GroundFloor Review: Real Estate Crowdfunding & Investing Sites
GroundFloor was the first and only real estate investment marketplace which allows non-accredited investors to invest in real estate through crowd funding. The investments available with GroundFloor are usually short-term, high yield returns backed by real estate. The loans have typically 10 percent return rate on a six to 12-month term. GroundFloor brings together investors and borrowers. Borrowers have the benefit of easily accessible, flexible, faster and cheaper capital and investors enjoy high yield short-term investments.
It all begins when a borrower applies for a loan with GroundFloor. The borrower submits an application for the project they want to get funded. They provide all the required documents which are then reviewed by the team of GroundFloor and different grades are given to the projects which are based upon the risk involved and return expected. The borrower team works with the borrower to tailor the loan to meet the needs of the project. The loan is then underwritten and assigned a grade and interest rate.
The investors are presented with the investment opportunities in the online marketplace of GroundFloor. The investor can perform their own due diligence using the documents and information being provided by GroundFloor against all the investment opportunities being available on their website. Once your account is ready to start investing with GroundFloor, you can select the investment you wish to invest in and invest your choice of the amount above the minimum required amount. Once a loan is fully funded, GroundFloor initiates the closing with the borrower. The loan is then closed and the borrower is allowed to withdraw money and start working on their project. After the project is completed the property is then listed, sells and eventually closes. The borrower pays back the amount with the interest rate as promised. The principal amount along with the interest rate is distributed amongst the investors according to the amount they have invested in the property.
At this point GroundFloor, is only providing investment opportunities in loans backed by a residential-real estate.Those projects can be acquisition and/or renovation of single-family homes or 2-4 units.
GroundFloor Investment Options and Special Features
GroundFloor very much different from a REIT. GroundFloor gives you the complete freedom to create your own portfolio whereas in a REIT, the trust in the driving seat to choose which real estate they want to add to their portfolio. In a REIT, the risk and rewards are managed by the trust thus creating a low-risk environment but also reducing the return on investment to a down side. Whereas with GroundFloor you can create your own portfolio which can be a mixture of different real estates.
To make it easier for the investors to understand the risk involved with any investment made available on the marketplace of GroundFloor, the investment is graded on the scale of A-G. Where A means the lowest risk with the lowest expected return of 5.5% and G being the high-risk category with the highest expected return rate of 25.8%. This scale makes the platform of GroundFloor easy to use and invest. GroundFloor uses a number of factors when grading a loan and assigning a rate of interest to the loan. The factor includes: Location, lien position, borrower commitment, skin-in-the-game, and others. The final rate is adjusted from the above scale around factors like loan size, loan term, personal guarantee, history with GroundFloor, creditworthiness and more.
GroundFloor is a good place to invest is real estate and their are many facts and stats that supports this claim of GroundFloor. GroundFloor have more than 10% annual return on the investments made through their platform. GroundFloor's marketplace allows the investors to create the perfectly diversified portfolio with investments ranging between 5.5% - 25.8% return rate. All the loans with GroundFloor are short term loans ranging between 6-12 months. This allows your capital to move much more freely across assets and investments. All the loans are backed the property against which the loan is applied and GroundFloor is open for everyone to invest, its not just for accredited investors but for everyone. GroundFloor follows high standards for underwriti and approve only 5% of loan application they receive. GroundFloor pre-funds all the investments so you do not have to worry about it.
To help the investors invest in loans before they are completely funded, and enable to investors to create the diversified portfolios very easily, GroundFloor provides Automatic Investment tool. Auto-investments take place when the loans are first released, and are first in line to get their allocations.With Auto Invest, you can choose the amount you would like to invest in each loan of each different grade. AI will invest in these loans as soon as they go live. You can connect your bank account with AI to ensure you never run out of money to invest in different portfolios.
If in any case the loans fails to get fully funded within a window of 45 days, then GroundFloor removes that investment from their website and refunds the money back to the investors in their GroundFloor account, the investors will be notified for such event via email.
GroundFloor Past Investment Opportunities
Requirements to Sign up For GroundFloor
- You start by creating your account providing the basic details such as name, email ID etc.
- Once your account is created, you will be asked to complete your profile where you need to provide other information like social security number.
- Now you have to link your bank account with GroundFloor and initiate the fund transfer.
- After the funds are transferred to the account of GroundFloor you can begin investing with their platform.