Groundfloor Review | Zero Fees & 10% Returns?
Want to invest in real estate but don’t have the large amount of capital that’s typically needed? Or perhaps you’re looking for an alternative investment platform.
If so, then Groundfloor’s real estate investing platform could be for you.
As opposed to other real estate crowdfunding platforms that concentrate on multi-year commercial projects, Groundfloor lets you finance housing projects lasting 6-12 months.
Let’s take a closer look at our Groundfloor review below.
What Is Groundfloor?
Groundfloor is a P2P (peer-to-peer) real estate lending and crowdfunding investment platform that focuses on fix-and-flip residential real estate projects.
They make it easy for non-accredited individual investors to invest in real estate with little money. It’s a suitable platform for both investors and borrowers looking for short-term loans.
A minimum investment of $10 can be made on the platform and returns average over 10%. Keep in mind, your returns will range depending on your risk tolerance.
Think of it as a great way to get into the market and test the waters of real estate investing without the need for a large amount of capital.
You can find a more in-depth review of Groundfloor here.
How Does Groundfloor Compare To Its Competitors?
Groundfloor differs from competitors such as Fundrise by providing direct exposure to private property without the need to purchase shares in a REIT or fund.
Most others provide indirect exposure through investments via a specific management company.
This investment model is attractive for both parties because real estate-backed returns provide investors with a reasonable level of security, while quick loans meet the needs of borrowers better than traditional bank loans.
And unlike many other real estate investing sites, you won’t have to pay fees.
Investing in private property without being an accredited investor can be argued to be the single greatest advantage of Groundfloor.
Here are 5 reasons why we think GroundFloor is better than other real estate investing apps:
- You don’t have to pay upfront costs – GroundFloor doesn’t charge anything until you sell. So there are no upfront costs like broker commissions or application fees.
- There are no hidden fees – GroundFloor does not charge extra fees for things such as paying property taxes, insurance, or investor fees.
- You can invest in multiple markets – With GroundFloor, you can have real estate investments in over 30 major cities across the US.
- You can invest anywhere – GroundFloor works with investors worldwide, allowing you to invest in single family rentals outside of the United States.
- You can make money while you sleep – GroundFloor pays out monthly dividends to investors based on how much equity they hold in their portfolio.
How Does Groundfloor Work?
First, you set up and fund your Groundfloor account by linking your designated bank account and transferring some funds. Once your Groundfloor account is funded, you can choose which project(s) you wish to invest in.
On the platform, you can see which loans are currently being funded and then click through to their detailed pages.
You choose when, how much, and, how often to contribute.
Investors usually have up to 45 days from when they first see an investment opportunity to decide whether they want to invest. If they don’t, then the opportunity goes back into the pool of opportunities for future investments.
You’re technically investing in a limited recourse obligation (LRO), which is a type of bond issued by Groundfloor.
Your investment corresponds to the project you’ve selected to invest in. The performance of each LRO depends on the performance of the borrowers’ loans.
When you invest in an LRO, you’re considered a creditor to Groundfloor, who then pays back the investment plus interest once the borrower has repaid their loan.
Groundfloor is registered to conduct business in the following states:
- California
- Georgia
- Illinois
- Maryland
- Massachusetts
- Texas
- Virginia
- Washington
- Washington, D.C.
They have plans to grow into more states and eventually become a national brand.
The Groundfloor due diligence team has real estate experience and turns down most people who want to borrow from them. However, like all investments, there are no guarantees.
If you invest in a business and the company defaults, you may lose your entire investment.
When the principal is repaid, you’ll get back your original investment plus any accrued interests.
Any remaining funds will go into your investment portfolio. You may then choose to reinvest them or take the cash out.
Either way, you’ll hopefully end up with an extra profit.
So far, Groundfloor has lent $38 million across 318 projects. To date, investors have received average returns of 10.5%.
Groundfloor Review Summary
Overall, GroundFloor is a great P2P real estate lending platform. Fix and flip loans can be previewed and funded by investors.
Potential borrowers submit a loan package that will be inclusive of all details needed.
These will include but are not limited to:
- Detailed investment numbers
- Pictures of the property
Visit Groundfloor today to find out if it’s a good fit for you and your investment strategy. Just remember to always do your research before making any investments.
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