Groundfloor 2025 Overview: Fees, Services, and More
onetop10.com | October 31, 2025 | Blog
Groundfloor is a real estate investment platform offering short-term, high-yield opportunities through fractional debt investments. Unlike traditional crowdfunding platforms, it allows non-accredited investors to participate with as little as $100, making it accessible to a wide range of investors. The platform primarily funds residential real estate projects and offers returns based on loan repayments made by developers. With its unique risk-reward structure and self-directed approach, Groundfloor offers an alternative to REITs (Real Estate Investment Trusts) and other real estate investment vehicles. Investors can review project details, risk levels, and expected returns before allocating their funds, adding a layer of transparency to the process.

Services and Features: What Does Groundfloor Offer?

Groundfloor is a specialized platform that does not offer traditional securities such as stocks, bonds, options, or mutual funds. Instead, it focuses on an alternative investment class: short-term real estate debt.

Here is how it works: borrowers apply to Groundfloor for a short-term real estate loan, typically with a term of six to eighteen months. They use these funds to purchase or renovate residential real estate for commercial purposes. Most Groundfloor borrowers use the capital to fund a property sale.

Groundfloor provides what is known as a “hard money” loan. This means the loan is secured by a physical asset that serves as both collateral and the intended source of repayment. For example, when a borrower takes out a loan to quickly renovate and sell a house, they do not intend to make payments from their personal income—as they would with a traditional mortgage; instead, they plan to repay the loan based on the resale value of the underlying property.

Groundfloor then bundles this debt into a portfolio in which its investors (you) can invest. For instance, you might purchase a $1,000 share of the debt for the “123 Main Street” project and a $5,000 share of the debt for the “567 Broad Street” project. When you invest, you do not actually acquire the debt itself. Instead, you receive a so-called LRO—a “Limited Recourse Obligation”—which entitles you to repayment based on the underlying loan.

When the borrower makes interest payments, they are distributed to Groundfloor investors on a pro-rata basis. You receive interest payments proportional to your share of the portfolio. When the borrower repays the loan, you receive your investment back.

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What Groundfloor Isn’t

Readers should be aware that Groundfloor is sometimes described as a crowdfunding platform. This is not entirely accurate. Groundfloor does not raise funds from its investors to finance its initial loans; instead, it originates the loans directly and then offers investors the opportunity to purchase a share of the existing debt. A more apt comparison for Groundfloor would be to secured mortgage loans.

This structure offers Groundfloor numerous advantages over other non-traditional investment platforms. Notably, it allows even small investors to access the real estate market. It is possible to purchase a share of Groundfloor debt for as little as $100. Furthermore, the platform is open to both accredited and non-accredited investors. This makes Groundfloor one of the most accessible alternative investment options available on the market today. At the same time, Groundfloor debt securities are a good source of income-generating investments. As borrowers pay interest, those payments accumulate in the investor’s portfolio as active income. Upon the maturity of the short-term note, the principal is recovered, allowing for reinvestment in a new project without the need to keep funds tied up for years.

Be Aware of Risks

However, it is important to be aware of the risks. Since Groundfloor offers debt assets, the greatest risk is a total default (without recovery). This means the borrower has failed to repay the debt, and the lender must attempt to sell the underlying collateral to recoup as much money as possible. This risk is inherent to the real estate sector and is particularly significant given Groundfloor’s focus on the rapid purchase and resale of homes intended for renovation (house flipping). Despite its popularity, this practice is essentially a form of high-risk real estate speculation that often ends poorly for the companies involved. Consequently, Groundfloor’s business model targets the highest-risk niche within an already high-risk sector.

As a result, Groundfloor has recorded default rates ranging from 2% to 4.71%. This is a high figure by residential real estate standards; for instance, according to data from the Federal Reserve Bank of St. Louis, the default rate for single-family residential mortgages stood at just 1.77% in the fourth quarter of 2024. Although real estate serves as collateral for this loan, the risk implies that the primary question is whether the borrower will make timely payments, rather than when.

Fees: How Much Does Groundfloor Cost?

In general, when choosing an investment or trading platform, four types of fees should be considered. When evaluating any investment or trading service, pay attention to these aspects:

Trading fees: Any fixed fee associated with each transaction you execute. This can be a fixed charge or a spread; the latter occurs when the broker charges you based on the difference between the asset’s buying and selling prices (if applicable).

Trading volume fees: These apply when the broker charges a percentage based on the volume or value of each transaction.
Inactivity fees: Fees charged by the broker for inactivity—for example, for holding funds in an investment account.
Other fees (not directly related to trading): Any other type of fee for using the platform not mentioned above. For instance, the investment company might charge you for depositing or withdrawing funds from your account or for purchasing additional services.
Groundfloor is free. According to information available to SmartAsset, this platform does not charge individual investors any fees or costs.

In contrast, Groundfloor derives its revenue from borrowers. When the platform issues a loan, it charges the borrower a fee ranging from 2% to 4.5% of the principal amount. The borrower also pays closing costs and application fees.

Effectiveness: How Well Does Groundfloor Work?

SmartAsset: Groundfloor Review 2023 – Fees, Services, and More
It is evident that the site was designed with ease of use as a top priority. Groundfloor is remarkably simple, partly due to its limited number of features. The company believes there are only three things you need to do on the site: add funds to your account, review your current investments, and make new ones. However, the site also features an educational center offering videos and articles on real estate investing and the real estate market. Your Groundfloor account page displays a list of real estate properties available for investment, along with key information about each one. Clicking on a specific investment takes you to its details page, where you will find information regarding the project, the borrower, and the expected return. (This information is visually presented via an “After-Repair Value” bar chart to illustrate the potential attractiveness of a given investment.) Perhaps most importantly, a large, colorful letter indicates the credit rating Groundfloor assigns to the project on a scale from A to G.

Assessing Risk

The inherent risk associated with real estate investment is not a hindrance to Groundfloor’s business model. The platform advertises average returns of 10% or higher, and most portfolios perform close to that 10% mark. Groundfloor’s debt structure offers an investment option that generates solid returns, while its focus on short-term loans prevents your capital from being tied up for years.

Bottom Line

it is important to approach investing in Groundfloor’s portfolio with caution. Its business model is speculative, as are the underlying assets of the debt securities offered.

Tips for Investing

Groundfloor offers short-term real estate debt investments. This can be a great way to include income-generating speculative investments in your portfolio. It is a simple way to enter the real estate market, but the average retail investor should understand the risks associated with different types of real estate projects before getting involved.

• The speculative portion of your portfolio can be one of the strongest pillars of your financial life. It can certainly also be the most enjoyable—provided you plan it wisely. That is why the advice of a financial professional is so valuable. Finding a financial advisor does not have to be difficult. SmartAsset’s free tool connects you with up to three vetted financial advisors in your area, and you can interview them for free to determine which one is the best fit for you. If you are ready to find an advisor to help you achieve your financial goals, get started now.
• One of the simplest ways to allocate your portfolio assets based on your risk tolerance, goals, and time horizon is by using an asset allocation calculator.

Photo credits: ©iStock.com/Khanchit Khirisutchalual, ©iStock.com/VioletaStoimenova, ©iStock.com/gremlin

Eric Reed is a freelance journalist specializing in economics, politics, and global affairs, with extensive experience covering finance and personal finance. He has worked with media outlets such as The Street, CNBC, Glassdoor, and Consumer Reports. His work focuses on the human impact of abstract issues, prioritizing analytical journalism that helps readers better understand the world around them and how to manage their finances. He has worked with journalists from over a dozen countries, including in cities such as São Paulo (Brazil), Phnom Penh (Cambodia), and Athens (Greece). Before turning to journalism, he practiced law, specializing in securities litigation and white-collar criminal defense, in addition to doing pro bono work related to human trafficking. He is a graduate of the University of Michigan Law School, and on autumn Saturdays, he can often be found cheering for his team, the Wolverines.