GROUNDFLOOR is a growing community of lenders and borrowers using the scale, scope, and sensibility of the Internet to finance real estate development in a way like never before.
What is GROUNDFLOOR?
GROUNDFLOOR is a unique financial product for individual investors that allows non-accredited and accredited investors alike to participate directly in real estate investment loans on a fractional basis. We open the door to short-term, high-yield returns backed by real estate. Typical loans have returned 10 percent annually on a six to 12 month term.
The product is based on venture loans to real estate entrepreneurs, originated and serviced by Groundfloor. Prior to offering, every loan is pre-funded by Groundfloor after a thorough vetting of the borrower's experience, credit worthiness, and business plan, plus an assessment of the property value on an as-is and as-improved basis.
How does GROUNDFLOOR work?
It all starts with the borrower. A real estate investor, who we call a borrower, secures a loan through Groundfloor rather than a traditional bank or a hard money lender to finance a residential real estate project. That borrower submits a loan application which Groundfloor reviews and underwrites using their loan grading engine.
After review, the loan is assigned a loan Grade A through G and a corresponding rate where Grade A loans are the least risky, with the lowest rate of return and Grade G loans are most risky, with the highest rate of return. Grade A loans generally offer returns of 5.5% and Grade G loans generally offer returns of 26% with each letter grade offering a rate in that in range.
Once a loan is fully funded, a closing is initiated with the borrower. The loan closes, the borrower draws money according to a schedule, and completes the renovation or rehab project. The property is then listed, sells, and eventually closes. At closing the borrower repays investors via Groundfloor. A lump sum of principal invested plus interest earned is deposited into your Groundfloor Investor Account. The balance in your Groundfloor Investor Account can be withdrawn or reinvested in other projects.
How is GROUNDFLOOR different than a REIT?
With Groundfloor you create your own REIT. A real estate investment trust or REIT is a company that owns or finances income-producing real estate. When you invest your money with a REIT, the REIT manages your risk and reward. With Groundfloor you choose how much, when, and in which projects to invest. You are in control of your money and you manage your own risk and reward.
Do I have to an accredited investor to invest with GROUNDFLOOR?
From the very beginning Groundfloor has been open to accredited and non-accredited investors alike. In fact, Groundfloor revolutionized real estate investing by becoming the first-ever real estate platform for non-accredited investors, and it remains the only platform offering a customizable real estate portfolio for short-term, high-yield returns today.
As of January 9, 2018, we were qualified by the SEC to allow investors in all 50 states to invest in loans funding on our site. However, due to state-specific legislation in Nebraska, we do not currently allow investments on our platform from Nebraska residents.
Is GROUNDFLOOR lending?
Yes, GROUNDFLOOR is currently accepting loan applications for deals that meet our lending criteria and closing loans in as little as 3 weeks.
Given current market dynamics, we are not accepting new QC Maxx applications at this time. In addition, we are pausing all QC Maxx applications currently in process until further notice.
What are GROUNDFLOOR's lending guidelines?
Groundfloor is currently closing loans in as fast as 3 weeks. Below are our current lending guidelines:
1-4 Unit Properties in 30 states
New Construction projects in GA and NC
Loan size: $75,000-$1M
Terms: 6, 9, 12 month loans
Up to 75% LTARV; Up to 100% Loan-to-Cost depending on experience
No minimum transactions experience required, no JV Agreements considered
5 year look back for experience
Minimum credit score of 600
Minimum property value $50,000
All loans will be Full Recourse Loans with Personal Guarantees
Groundfloor will refinance a loan from another lender if the project is complete.
Why hasn't this been possible before?
Groundfloor was founded with a non-negotiable motivation to address the disparity of economic opportunity in finance, saving, and investing. Our commitment led to innovative insights about how to apply existing securities law to achieve our objectives. We're singularly focused, unlike other new entrants who have taken the easier path of serving the accredited investor status quo.
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