Groundfloor Review 2024

Investing in real estate no longer requires forking over tens of thousands of dollars and going through a long regulatory process.

Recent advancements in technology and real estate crowdfunding platforms make it possible to start with less money and less risk.

Groundfloor is a leading real estate wealth tech platform. The company, based in Atlanta, Georgia, is quickly rising in popularity among young investors and has been listed on Forbes Fintech 50.

If you’re thinking about investing in real estate, Groundfloor is an option you’ll want to keep on your radar.

Keep reading to learn more about how Groundfloor works so you can determine whether it makes sense for your investment strategy.

What is Groundfloor?

Groundfloor provides short-term financing to fund property renovations and real estate investments to build new homes.

As an individual investor, when you invest with Groundfloor, you buy high-yield real estate debt investments called limited recourse obligations (LROs). If you’re new to the term, recourse debt is debt with collateral backing.

Here’s how it works: Homebuyers take out short-term home loans through Groundfloor, and Groundfloor users buy shares that promise higher-than-average returns. It’s essentially like serving as the bank and fractionalizing the real estate loan.

Most of Groundfloor’s options have 12 to 18-month terms, so you don’t have to worry about locking up your money for very long periods of time.

As of Fall 2023, Groundfloor also rolled out a new Auto Investor Account, allowing investors to automatically invest and diversify across dozens of projects at once. With an Auto Investor Account, no prior real estate knowledge is needed and you can start to see repayments trickle in within as little as seven days.

Groundfloor Features

High-Yield Returns for Lenders

Investors often turn to Groundfloor because of the company’s attractive high-yield returns.

According to its website, the Groundfloor platform offers an average of a 10% return on investments.

Groundfloor also offers shorter-term investments called Notes. You can choose from 30-day, 90-day, and 12-month Notes, though the minimum investment is higher at $1,000. It offers standard Notes and Rollover Notes. Rollover Notes only come in 30-day and 90-day terms, and the principal amount you invested is automatically reinvested in another Note of the same duration upon repayment.

Any interest you accrue is yours to keep, and Rollover Notes offer a bit higher average returns than standard Notes. If you’re looking for a liquid option, Rollover Notes let you cancel your investment within the first 30 days.

Diversification

Groundfloor’s mobile-first approach and mobile app make investing and diversifying quick and easy. With the Auto Investor Account, your funds will automatically be invested across a wide variety of available loans as soon as your funds hit. Then, those funds will be reinvested upon payment. That means your portfolio keeps growing and diversifying without the heavy lifting. 

This automatic and instant diversification also means you can see repayments in as little as seven days. While you’re in the app, you can find your accrued interest, total loans invested in, a breakdown of your returns, your average realized returns, and more. The Groundfloor app is available on iOS and Android.

Affordable Investing Through Fractionalization

Groundfloor offers a low minimum investment of just $10. Suffice it to say that you don’t need to have a lot of money to start. And there are never any fees to investors.

Thanks to the company’s low-cost model, it’s possible for anyone to invest, regardless of their unique financial situation.

Investment Transparency

After you invest in these loans, you can find more details on them from your desktop or mobile browser. Each property has a picture along with the rate, term, and loan to after repair value (ARV) percentage.

In other words, you have visibility into where your investment dollars go when using Groundfloor, if you want that. It’s also set up as a great way to passively earn income since you’re automatically diversified.

IRA Investment Options

Groundfloor allows customers to start a self-directed individual retirement account (IRA). As a result, the platform enables you to access tax-advantaged real estate investing.

The self-directed IRA is a great way to accumulate wealth over time and minimize what you pay in taxes.

Nationwide Coverage

Groundfloor offers nationwide coverage. The app runs from Maine to Southern California, and everywhere in between. So, if you’re looking to get started as a real estate investor, it doesn’t matter where you live in the country.

That said, borrowers will have to make sure they live in a state Groundfloor services.

Non-Accredited Investing

All investors, including accredited investors and non-accredited ones, can use Groundfloor. The company has a low $10 minimum amount to start using its platform, with no certification requirements and no fees to investors (they make money by charging borrowers a fee).

This is great news for folks just starting out their real estate investing journey, as many real estate investment opportunities have typically only been available to accredited investors, or you have to fork over fees to fund managers.

Loan Vetting

One of the nice parts about investing through Groundfloor is the company thoroughly vets all loans, and every project is qualified by the U.S. Securities and Exchange Commission, providing a lot of transparency.

All investing is risky, but this system makes it a bit more trustworthy.

It’s also worth noting that the company removes loans after 45 days if they fail to reach full funding.

Flexible loans

Groundfloor offers short-term financing to fund property renovations, with 12-18 month terms. This makes the company ideal for those who are looking to fund fix-and-flip projects and capitalize on foreclosures.

House flippers can access Groundfloor loan amounts ranging from $75,000 to $750,000. The platform offers up to 100% loan-to-cost depending on experience, and up to 75% loan-to-after repair value.

Fees

Groundfloor is free to sign up for and use. In addition, Groundfloor doesn’t charge any investor commissions.

The combination of a $10 minimum investment, plus its no-fee policy, makes Groundfloor very attractive from a pricing standpoint. It’s one of the more affordable ways to start investing in real estate.

When buying physical real estate, $10 will barely even pay for the ink on a loan application fee. So, Groundfloor can be a great way to get started as a real estate investor without needing to fork over tons of cash upfront.

Getting Started

To sign up for Groundfloor, you need to hand over personal and contact information. Luckily, the process is brief, and you won’t have to endure a lengthy approval process. You can sign up via desktop, or the easiest way is to download their mobile app.

Once you’ve created an account, you’ll have to add your bank account. The company uses a third-party service called Plaid for secure transfers between accounts, so your boxes are checked from a security point of view.

After that, fund your account and wait for the transfer to clear. You should be up and running and ready to invest within a few days. Groundfloor does this part for you with their Auto Investor Account. As soon as your funds are transferred in, they’ll automatically be allocated across dozens of projects at once, giving you instant diversification.

You can transfer money to and from your account online. Groundfloor notes that transactions can take three to five days.

Bonuses

Groundfloor occasionally offers great promotions, so keep your eyes open if you’re thinking about using the service.

If you have a friend who may benefit from Groundfloor, check out the platform’s referral program. You and your contact can both receive bonus credit if they sign up as an investor and fund their account.

If you’re an influencer among your group, you could be able to bring in some decent cash this way.

Security

From a financial perspective, there aren’t any guarantees when using a service like Groundfloor. Borrowers can potentially default on loans, meaning you could lose your entire investment.

That being the case, you have to prepare to lose everything before putting any money into Groundfloor. To avoid making a decision you come to regret, analyze your portfolio and financial situation before funding your account.

As for digital security, the company uses multiple physical, operational, and electronic security measures to protect data.

For example, Groundfloor uses Secure Socket Layer (SSL) technology to safeguard its website. In addition, the company uses a 128-bit browser for transactions and logins.

If you’re comfortable using online or mobile banking in general, you shouldn’t have any issues trusting Groundfloor’s cybersecurity.

Customer Support

Groundfloor offers both phone and email support, Monday through Friday, from 9 a.m. to 5 p.m. EST. There are three customer support divisions, as follows:

Investor Support

• Email: [email protected]
• Phone: 404-850-9223

Borrower Services

• Email: [email protected]
• Phone: 404-850-9224

Asset Management

• Email: [email protected]
• Phone: 404-566-9686

Pros and Cons

Pros

• Low minimum investment of $10
• Open to accredited and non-accredited investors
• Short-term investments
• Easy-to-use platform and mobile app
• No fees for investors

Cons

• Minimal liquidity
• No commercial real estate; residential only
• Loan defaults can happen
• Limited customer support and guidance
• No monthly distributions

Alternatives to Groundfloor

Before deciding whether Gloundfloor makes sense for you, consider some of the alternative investments on the market.

Fundrise

Fundrise is an online platform for real estate investing. The company offers a great user dashboard and real-time reporting to make account management easy.

Unlike Groundfloor, it charges a small management fee.

Yieldstreet

Yieldstreet is a platform that lets you invest in alternative assets. For example, you can use Yieldstreet to invest in things like aviation, art, and real estate.

Yieldstreet offers reasonable fees for most offerings, and it’s open to all investors.

Fund That Flip

Fund That Flip is a real estate investing platform that lets you invest in vetted real estate loans. Fund That Flip’s performance is head-to-head with Groundfloor. The company offers an annual yield of up to 10.5%.

AcreTrader

AcreTrader is an app specifically designed for investing in U.S. farmland. Since everyone needs to eat, farmland can be a great long-term investment.

AcreTrader makes it easy to invest in farmland. You make money through the land’s increase in value and rent payments from farmers.

Streitwise

Streitwise is a solution that’s designed to help investors generate passive real estate income. It’s available to both non-accredited and accredited investors.

Very simply, Streitwise lets you invest in commercial real estate properties using a real estate investment trust (REIT).

Since REITs are required to pay out 90% of their taxable earnings as dividends, you should be able to enjoy a decent return, assuming the REIT doesn’t go belly up.

Frequently Asked Questions

Is Groundfloor a legit way to make money?

Groundfloor is a perfectly safe and trustworthy organization. In fact, Groundfloor is one of the more widely used real estate investing platforms on the market. More than $1.3 billion has been invested already through Groundfloor. Smart investing through Groundfloor can lead to a steady cash flow and strong returns over time.

That said, this is a newer approach to real estate investing, and it may take some getting used to. However, it’s a much easier and less intensive way to invest in real estate. Investors of all types use Groundfloor to make money.

Is Groundfloor a good investment?

When you make a Groundfloor investment, your money goes into individual property loans. You’re essentially profiting off of debt, and banking on the fact that the borrower — meaning the ultimate property owner — will pay their loan and give you a return.

As such, there are good and bad investments within the Groundfloor app. The company vets all properties to provide as much security as possible.

The best thing you can do as an investor is to do your due diligence, understand your risk tolerance, and assess each property using whatever data you have.

What is Regulation A?

The Securities Act of 1933 requires companies to register with the United States Securities and Exchange Commission (SEC) when selling securities. Regulation A provides rules for registration requirement exemptions and essentially enables equity crowdfunding without registering.

According to Groundfloor, the company offers and sells securities under Regulation A, only to investors “who are residents of the states in which Groundfloor Finance Inc. (“Groundfloor”) has either qualified an offering statement under Tier 1 of Regulation A or made notice of its intent to offer and sale securities under Tier 2 of Regulation A.”

Check out Groundfloor’s complete disclaimer on the footer of its website for more information.

Does Groundfloor fund multifamily properties?

Groundfloor funds both single-family and multifamily properties. This means you don’t have to worry about restricting yourself to one type of property if you’re looking to build a real estate investment portfolio.

Since both types of properties can be profitable, this is a great thing because you have more options.

Is Groundfloor Best for You?

At the end of the day, fractionalized sites like Groundfloor help average investors act as hard money lenders and enjoy ongoing passive income from real estate.

This particular investment platform allows house flippers and real estate entrepreneurs to secure short-term loans to further their real estate projects. At the same time, the lending platform can also help you achieve your personal finance goals if you’re able to profit from the deals you select. It has a solid track record of success.

Of course, when it comes to investing, nothing is guaranteed. As a real estate investor, you still need to be careful. The last thing you want to do is pour all of your money into an opportunity only to learn the hard way that you made the wrong decision.

Furthermore, while Groundfloor can help you make money, you should also consider investing in REITs, which have repeatedly proven to be among the best asset classes over the last few decades.

Whatever you decide, don’t bite off more than you can chew. On the journey to financial independence, slow and steady wins the race.