Groundfloor Review: Real Estate Investing Starting at $10

Real estate is one of the most popular alternative investments, and for good reason. Countless millionaires and billionaires have built their wealth by investing in real estate. While real estate is a proven way to grow your net worth, it’s not always convenient or accessible.

There are several different ways to invest in real estate. Some of those options involve owning and managing properties, which can be very high maintenance. If you like the idea of adding real estate investments to your portfolio but you want a hands-free investment, your options will be limited.

During the past few years, crowdfunding platforms have become a popular way to invest in real estate without owning or managing the properties. Some crowdfunding platforms are open only to accredited investors, but others are open to any investor regardless of income or net worth. In this Groundfloor review, we’ll look at one of the most beginner-friendly platforms for investing in real estate.

7 Things to Know About Groundfloor

• Groundfloor allows you to invest in short-term real estate deals. Most of the projects range from a few months to a year in length. That means your money won’t be tied up for 5-10 years like it will be with most real estate platforms.
• With Groundfloor, you’ll invest in individual properties instead of a portfolio. Other real estate platforms like Fundrise take the portfolio approach, but with Groundfloor you’ll choose the specific properties you want to invest in.
• Historically, deals on the platform have produced an average annual return of more than 10%, according to Groundfloor. The target return varies depending on the project, but most are in the 8-12% range.
• Groundfloor is one of the most beginner-friendly real estate platforms. It’s open to non-accredited investors and you can start with as little as $10. In just a few minutes, you can add a real estate investment to your portfolio.
• New deals are added every day, so there are plenty of opportunities for investors. Some other real estate platforms have a very small selection of deals to invest in. That’s not the case with Groundfloor as there are new deals added constantly.
• Groundfloor offers a signup bonus for new investors. The bonus is $10. If you signup and invest at least $10 of your own, Groundfloor will give you another $10 to invest.
• There are no investor fees. Most real estate platforms will charge a management fee, but that’s not the case with Groundfloor. Instead, the borrowers pay the fees.

Groundfloor Review: Overview of the Platform

Groundfloor is one of the few real estate crowdfunding platforms for non-accredited investors that allows you to invest in individual properties or projects. Other platforms like Fundrise take a portfolio approach where investors own a share in a diversified portfolio of properties. If you want to select the specific properties you invest in, you’ll love Groundfloor.

As a crowdfunding platform, Groundfloor essentially matches borrowers and individual investors. Real estate developers and house flippers can get short-term loans for residential properties that include 1-4 units. As an investor, you’ll see all the real estate project that’s currently available, with the details of each. You’ll see the exact location of the property, photos, rate, remaining term, valuation, number of current investors, loan amount, and the remaining time for funding.

Groundfloor also assigns each short-term loan a grade. Loans with an “A” grade will present the least risk to investors, but also the lowest return.

When you see a project that interests you, Groundfloor provides a more detailed summary that gives much more information. You can see the specific factors used to determine the grade, read a detailed breakdown of the specific risk factors, loan terms, and more.

To invest, you’ll transfer money to Groundfloor from your bank account. The ACH process takes a few days, and then you’ll see the money in your Groundfloor account. With the money in your Groundfloor account, you can select any project you want to invest in, and it takes just a minute to set the amount you want to invest and move forward.

Most of the projects on Groundfloor have a deferred payment schedule, which means investors will be paid when the project is complete (as opposed to receiving a monthly payment). If the borrower is flipping a house, investors will be paid once the house is sold. The loans typically range from a few months to a year, so that’s the amount of time you’ll need to wait to be repaid with interest.

Of course, like any other investment, the projected returns are not guaranteed. There is some risk of loss involved in investing with Groundfloor, just like any other real estate investment.

Past Performance

According to Groundfloor, the actual returns to date on the platform are 10.5%. As an investor, you’re able to choose the projects you invest in. You’ll see the grade for each project, as well as the target or projected return. If you want to take a more conservative approach, you can invest in deals with an “A” or “B” grade (there aren’t many deals with an “A” grade), but you won’t earn a 10% return for these deals with limited risk. If you want a higher return and you have some risk tolerance, you can invest in deals with a lower grade that have a target return of 10% or more. There are plenty of these deals available, and new options are added daily.

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Groundfloor Pros and Cons

Like any other investment platform, there are pros and cons that should be considered before investing in Groundfloor.

Pros

• Open to accredited and non-accredited investors. Many real estate investment platforms are open only to accedited investors (annual income of $200,000+ or a net worth of at least $1,000,000, exlcuding primary residence).
• Get started with as little as $10. Groundfloor has an incredibly low minimum investment that makes it possible for anyone to get started.
• Choose the exact properties you want to invest in. Groundfloor is one of the only platforms open to non-accredited investors that allows you to select the specific projects and properties you want to invest in.
• Strong historical returns. With past average returns exceeding 10%, it’s clear that Groundfloor is a legit investment option.
• Short-term deals. While most real estate investing platforms require you to invest for 5-10 years, Groundfloor forcuses on short-term deals. As a result, your money won’t be tied up for years.
• Excellent and user-friendly investor deashboard. You can login and see the available real estate debt investments, choose any that you want to invest in, and move forward very easily. You can also see the details of your current investments.
• Signup bonus. Currently, Groundfloor is offering a $10 bonus for new investors. If you invest at least $10 of your own money, you’ll qualify for the bonus (you need to sign up through a referral link to be eligible for the bonus).
• No investor fees. While most real estatement platforms, along with other alternative investments, charge a fee to investors, Groundfloor does not. With no fees, your money can grow and compound faster.
• Option to invest in a self-directed IRA. You can invest through a regular taxable account or set up an IRA. Groundfloor offers the following types of self-directed IRAs: Roth, traditional, SEP, simple, rollever, and self-employed 401(k).
• Automatic investment otion. Groundfloor offers the option to invest automatically. You’ll set the amount you want to invest, the schedule, and the investment grade you prefer. Your money will be automatically invested with no need to review each deal individually.

Cons

• Requires more time from investors. If you’re not using the auto investing option, reviewing and selecting projects will take some of your time. Those who want a completely hands-free investment may prefer an option like Fundrise, where you simply invest in a portfolio of income-generating properties.
• Diversifying your investment requires you to invest in many deals. Investing in a broad portfolio of properties helps with diversification. You can accomplish the same thing with Groundfloor, but you’ll need to invest in a lot of different deals on the site.
• Higher risk. Groundfloor grades each deal and provides details that help investors evaluate risk. However, investing through Groundfloor involves a greater risk of default than many other types of investments. Of course, greater investment risk also brings the possibility of higher returns. You’ll need to consider your comfort level with risk before investing.

Groundfloor Fees

Groundfloor does not charge any fees to investors. Borrowers pay fees for Groundfloor’s services, allowing them to operate without fees or costs for investors.

Who Is It For?

Because Groundfloor is open to all investors (accredited and non-accredited) and because the investment minimum is just $10, it’s an ideal platform for anyone who wants to get started with real estate investing. The barriers that often present a challenge for investing in real estate aren’t an issue if you’re investing through Groundfloor. It’s easy to get started with a small amount of money, and you can add more later if you choose to.

Groundfloor is also an ideal platform for anyone who wants to pursue double-digit investment returns. With an average historical return of 10.5%, Groundfloor has an excellent track record of producing results for investors.

Experienced investors who want to choose specific projects and properties will also appreciate Groundfloor. Since many other platforms take the portfolio approach, Groundfloor stands out by allowing investors to select specific projects.

Groundfloor Alternatives

Groundfloor is an excellent option, especially for new investors, but here are some alternatives you might want to consider as well.

Fundrise

Fundrise is the most popular real estate crowdfunding platform. Like Groundfloor, Fundrise also allows investors to start with as little as $10. However, Fundrise takes a much different approach by pooling investors’ money together. As a Fundrise real estate investor, you’ll own a share of a portfolio of properties.

Compared to Groundfloor, Fundrise is more of a hands-off investment. You’ll simply fund your account, with no need to choose the individual projects you want to invest in, which is ideal for the passive investor. Fundrise also provides a user-friendly dashboard and has produced solid historical returns.

Arrived

Arrived is similar to Groundfloor in some ways. The primary difference is that Arrived is a real estate investing platform for rental properties, not house flipping. Like Groundfloor, you’ll select the specific properties you want to invest in, but these will not be short-term loans like the deals offered at Groundfloor. Arrived allows you to own a share of a rental property, and you’ll be paid based on the rental income generated by the property. The minimum investment is $100.

Public.com

Public.com is an online brokerage that offers commission-free trades of stocks and ETFs. It’s not a real estate platform, but it is a Groundfloor alternative as a legit option for easily investing small amounts of money. You can purchase fractional shares of stocks and ETFs for as little as $1. And currently, Public.com is offering a free slice of stock worth up to $300 if you sign up through this link*.

Final Thoughts

If you’re looking for a way to get started with real estate investing, Groundfloor is an excellent real estate crowdfunding platform. It’s a beginner-friendly platform that’s open to all investors (not just accredited investors) and the minimum investment of just $10 makes it a legit option for anyone. However, the 10%+ historical rate of return makes Groundfloor an attractive option even for more experienced investors.

If you’re ready to get started with Groundfloor, be sure to sign up through this referral link to qualify for the signup bonus.

*Public.com offer valid for U.S. residents 18+ and subject to account approval. This is not a recommendation. You can lose money with any investment. Open To The Public Investing is a member of FINRA & SIPC. Regulatory and firm fees apply. New customers receive free stock with value $3-300; 0.3% receive the max value. Cryptocurrency trading provided by Apex Crypto LLC (NMLS ID 1828849). Apex Crypto is licensed to engage in virtual currency business activity by the New York State Department of Financial Services. See Public.com/disclosures/