. Unlike traditional banks and hard-money lenders, borrowers can find flexible, quicker, and cheaper capital through peer-to-peer lending.
Depending on the risk grade of the loan, short-term, high-yield investments typically offer returns ranging from 6% to 14%. As of today, Groundfloor has a number of Grade G loans with projected returns of 25% on its platform. If you expect a high return, then your risk is high. Using GROUND FLOOR, everyone can invest in real estate and build wealth.
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Knowing where to begin is the key to building wealth.
Public investors can take advantage of a fast-tracking, high-profit real estate debt fund, GroundFloor. It is important that every individual has the freedom to choose how to invest.
It’s easy to get started with GroundFloor.
Your account can be set up quickly and easily. Starting with just $10, you can decide how much you wish to invest.
Choose your investments wisely.
Invest in real estate debt at a high yield in a short term, based on your personal risk/reward profile. We can guide you through our investment tool.
To help you transfer funds to begin investing.
Our secure technology partner allows you to link your bank account to begin investing and transferring funds.
We have consistently generated returns of 10% or more for investors through debt products over the past six years and received investments back in an average of six to nine months due to the less risk associated with debt products.
Create an investment account
Our secure technology partner allows you to link your bank account to begin investing and transferring funds. Inherently, debt products carry less risk, which has helped us consistently generate returns of 10%+ for our investors while they have received their repayments in 6-9 months.
How Groundfloor Works
STEP1:- Sign Up
Signing up for a Groundfloor account is easy. You can start investing with as little as $10 and choose the amount you wish to invest.
STEP2:- Select your investment
Make your own short-term, high-yield real estate debt investment portfolio based on your risk and reward profile. Alternatively, you can use our investment wizard.
STEP3:- Deposit money into your account.
Invest with our secure encryption partner by linking your bank account. You are already on the path to financial success with Groundfloor!
Over the past six years, we’ve consistently generated 10%+ returns for our investors with repayments received in 6-9 months on average.
The GROUND FLOOR: Why is it so important?
Groundfloor was founded on the premise that individual investors could access private capital markets in order to make America more competitive. Real estate lending is the best way to build wealth for everyone.
At Groundfloor, we believe that crowdfunding closes the gap between investors and borrowers.
“Groundfloor is unique in that it reaches out to the general public to make real estate investing accessible… There is a thorough pre-screening process for developers, and the investment is secured by real property.”
It is an opportunity that developers have embraced. Having access to cash quickly for a project is a viable option for them.”
“GROUNDFLOOR meets a need for entrepreneurs in real estate.”
Regular Americans are the investors in Ground FLOOR’s projects…They earn up to 16 percent return on investment in one to two years. They invest in 20 to 30 real estate projects each month. Many investors are retired individuals as well as professionals who are looking to invest part-time in real estate.
Groundfloor opened up the opportunity for everyone to invest in properties.
- GROUNDFLOOR’s business has been built from scratch, so I truly appreciate that as a non-accredited investor.
- Before you invest with this crowdfunding platform, here are the benefits and risks you should know.
- Long-term wealth is built by investing in real estate. Register for our comprehensive real estate investing guide to learn more about this asset class.
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Summary: Is the ground floor an investment worth it?
- In order to obtain a Groundfloor loan, a borrower must submit a loan application to Groundfloor. Underwriting and acceptance of a loan determine the risk rating.
- In addition to factors such as borrower experience and location, the platform’s proprietary loan-grading algorithm also takes these into account. Grading a loan provides investors with an idea of the risk posed by each particular project and consequently creates an interest rate that reflects the risk being carried.
- Underwriting at Groundfloor is transparent. They do not want to have a single defaulted loan. Investors may benefit from defaults (defined as the borrower missing a payment) because Groundfloor can take action, which can speed up repayment or increase returns.
- Besides the monthly updates on loan repayments and asset management activities posted on the company’s blog, investors can also receive regular reports on the performance of the portfolio.
- By creating a diversified portfolio of loans tailored to their individual investment objectives, investors can choose how much risk they are comfortable with. Through the Groundfloor platform, individual investors have access to information and choices for making informed decisions, which are the attributes that make real estate crowdfunding so attractive to them.
- Automated investing is also available on the platform. You can determine the amount of investment you want to make on each loan and the loan grade. As soon as new loans become available, the system will automatically make investments for you based on your criteria. Your note investments can also be reinvested using this feature
- In this fashion, you can choose how much you want to invest per month and the way you want your investments to be diversified.
- Groundfloor contributes to the borrowing process by funding the loan upfront, so the borrower receives the initial funds themselves. A loan is converted into a security in the form of a limited recourse obligation (LRO) after it is originated. This is when investors are able to invest in the loan.
- After the loan closes and the renovation or rehabilitation has been completed, the borrower withdraws funds according to a set schedule. The process of listing, selling, and closing the property. Each investor receives the principal and interest of the loan from Groundfloor once the loan has been completed. You can withdraw or reinvest your repayment deposit in other projects within days after the end of the loan.
- For now, Groundfloor is the only site allowing investors without credit to invest in individual notes.
- Groundfloor allows anyone to invest with as little as $10.
- The flow of deals is high.
- To choose from a variety of risk and return loans.
- Investor fees are not charged (all fees are paid by borrowers).
- Investors without accreditation are welcome.
- Investment choices are more heavily influenced by investors (unlike REITs, where managers decide which investments to make).
- A self-directed IRA allows investors to invest.
- This feature allows you to invest automatically.
- The Federal Reserve tracks industry trends that indicate a higher default rate for loans.
- Every 30 days, investors receive updates on each loan.
- This policy does not protect against bankruptcy.
- Across different types of real estate investments, there is a lack of diversification.
- Property flippers can only be financed with funds; equity cannot be invested.
Performance on the ground floor
We originate between 60 and 70 loans a month at Groundfloor. High liquidity is a key characteristic of Groundfloor’s business model. According to Groundfloor CEO Brian Dally, Groundfloor’s goal is to maximize net returns by actively pushing default so investor funds can be returned and/or a workout plan developed when default seems likely.
In addition to Groundfloor’s lack of transparency and detailed deal offerings, a few investors have complained about Groundfloor’s lack of due diligence.
Investing in hard-money loans requires investors to recognize that default rates will be higher than in residential loans of other types. Over the same time period, 2% of its portfolio has gone through foreclosure, compared with an average national foreclosure rate of 0.6%. As opposed to loans on a borrower’s residence, foreclosure laws in most states are typically more favorable to lenders when it comes to investment properties.
Features of the ground floor
|The investment minimum is $10||Investors do not pay account fees|
|Three months Total project time||Requires accreditation|
|REITs in private ownership||There are four types of offerings: debt, equity, preferred equity, and direct ownership|
|Residential, commercial, single-family, investment properties, foreign investors||Serving eight states as well as Washington D.C.|
|The secondary market||IRAs that are self-directed|
|Exchange of 1031||A pre-vetted resource|
Loans for ground floor projects
A real estate rehab or renovation project begins with the borrower seeking a loan to finance it. As part of our due diligence process, Groundfloor reviews the deal details and verifies the borrower.
Groundfloor invests in loans rated Grade A through G with corresponding rates of return; The least risky loans are those of Grade A (with the lowest returns), while the riskiest loans are those of Grade G (with the highest returns). Location, lien position, borrower commitment, skin-in-the-game, etc., are all factors considered by Groundfloor when grading and assigning a rate to a loan. In addition, there are elements such as the loan term, the loan size, the personal guarantee, the history of Groundfloor, and creditworthiness that are considered when determining the final rate.
Generally, grade A loans offer returns of around 6%, and grade G loans offer returns of around 25%, with each letter grade offering a rate in between:
|Grade A: 6%|
|Grade B: 8%|
|Grade C: 11%|
|Grade D: 14%|
|Grade E: 18%|
|Grade F: 21%|
|Grade G: 25%|
A fully funded loan is withdrawn under an approved plan to complete the project, and the borrower then repays the loan. Eventually, we list, sell and close the property. Following closing, Groundfloor receives the borrower’s repayments plus interest earned, which are deposited into each investor’s account.
A Grade A loan with a three-month term can be obtained for as low as 5.4% in 23 states (for a monthly payment of $700 on a seven-year loan). A Ground Floor project is eligible for up to 90% funding, as well as 70% of the project’s after-flip value.
Borrowers have the option of not making payments during the repayment period. A hard-money lender typically charges interest rates of 12-15% and requires a higher loan-to-value (LTV) ratio than a conventional lender.
|Rating 8/10 7/10 8/10|
|Minimum Investment $10 $50,000 $1,000|
|Account Fees No Fees for Investors 1.0% – 3.5% 0.25% – 1.0% setup fee|
|Private REIT Read Review|
Ground floor review: An Overview
- The first step is to link your checking or other designated account to your Groundfloor account. After you fund your Groundfloor account, you get to choose the project(s) you want to invest in. Interested users can browse the summary page of loans being funded on the platform and view the detail page of each loan for more information. The decision to invest is yours.
- Investors can fund the loan within 45 days after the deal becomes available for funding. Loan terms are usually between six and twelve months, but they can be shorter or longer.
- The investment is an LRO, or Limited Recourse Obligation (LRO), which is a debt security issued by Groundfloor. LROs correspond to the projects you have chosen to fund. Every LRO’s performance depends on the performance of its borrower’s loan.
- Groundfloor becomes a creditor when you own an LRO. When you invest in a loan, and it is repaid, you are reimbursed via the LRO.
- Those who plan to borrow from the Ground floor face rejection because the Ground floor’s due diligence team is made up of real estate executives. It is not certain that you will not lose the entire investment if the loan defaults.
- Liquidity is not an issue when the loan is in place. No, you can’t cash it out or sell it to another investor. You will receive interest once the principal has been repaid. Withdrawal of the cash will give you the option to reinvest.
- At present, Groundfloor has provided loans for 318 projects totaling $38 million. The average return on investment has been 10% to date.
- Groundfloor provides you with the opportunity to invest in real estate without having to be an accredited investor. The site Rich Uncles Fundraise, for example, allows non-accredited investors to invest in private real estate through real estate investment trusts (REITs). In the case of Fundraise, the company operates a private REIT that provides investors access to private real estate. The difference is that the Ground floor offers direct access to private real estate rather than investing in a particular management company.
Low Minimum Investment
You can fund your account with just $10, which is the lowest minimum threshold of any real estate crowdfunding site currently available.
Borrower and Deal Pre-screening
Groundfloor must make sure each deal works out favorably for investors, which means due diligence on the deal and the borrower is a high priority.
Investment is a complex discipline, and we strive to help clients find solutions specific to their needs. The experts at our firm will work tirelessly until they find the right fit for your next purchase, whether that be an investment property or partnering with you on a new project.
What are the chances of making money on the ground floor?
The ground floor does the renovations, but not the actual work. They instead help people buy properties and renovate them by providing short-term financing. As a result, investors can earn high profits on their money with far less risk when they invest in renovation loans.
Ground floor opportunities are great, but what are they?
The ground floor opportunity refers to a time period when entry costs tend to be the lowest and returns are the highest for new ventures or investments. An organization with fewer than 20.000 advisors is considered its ground floor.
What does ARV mean when referring to loans?
The loan-to-value ratio and After Repair Value. The loan-to-value ratio describes the amount borrowed in relation to the property’s value, while the After Repair Value represents the value of the property after the renovations are complete.
How does the 70% rule work?
According to the 70% rule, real estate investors should not pay more than 70% of the ARV minus repairs. The 70% rule states that not more than $85,000 should be paid for a $150,000 house that needs $20,000 in repairs.
Is a ground floor a good investment?
Investments on the Ground floor might be a good option if you are willing to take on more risk. Investors who are open to experimenting and do not require liquidity are best suited to these platforms. Through this passive method, you can get into real estate investing.
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