Groundfloor is a real estate and technology investment platform that offers SEC-listed, real estate-backed investments to both accredited and non-accredited investors. The platform uses passive investment strategies to provide easy access to a variety of real estate projects.
Business Insider’s personal finance team compared Groundfloor to leading real estate investment platforms and found it to be the leader in automated real estate investing. However, its expensive and high-risk options make it unsuitable for inexperienced investors.
Pros and Cons
Groundfloor Pros
- No investor fees
- Short-term investment options
- Average return: 10%
- Available to non-accredited investors
Groundfloor Cons
- Although the investments have shorter terms, they are not as liquid as stocks and other securities.
- You could lose money if the loan is not repaid.
- Only offers real estate loans.
- Limited educational resources.
Overview
Groundfloor is one of the best real estate investing apps for experienced investors who can allocate their funds through short-term, high-yield, private fractional real estate debt investments, such as bonds and SEC-qualified limited recourse obligations (LROs).
The lack of management fees and automated diversification make it more attractive to anyone interested in short-term investment options. Groundfloor offers an auto-investor account to generate long-term passive income, which can be suitable for intermediate and experienced investors.
Groundfloor also offers automated fractional real estate investments with its Flywheel Portfolio, with a $100 minimum investment.
Overall, investing in real estate can be overwhelming for beginners, even with the best real estate lending platforms. While Groundfloor’s automated trading capabilities make real estate investing easy, it can be overwhelming and risky for inexperienced investors. Furthermore, it is more expensive than traditional investment options.
However, Groundfloor can be a great addition to a traditional investment portfolio, as it only offers investments backed by real estate. Those looking for exposure to multiple asset classes should consider a different investment platform.
Ways to Invest
Here’s how to invest in real estate with limited funds through Groundfloor.
Groundfloor invests exclusively in partial real estate debt with maturities ranging from 30 days to 36 months. The company offers LROs, bonds, and a Flywheel portfolio. Limited Return Obligations (LROs) are debt securities backed by an underlying real estate asset with an expected yield of 8% to 15%.
Standard and rollover bonds are loans with a bond-like repayment structure and a maturity of 30, 90 or 12 months. They are backed by a pool of loans originated by Groundfloor that have not yet been funded as LROs on its platform. The bonds offer a lower yield than LROs (5.75% to 7.50%), but also lower risk.
The Flywheel Portfolio is Groundfloor’s newest offering, allowing investors to automatically split investments down to a fraction of a cent. It offers greater portfolio diversification and liquidity, with yields ranging from 9.5% to 14.5%.
Groundfloor Mobile-First Investing
The Groundfloor mobile app makes it easy to invest and monitor various projects. You’ll have a dashboard, automatic reinvestment options, savings goals, and portfolio forecasts to help you predict future balances.
The Portfolio Overview feature lets you track your investments, accrued interest, and annualized returns, as well as see the total number of loans you’ve invested in. The Payment Breakdown feature shows your principal repayment, interest earned, and average return.
Groundfloor Self-Directed IRA
Groundfloor allows you to invest in LROs, Traditional IRAs, Roth IRAs, SEP IRAs, Simple IRAs, and Rollover IRAs. Forge Trust is the custodian of Groundfloor IRAs.
Groundfloor’s self-directed investment feature allocates your money across a variety of real estate projects with investment returns ranging from 7% to 14%. What’s more, Groundfloor will not charge fees on IRAs until June 2025.
Groundfloor Flywheel Portfolio
The Groundfloor Flywheel Portfolio is the platform’s newest fractional real estate investment offering. It allows investors to instantly diversify their portfolios across hundreds of short-term real estate loans using a “set it and forget it” approach.
Participants receive monthly payments as their loans mature, for a total return of 9% to 14.5%. New loans are added to the portfolio every six months. All Flywood investments are liquidated or repaid within 36 months, creating a reliable liquidity period for investors.
You only need $100 to invest in a Flywheel portfolio to get started. The quarterly asset management fee is 0.25%.
Groundfloor for Borrowers
Borrowers can apply for loans from $75,000 to $2,500,000, with interest rates ranging from 2% to 4.5%.
To be considered a borrower, you must operate as an active LLC or corporation. Additionally, Groundfloor only accepts single-family home designs (1 to 4 units), and the property must be located in a state where Groundfloor actively lends, according to its website.
Here are a few other things to keep in mind:
- You must have a minimum property value of $50,000.
- You must have a credit score above 640.
- Groundfloor includes mortgage units in your closing costs; you can defer interest payments until your loan is paid off.
- You can get up to 100% loan-to-value ratio after renovations (ARV stands for the ratio of the loan amount to the value of the property after all renovations are completed) based on your experience.
Groundfloor’s true deferred payment option means borrowers don’t have to pay interest until the loan is paid off. While the company also offers a monthly payment option, the deferred option allows you to defer interest payments until your loan is paid off. This may be a more attractive option for developers who don’t want to pay monthly interest.
Fees
A minimum down payment of $10 is required to start investing. Groundfloor’s fractional ownership real estate investment portfolio has a minimum investment of $100 (plus a quarterly asset management fee of 0.25%). Groundfloor only charges borrowers fees, so investors are not subject to any trading, administrative, or account fees.
Groundfloor charges borrowers service fees for loans. Loan interest rates range from 2.00% to 4%. Loan applications cost $495, and Groundfloor charges a $1,250 closing fee.
As an added benefit, all fees associated with Groundfloor IRAs are waived through June 2025. IRAs require a minimum initial balance of $25,000.
Trustworthiness
Groundfloor has a B+ rating from the Better Business Bureau (BBB). BBB ratings range from A+ to F and reflect the agency’s opinion of a company’s interactions with customers.
Groundfloor is also accredited by the BBB, which means it meets BBB’s trustworthiness standards, including honesty, integrity, responsiveness, and security.
Before assigning ratings, the BBB also considers the age of the company (including the type of business), customer complaint history, licensing and government actions, and advertising issues.
Groundfloor has not had any recent lawsuits or scandals.
Alternatives
Here’s how Groundfloor compares to other high-yield real estate investment programs.
Why You Should Trust Us
We analyzed the Groundfloor real estate investment app using Business Insider’s investment platform rating methodology to compare and examine account types, pricing, investment options, and overall customer experience. The platforms are rated on a scale of 1 to 5.
Real estate investment platforms offer a wide range of assets, trading tools, and other resources. Groundfloor was rated by focusing on its performance in each category.
