Groundfloor offers low barriers to entry, the minimum investment is only $100, and investors are automatically invested and diversified across hundreds of loans instantly through the Flywheel Portfolio. This product offers hyper fractionalization, down to even fractions of one cent, allowing for maximum diversification. Historically, investors have earned 10% average annual returns. This is true set-it-and-forget-it investing. Generate consistent cash flow.

Groundfloor offers short-term residential real estate loans to professional builders and developers and then sells pieces of those loans to investors. When you invest into Groundfloor’s Flywheel Portfolio, you are automatically investing into hundreds of these loans, you then get to share in the profit (or loss) that Groundfloor makes via interest payments on the loan. Unlike other real estate investment platforms where investors own an equity stake in real estate property or other types of funds for 3 to 5 year terms, Groundfloor investment options are based on secured, collateralized real estate debt with much shorter terms (6 - 18 months. For example, professional builders might be financing a 12-month project to rehab a house and then sell it at a profit. Because Groundfloor is usually in first-lien position on a secured asset, These debt products inherently carry less risk, which is why they've been able to generate consistent 10%+ returns for investors for more than a decade

Groundfloor’s default investment offering is called the Flywheel Portfolio. This product was rolled out in October 2024 based on years of investing experience across thousands of different loans and understandings of investor behavior. The Flywheel Portfolio is qualified by the U.S. Securities and Exchange Commission. Structurally, it is a REIT but comes with many benefits that are not traditional for most REITs.

The Flywheel Portfolio combines 200 – 400 short-term real estate loans into a single investment portfolio. This approach greatly reduces risk and offers more stable and consistent returns. With the Flywheel Portfolio, investors get the added benefits of:

• Weekly disbursements as loans repay
• Instant diversification into hundreds of loans
• Set-it-and-forget-it, real estate investing

The makeup of the Flywheel Portfolio consists of a variety of Groundfloor’s loans, which they originate and asset-manage internally. Most of these loans are issues to experienced developers who are flipping homes, building new construction homes or refinancing for long-term holds or rentals. Importantly for investors, Groundfloor usually is in first-lien position on these loans, meaning they are backed by the underlying asset of the home itself. This lowers the default risk for individual investors, and if and when there are defaults, the return on that property can actually even be higher than agreed upon terms.

The main point for everyday investors who want a passive income strategy is that Groundfloor is doing all the work for you. Each Groundfloor investor’s funds are automatically diversified  meaning you can invest $100 and have those funds dispersed into hundreds of projects at once minimizing your risk and maximizing your diversification. Because you're invested into so many projects at once through your Auto Investor account you’ll also start to see repayments weekly.

And if you’re still stuck on how this is different from a traditional REIT, the Flywheel Portfolio offers consistent cashflow, higher-yields, shorter-terms, planned liquidity, a closed structure, low minimum, and thorough diversification.

More than $1.7 billion has been invested through Groundfloor at the time of this writing.

• Historically, Groundfloor did not charge fees to its investors.
• With the launch of the Flywheel Portfolio in October 2024, because of its industry-leading fractionalization and diversification opportunities, there is now a nominal fee for investors that is paid through your account’s repayments.
• There are no upfront fees to invest in the Flywheel Portfolio. Instead, the Flywheel Portfolio administers a management fee of 0.5% to 1.0%, assessed at the time those funds are disbursed back to you along with your share of the interest.
• It’s important to remember that Groundfloor’s historical performance has yielded 10% across its portfolio. Thus this fee is still just a small amount to access these types of private real estate returns.

In addition to these nominal investor fees Groundfloor charges borrowers origination fees on loans. Originations points fall between 2% and 4% for borrowers. Loan application fees are $495.00 which covers the cost of the valuation/inspection. 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 origination points into the loan amount, and 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

Groundfloor’s Asset Management team works tirelessly to ensure that all of their loans are performing and progressing as expected. They thoroughly vet each borrower and loan application and almost always puts itself in a first lien position to help mitigate your risk as much as possible. Usually, investors will see a return on a defaulted LRO, albeit at a lower rate. Foreclosure is rare and a last-resort solution.

Here are a few ways in which the Asset Management team works diligently to ensure you’re getting the best return possible:
 

• Project Updates: Their Asset Management team works with the borrowers to obtain monthly status updates of the project.
• Project Progress Monitoring: Prior to closing the loan, Groundfloor agrees to a schedule for completion of the renovation works and listing of the project for sale. The time between each draw is tracked. In the event a draw is not made within 30 days, Groundfloor will send an independent inspector to the property to check on the status of the works.
• Upcoming Maturity Monitoring: As the loan gets closer to the maturity date, their Asset Management team works with borrowers to ensure timely project completion and payoff. If there is a situation where the borrower will not be able to repay the loan on time, they will first attempt to negotiate a plan to complete and sell the property to avoid foreclosure.
• Default Interest: Investors continue to earn interest from the time the initial investment is made until the time that the loan is paid in full. It is very important that Groundfloor reaches a resolution that provides for the maximum recovery of loan proceeds in the most time efficient manner. Foreclosure is always their last resort as it can be a very long and costly process.

Groundfloor is offering securities through the use of an Offering Statement that has been qualified by the Securities and Exchange Commission under Tier II of Regulation A. It has been listed on the Forbes Fintech 50 list and was on the Inc 5000 list for five years in a row..