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Groundfloor is a wealth-tech and real estate investment platform offering SEC-qualified real-estate backed investments for accredited and non-accredited investors. The platform uses passive investing strategies to make diverse real-estate projects more readily accessible for everyone. Pricey investment options and high risk are not ideal for beginners.

Introduction to Groundfloor

Groundfloor is one of the best real estate investing platforms for experienced traders who allocate their funds across diverse short-term, high-yield private fractional real estate debt investments through notes and SEC-qualified Limited Resource Obligations (LROs).

The lack of management fees and automated diversification make it more appealing to traders interested in short-term investment options. Groundfloor also offers an Auto Investor Account for generating passive income over the long term, which may be suitable for intermediate and experienced investors. 

Generally, investing in real estate can be overwhelming for beginners, even using the best real estate lending platforms. Although Groundfloor’s automated trading features make investing in real estate more accessible, it may still be too confusing 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 real-estate-backed investments. Traders seeking access to multiple asset classes should consider a different investment platform. 

Groundfloor: Overall Rating

How Groundfloor Works

Here’s how to invest in real estate with little money with Groundfloor:

Groundfloor solely invests in fractional real estate debt investments with terms ranging from 12 to 18 months. The company offers two choices: LROs and Notes. Limited Recourse Obligations (LROs) are debt securities backed by an underlying real estate asset with expected returns of 8% to 15%. 

Standard and rollover Notes are loans with a repayment structure similar to bonds and terms options of 30-day, 90-day, or 12 months. They are secured by a pool of Groundfloor-originated loans that haven’t yet been funded as LROs on its platform. Notes have lower returns than LROs (ranging from 5.75% to 7.50%) but also lower risk.

Auto Investor Account

Groundfloor’s Auto Investors Account takes a set-it-and-forget approach to generating passive income. Once you transfer funds into your account, the robo-advisor automatically invests in hundreds of high-yield loans to create a diversified portfolio of assets with a 10% historic return.

Once your initial loans are repaid, you’ll be automatically reinvested in more. Payments start rolling out in as little as three months but may take longer. 

Mobile-First Investing

Groundfloor’s mobile app lets you easily invest in various projects. You’ll get access to an information dashboard,  automatic reinvesting features, savings goals, and portfolio projections to help you project future balances.

The Portfolio Summary feature allows you to track investments, accrued interest, and annualized returns and view the total loans you’re invested in. The Repayment Breakdown feature can show you your return capital, interest received, and your average realized return. 

Self-Directed IRA

Groundfloor lets you invest in LROs, traditional IRAs, Roth IRAs, SEP IRAs, SIMPLE IRAs, and Rollover IRAs. Forge Trust is Groundfloor’s IRA custodian. 

Groundfloor’s auto-investing feature allocates your money across diverse real estate projects, with investment returns ranging from 7% to 14%. Additionally, Groundfloor is waiving all fees for IRAs until December 2024. 

Groundfloor for Borrowers

Borrowers can take out loans of $75,000 to $750,000, with rates ranging from 2% to 4.5%. 

You must operate under an active LLC or corporation to qualify as a borrower. In addition, Groundfloor only accepts projects that are single-family residential properties (with 1-4 units), and the property must be located in a state where Groundfloor actively lends, according to its website. 

There are just a few other things to note:

• Must have a minimum property value of $50,000
• You’ll need to have a credit score above 640
• Groundfloor rolls mortgage points into closing costs; you can defer interest payments until the loan repays
• You can receive up to 100% loan-to-cost and up to 70% loan-to-after-repair value (ARV represents the ratio between the loan amount and the value of the property after you’ve completed all repairs), based on experience

Borrowers don’t have to provide interest payments until the loan is repaid because of Groundfloor’s true deferred payment option. While the company also offers a monthly payment option, the deferred option allows you to push off your interest payments until your loan ends. This could be a more attractive option for developers who don’t want to pay monthly interest payments.

Groundfloor Fees

There’s a $10 minimum deposit to start investing. Groundfloor only charges fees for borrowers, so investors are not subject to paying trading, management, or account fees.

Groundfloor does charge borrowers service fees on loans. Loan rates fall between 2.75% and 4% interest for borrowers. Loan applications are $250, and Groundfloor charges you $1,250 for closing.

On the upside, all fees associated with Groundfloor IRAs are waived through June 2024. IRAs require a $25,000 minimum opening balance.

Groundfloor Pros and Cons

Groundfloor Trustworthiness

Groundfloor has a B+ rating with the Better Business Bureau. BBB ratings range from A+ to F and reflect the bureau’s opinion of how well a company interacts with its customers. Before issuing ratings, the bureau also considers a company’s time in business (including the type of business it is), customer complaint history, licensing and government actions, and advertising issues.

Groundfloor doesn’t have any recent lawsuits or scandals.

Groundfloor vs. Other Real Estate Crowdfunding Platforms

Groundfloor vs. Fundrise

Groundfloor and Fundrise both offer real-estate investments for non-accredited, passive investors. But the two platforms differ in asset options and features. 

For only $10, you can open a Fundrise account to invest in REITs, electronic real estate funds, venture funds, and IPOs. Fundrise is also better for traders interested in long-term investments (at least five years), whereas Groundfloor is better for short-term investments and loans and charges lower fees. 

Fundrise offers more account options, including joint brokerage and entity accounts.

Fundrise review

Groundfloor vs. Yieldstreet

While Groundfloor is solely a real-estate investing platform, Yieldstreet also offers multi-class funds, fine art, and short-term assets. However, it charges a higher account minimum ($10,000). 

If you want to buy and sell various assets, particularly alternative investments like art, then Yieldstreet is a better option. Investors solely wanting to trade real estate and take out real estate-related loans are better off with Groundfloor. 

Yieldstreet review

Groundfloor FAQs

Why You Should Trust Us: How We Reviewed Groundfloor

We examined Groundfloor‘s real-estate investing app using Business Insider’s rating methodology for investing platforms to compare and examine account types, pricing, investment options, and overall customer experience when reviewing investing platforms. Platforms are given a rating between 0 and 5. 

Real estate investing platforms generally offer multiple assets, trading tools, fees, and other resources. Some platforms are better for more advanced or active investors, while others may better suit beginners and passive investors. Groundfloor was evaluated, focusing on how it performed in each category.