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.
Business Insider's personal finance team compared Groundfloor to the best real estate investing platform and found it an industry leader for automated real estate investing. However, pricey and high-risk options make it not ideal for inexperienced traders.
Pros and Cons
Groundfloor Pros
- No fees for investors
- Shorter investment options
- Investments return 10% on average
- Available to non-accredited investors
Groundfloor Cons
- Though investments have shorter terms, they aren't as liquid as stocks and other securities
- You could lose money if the loan goes into default
- Only offers real-estate loans
- Limited educational resources
Open an Account
$10
2.75% to 4% interest on loans
- Historic 10% annual return
- Available to accredited and non-accredited investors
- Short-term investing terms
- Only offers real-estate investments
- Low-liquidity on investments
Groundfloor is best for experienced and passive investors, looking to profit from short-term real estate investments. There are no management fees, and it offers shorter investment terms than some competitors.
- All fees associated with Groundfloor IRAs are waived through the end of 2023.
Compare Groundfloor
$10
0.85% for real estate (additional 1% and $125 for IRAs)
- Available to non-accredited investors
- Low minimum account size requirements
- Varying risk and volatility options
- Passive income
- Investments are illiquid
- Illiquid investment options
- Not ideal for short-term investing
Fundrise is one of the best real estate investing apps for non-accredited investors looking for affordable crowdfunding investment options. The platform accepts clients regardless of annual income or net worth.
Fundrise- Consider it if: You're looking for an easy and inexpensive way to start investing in real estate.
- Awards: Listed in Forbes Fintech 50 list twice
$10,000
1% to 4%; 1.5% for Alternative Income Fund
- Access to alternative investments, including art, real estate, and legal settlements, that allow investors with plenty of assets to further diversify their portfolios
- Investors receive regular interest payouts over the life of the loan
- Higher-risk investments — best for those with a large amount of money to invest; limited investments available
- Fees may be higher than other types of investment accounts
- Investments are highly illiquid
Yieldstreet is best for experienced, high-income/high-net-worth investors, but folks who don't have six figures to invest in should look elsewhere. Yieldstreet is one of the best real estate investing apps for folks interested in real estate and alternative investments.
Yieldstreet- Consider it if: You're a high-net-worth investor interested in diversifying your investments across real estate and other alternative assets.
- Awards: Listed on CB Insights' Fintech 250 ranking as a Top Fintech Startup
$5,000 (minimums can also range between $10,000 and $30,000)
Varies; typically 0.5% (EquityMultiple also charges annual administrative expense fee of $30-$70)
- Low fees
- Option to invest in institutional commercial real estate, equity, preferred equity, and senior debt
- Multiple property types
- Self-directed IRAs available
- Only accepts accredited investors
- Doesn't offer publicly traded REITs
EquityMultiple is one of the best real estate investing apps for accredited investors. It offers commercial real estate assets, senior debt, equity, and preferred equity.
EquityMultiple- Consider it if: You're an accredited investor looking to invest at least $5,000 into commercial real estate.
Groundfloor Overview
Groundfloor is a top real estate investing app 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.
Ways to Invest with Groundfloor
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 30 days to 36 months. The company offers LROs, Notes, and the Flywheel Portfolio. 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.
The Flywheel Portfolio is Groundfloor's newest offering, allowing investors to fractionalize investments down to a fraction of one cent automatically. It offers greater portfolio diversification and liquidity with a 9.5 to 14.5% yield.
Groundfloor 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.
Groundfloor 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.
Groundfloor 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 Flywheel Portfolio
Groundfloor's Flywheel Portfolio is the platform's newest fractional real estate investment offering. It allows investors to diversify their portfolios instantly across hundreds of short-term real estate loans with a set-it-and-forget approach.
Participants earn monthly disbursements as loans are repaid, with a target aggregate return of 9-14.5%. New loans are added to the portfolio every six months. All Flywood investments are resolved or repaid within 36 months to establish a reliable liquidity timeline for investors.
To Invest in the Flywheel Portfolio, you only need $100 to get started. There's a 0.25% quarterly asset management fee.
Groundfloor for Borrowers
Borrowers can take out loans of $75,000 to $750,000, with rates ranging from 2% to 4.5%.
To qualify as a borrower, you must operate under an active LLC or corporation. 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 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 its business type), customer complaint history, licensing and government actions, and advertising issues.
Groundfloor doesn't have any recent lawsuits or scandals.
Groundfloor Alternatives
Here's how Groundfloor compares to other top-performing real estate investing apps.
Groundfloor vs. Fundrise
Groundfloor and Fundrise both offer real-estate investments for non-accredited, passive investors. However, 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.
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.
Groundfloor FAQs
Groundfloor is a safe investment platform offering SEC-qualified real-estate back investments for accredited and non-accredited investors. The platform uses data encryption software to protect users' personal information
Groundfloor fees are between 2.75% and 4% interest on loans. Loan applications are $250, and closing costs are $1,250.
You can get your money out of Groundfloor by logging into your account and opening the Investor Account tab at the upper right-hand corner. Click on Transfer Funds and select where you'd like to pull your funds from.
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 1 and 5.
Real estate investing platforms offer multiple assets, trading tools, and other resources. Groundfloor was evaluated, focusing on how it performed in each category.
Business Insider's Overall Groundfloor Rating
| Feature | Insider rating (out of 5) |
| Fees | 4.00 |
| Investment selection | 3.50 |
| Access | 5.00 |
| Customer service | 4.50 |
| Ethics | 5.00 |
| Liquidity | 4.00 |
| Overall score | 4.27 |
