Groundfloor Review: Can You Make Money With The Platform?

Everyone knows that in this day in age, creating passive income is a must.

What seemed to be reserved for a select few in the past – generating passive income – is now more possible for anyone and everyone with stocks, real estate investing, and the internet.

However, there is often a catch… you need money to make money, right?

Often times the notion of investing in real estate is intimidating because of the capital it requires, but there are actually ways to make real estate investments while diversifying your portfolio with little risk and just $10.

How?

Use a crowdfunding platform such as Groundfloor.

Today, we will help you learn whether or not Groundfloor is worth your consideration, how the platform works, and how much money you can make if you elect to invest in the Groundfloor crowdfunding platform.


Quick Review of Groundfloor:

  • Our Rating: ⭐ 3.3/5
  • Low Investment: Just $10 to start
  • Rate of Return to Date: 10.5%
  • Interest Earned: $12,693,868
  • No Investor Fees
  • Variety of deal/risk/investment options

Simple steps to get started with Groundfloor:

  1. Sign-up here
  2. Select your investments
  3. Fund your account with just $10
  4. Earn

A Complete Groundfloor Review

You don't need $1,000's upon $1,000's to invest in real estate as you might think, you need just $10.

Recently, passive real estate investing — whether through traditional real estate investment trusts (REITs) or through real estate crowdfunding opportunities — has gained popularity as a way to access real estate’s earning power without having to rehab or rent out properties yourself.

But many passive investing options still require high minimums — sometimes thousands of dollars — to get started, and they have their drawbacks like low control over your funds, high costs to invest, and uncertain outcomes. 

That is not the case with Groundfloor as we learned in creating this post.

Groundfloor represents a new way to invest in private real estate loans simply, directly, and affordably, while allowing investors to retain full control over their portfolios. 


How does Groundfloor compare?

Groundfloor

  • Minimum investment of just $10
  • Can get your feet wet with real estate investing
  • Do not need to be an accredtied investor
  • $0 in fees

Crowdstreet

  • Minimum Investment: $25,000
  • Must be accredited investor
  • High return potential, steep intial ivestment required
  • Commercial deals

EquityMultiple

  • Minimum Investment: $10,000
  • Commercial focused real estate investing
  • Must be accredited investor to participate however minimum investment is $5,000

What is Groundfloor?

Groundfloor is a wealth tech platform that allows anyone to build wealth through real estate.

Founded on the belief that people are capable of making their own decisions about their investments and that they should be able to do so efficiently and economically, Groundfloor allows individuals to create their own, customized portfolios of individual real estate investments based on their personal investment and risk criteria — starting with a minimum investment of only $10.

Founded in 2013, Groundfloor was built from the ashes of the Great Recession, following the passage of the JOBS Act of 2012 (which our co-founder Nick Bhargava helped develop).

Founders Brian Dally and Nick Bhargava, started the platform with just a $10 minimum to make it accessible to everyone and to be a low barrier to diversification.

In practice, this means that rather than forking over thousands of dollars to invest in one project or fund, the $10 minimum allows investors to spread their funds out over many projects, thereby mitigating risk (similar to apps like Acorns). This is particularly beneficial for beginning investors, who may want to familiarize themselves with the process without having to commit large sums of money right away. 

Groundfloor Mission Statment:

“To open up previously private capital markets and new types of investments to the public so that anyone can participate in them, directly, as a bona fide first-party agent making their own investment decisions”


How Does Groundfloor Work?

Essentially, Groundfloor is a marketplace that brings together real estate developers looking for financing to complete their projects with everyday investors like yourself that are looking for ways to invest and build wealth (Related: How to Invest For the 1st Time).

Here is how it all works:

  1. Real estate developers start the process by applying for financing through Groundfloor.
  2. With over 100+ years of collective real estate experience, the Groundfloor team uses a proprietary algorithm to then underwrite and assign a grade to each approved loan.
  3. These loans are converted into investment securities (LROs) and qualified by the Securities and Exchange Commission.
  4. Once qualified, individual investors can invest into any LRO on a fractional basis with as little as $10 and create a fully diversified, custom portfolio of real estate debt tailored to their personal risk tolerance. This may seem like a lot of regulatory jargon, but the good news with this is that it means there is a lot of oversight provided by the SEC.

As each underlying loan is repaid, individual investors’ investments are also repaid, plus interest. Earnings are then able to be withdrawn from the platform at any time with no penalties — allowing you free access to your money whenever you need it most — or reinvested into other loan opportunities currently available on the platform. 

On Groundfloor, investors own short-term, high yield, real estate debt investments. Effectively, individual investors are investing in the short-term loans that professional builders and developers need to either rehab a house, build a new house, or provide rent stabilization for one of their properties.


Do you need prior investing expierence?

While it certainly doesn't hurt to have investing experience, the cool thing about Groundfloor is that you don’t need to have any prior real estate knowledge to invest.

The company created a standardized way to present all the relevant details about each investment opportunity:

  • such as loan amount,
  • term length,
  • loan to ARV,
  • interest rate, and more

Using their easy-to-understand proprietary grading algorithm that color-codes and grades loan opportunities A through G, allowing investors to easily gauge the project’s relative risk at a glance.

Sound cool? It really is. Keep reading below to learn how to get started with Groundfloor.


How to get started with Groundfloor:

how to get started with groundfloor
How to get started with Groundfloor

Setting up an account on Groundfloor takes just a few minutes and is pretty straightforward or put another way, as simple as downloading an app.

Here is how to get started for as little as $10:

  1. Visit Groundfloor and sign-up
  2. WIth their help, select your investments that fit you best
  3. Fund your account
  4. Earn (10% return on average as of July 2021)

Similar to an online brokerage account, you deposit the funds you plan to invest via transfer from your linked bank account.

Groundfloor utilizes a trusted third-party processor to process these transfers; once initiated, deposits may take three to five business days to appear in your Investor Account.

Deposited funds are held in your name (not Groundfloor’s) and are FDIC-insured until invested. 


What Kinds of Investments Does Groundfloor Offer?

Groundfloor’s main investment products are short-term residential real estate debt investments. Unlike equity investments (which are usually what you own on other real estate investing platforms), debt products are shorter-term and inherently carry less risk. These investments are backed by secure, collateralized assets (the properties themselves) in a first lien position. This means that Groundfloor investors will be first in line to be repaid should the property need to be sold as collateral to pay back the loan.

Funded real estate projects are sourced from around the country and vary in size, term length, and risk level. Groundfloor has built up a solid loan origination pipeline and introduces new investment opportunities on the platform on a weekly basis, ensuring investors always have the option to diversify into new projects.

Groundfloor also offers the ability to set up a self-directed IRA, giving investors the opportunity to diversify their retirement portfolio with real estate. 

Ways to invest with Groundfloor include:

When it comes to your investment options, this is where Groundfloor shines because they offer quite a few options for everyday investors like myself. From an auto investing feature that positions your funds to real estate projects that match your risk tolerance to literally allowing you to buy stock in Groundfloor itself, the options are nice.

Here is how it works when you invest in LRO's (Lesser risk only):

  • Groundfloor lends money to flippers
  • The money they lend in the form of a loan is convereted into fractional real estate debt investments
  • You fund your account and purchase a piece or fraction of that investment
  • Once the loan is paid back you're paid back interest
  • The loans are ranked (A-G) based on risk tolerance.

Groundfloor's borrower rate minimums are as follows:

  • Grade A: 5%
  • Grade B: 7%
  • Grade C: 9.5%
  • Grade D: 13%
  • Grade E: 16.5%
  • Grade F: 20%
  • Grade G: 24%

This means, if you're looking for a safer, less risky investment, option A would be your best bet, but the returns will be more conservative. Not to get into the weeds of things, Groundfloor also offers self-directed IRA investments.


Is Groundfloor legit?

Yes, Groundfloor is legit.

GROUNDFLOOR is the first and only company qualified by the SEC under Regulation A that offers debt-secured residential real estate investment opportunities to accredited and non-accredited investors alike.

That said, whether or not it belongs in your investment portfolio is another question. Groundfloor is optimal for passive investors looking to profit from short-term, high-yield private real estate debt investments.

They offer just a $10 minimum to get started and $0 in fees meaning it is free to use their platform as an investor. As of July 2021, the average rate of return was 10.5% meaning if you invested $100, you would have made $10.50.

Also, they have an A+ BBB rating.


Do you need flipper/real estate lending?

Alternatively, if you're not interested in crowdfunding investments but you are in need of lending to buy and rehab a property (BRRR method = buy, rehab, rent, repeat) then you can also use the Groundfloor platform to apply for a loan.

The availability differs based on your location, but as of right now Groundfloor lending is available in over half of the states.


What are Groundfloor's pros and cons?

groundfloor review

PROS of Groundfloor:

  • Anyone can invest in real estate with their low, $10 minimum investment
  • Variety of investment options/risks to choose from
  • Auto allocation feature
  • You get to maintain control of what you invest in unlike REITs
  • Non-acreddited investors can invest unlike CrowdStreet & others

CONS of Groundfloor:

  • Higher loan default rates compared to norms because of the amount of lending they offer
  • No live tracking, updates every 30 days only
  • Risk of property foreclosure (thus investment doesn't pan out)
  • No equity investing available with Groundfloor


What Are Groundfloor Returns and Statistics?

Historically, Groundfloor investors have averaged 10% annualized returns, on a 6-18 month timeframe, with no investor fees. According to the company’s most recent analysis (July 2021), the average annualized return on GROUNDFLOOR portfolios was 9.98%. 

Groundfloor currently has over 100,000 registered users on the platform. The company has seen investment sales of over $570M and has processed over $1B in transactions on the platform.

✅Need more stats? See more here:

Groundfloor is also an award-winning company, with the following distinctions:

  • Ranked on Inc Magazine’s 2021 Inc. 5000 List
  • Ranked in the top 10% (#402) on Inc. Magazine’s 2020 Inc. 5000 List
  • Ranked #102 on the 2020 Deloitte Fast500 List
  • 2020 Benzinga Global Fintech Awards Winner for Best Lending Platform
  • 2020 Benzinga Global Fintech Awards Finalist for Best Alternative Investments Platform
  • 2020 HousingWire Tech 100 AwardFintech Breakthrough Award for Best Crowdfunding Platform
  • Atlanta Business Chronicle Pacesetter Award Technology Association of Georgia
  • Top 10 Most Innovative CompaniesTechnology Association of Georgia's Fintech ADVANCE AwardA

  • The Verdict – Try it!

    When it boils down to it, you're not risking a lot to try investing in real estate with Groundfloor (depending on how much you invest).

    Like all sorts of investing, in the end, there will always be inherent risk and you should only invest what you're willing to lose (as the saying goes). Will you lose money when you invest with Groundfloor? I can't say you will or you won't, but based on this Groundfloor Review you should be able to discern that you have some pretty safe options with returns that range from 5+ and up.

    Here is what I would do/did:

    1. I would create an account with Groundfloor here
    2. I would fund the account with at least $10, but perhaps $100-$200
    3. Invest in a B,C, or D fund
    4. See what happens after 90 days

    Groundfloor FAQ

    Can you make money with Groundfloor?

    Yes, you can make money with the Groundfloor platform. Groundfloor states that their investors see an average return of 10.5% as of July 2021.

    Does Groundfloor cost money?

    No, there are $0 in fees to use Groundfloor and with a minimum requirement of just $10 to fund your account, it is a great option for new or non-accredited investors.

    What is the average rate of return for Groundfloor?

    According to Groundfloor's website, the average rate of return is 10.5%. You have the option to invest in different graded LRO's from less risk to more risk.

    Who owns Groundfloor?

    Brian Dally and Nick Bhargava founded and own Groundfloor an Atlanta-based company that started in 2013.

    Is ground-floor publically traded?

    Yes, 27% of Groundfloor was owned by the public as of 2021.

    What does loan ARV mean?

    After repair value refers to the value of a home after repair. This is relevant for flippers who are looking to make money on their flip and then pay off their loan.