Groundfloor.

How does it work? Groundfloor originates and services venture loans to real estate entrepreneurs.

Prior to offering, Groundfloor pre-funds every loan after carrying out a thorough vetting of the borrower’s experience, credit worthiness and business plan. This is followed up by an assessment of the property value on an as-is and as-improved basis.

With that in hand, Groundfloor provides individual investors the opportunity to access short-term, high-yield returns backed by its real estate offering.

According to Groundfloor, typical loans have returned 10% annually on a six to 12 month term.

Groundfloor was founded in 2013 by Brian Dally and Nick Bhargava. It is headquartered in Atlanta, Georgia, and is made up of a fast-growing team on a mission to take private lending public.

As a winner of more than 25 industry and innovation awards, Groundfloor currently has more than $240 million worth of assets under management, with nearly 200,000 users.

Groundfloor is a private money lender that lends money to people to buy real estate properties. As such, it offers private money to those in need of hard money loans that are designed for short-term expenses.

 

Aside from its loans, Groundfloor offers two products to the general public.

 

Stairs by Groundfloor

Designed to provide an alternative to big bank savings accounts, Stairs is an online savings platform that allows users to earn a 4% return on their savings.

With no minimum balance required and no fees to pay, the platform also offers 100% liquidity, letting users withdraw their money at any time.

This 4% return compares favourably to the big banks in the United States, where savings accounts typically offer interest on savings between 0.01% and 0.5%. Most also charge fees, which reduces users’ returns even further.

Groundfloor

Designed to work as a low-risk investment account, Groundfloor is targeted at users looking for high-yield, short-term investments, in order to earn a higher return than simple savings can offer.

Investing as little as $10, investors can access investments with an average return of 10%, backed by real, stable assets. There is no maximum balance, and no fees to pay.

Users have the option of choosing individual renovation projects to invest in, or using Groundfloor’s automatic investing tools to continuously invest in projects that meet their criteria.

Investments repay every 4-12 months on average, so for users who make investments each month, after four months, they will always have investments repaying each month.

Using Groundfloor, borrowers have access to more flexible, faster and cheaper capital.

So, what’s the process? After the borrower has submitted its loan application, Groundfloor reviews the loan using its loan grading engine, assigning each loan a grade between A and G, where A is the least risky and G is the most risky.

As the least risky option, Grade A loans offer the lowest rate of return to investors, typically around 5.5%. As the most risky, Grade G loans offer the highest rate of return, generally around 26%.

 

 

 

With all the paperwork in place, Groundfloor underwrites the loan, and then offers it up as an investment option to investors.

Each investor decides when, how much, and where to invest. Investing is simple and efficient.

Once the 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. For those who invested in the project, a lump sum of principal invested plus interest earned is deposited into their Groundfloor Investor Account. That balance can then be withdrawn or reinvested in other projects.

Image credits & copyright Groundfloor

 

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