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 a 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 fees for investors
- 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.
- Offers real estate loans only.
- Limited educational resources.
Overview
Groundfloor is one of the best real estate investment apps for experienced investors who can allocate their funds between short-term, high-yield, private fractional real estate debt investments through bonds and SEC-qualified limited reverse obligations (LROs).
The lack of management fees and automated diversification make it more attractive to those interested in short-term investment options. Groundfloor offers an auto-investor account to generate long-term passive income, which is ideal for intermediate to experienced investors.
Groundfloor also offers automated fractional real estate investments with its Flywheel Portfolio, with a $100 minimum investment.
Investing in real estate can typically 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. It’s also 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 firm 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 secured 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 allows you to easily invest and monitor various projects. You’ll have access to a dashboard, automatic reinvestment features, 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 view the total number of loans you’ve invested in. The Payment Allocation feature shows your principal paid off, interest earned, and average return.
Groundfloor Self-Directed IRA
Groundfloor allows you to invest in Long-Term Investment Accounts (LROs), Traditional IRAs, Roth IRAs, SEP IRAs, Simple IRAs, and Rollover IRAs. Forge Trust is the custodian of Groundfloor IRA accounts.
Groundfloor’s automated investment feature allocates your money to a variety of real estate projects with investment returns ranging from 7% to 14%. Additionally, Groundfloor will waive IRA fees through June 2025.
Groundfloor for Borrowers
Groundfloor’s 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 with a “set it and forget it” approach.
Participants receive monthly payments as their loans mature, with a target total return of 9% to 14.5%. New loans are added to the portfolio every six months. All Flywheel investments mature or mature within 36 months, providing investors with a reliable liquidity horizon.
- You only need $100 to get started investing in a Flywheel portfolio.
- There is a 0.25% quarterly asset management fee.
- For Groundfloor borrowers
Borrowers can apply for loans ranging from $75,000 to $2,500,000, with interest rates ranging from 2% to 4.5%.
To be considered a borrower, you must be an active LLC or corporation. Additionally, Groundfloor only accepts single-family home projects (1 to 4 units), and the property must be located in a state where Groundfloor actively lends, according to their website.
Here are a few other things to keep in mind:
Your property must have a minimum value of $50,000.
You must have a credit history of 640 or higher. Groundfloor includes mortgage units in closing costs. You can defer interest payments until your loan is paid off.
After renovation, you can receive up to 100% of the loan-to-value ratio and up to 70% of the loan-to-value ratio (ARV) (the ratio of the loan amount to the value of the property after all renovations), depending on your experience. With Groundfloor’s true deferred payment option, borrowers do not 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 fully paid off. This may be a more attractive option for developers who do not want to pay monthly interest.
Fees
There is a $10 minimum deposit to start investing. Groundfloor’s partial real estate investment portfolio has a $100 minimum (plus a 0.25% quarterly asset management fee). Groundfloor only charges borrowers fees, so investors are not subject to any trading, management, or account fees.
Groundfloor charges borrowers a service fee. Loan interest rates range from 2.00% to 4%. Loan applications cost $495, and Groundfloor charges a $1,250 closing fee.
As an added bonus, 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 customer service.
Groundfloor is also BBB accredited, which means it meets the BBB’s standards for trustworthiness, including honesty, integrity, responsiveness, and security.
Before assigning ratings, 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
We compared Groundfloor to other high-performing real estate investing apps.
Why You Should Trust Us
We analyzed the Groundfloor real estate investing app using Business Insider’s rating methodology for investment platforms to compare and examine account types, pricing, investment options, and overall customer experience. Platforms are rated on a 1-5 scale.
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.
Groundfloor’s overall rating according to Business Insider
Business Insider’s Overall Groundfloor Rating
Fees: 4.00
Investment selection: 3.50
Availability: 5.00
Customer support: 4.50
Ethics: 5.00
Liquidity: 4.00
Overall rating: 4.27
