Groundfloor review

Looking for a way to invest in real estate short-term, and wondering “Is Groundfloor legit?”

Groundfloor offers a rare short-term real estate investment, letting you invest money toward hard money loans. These loans to real estate investors typically come with terms ranging from 12-18 months.

Over the years, Groundfloor has become one of my favorite real estate crowdfunding platforms. No investment comes without drawbacks, but Groundfloor has consistently impressed me with its low minimum investment, solid returns, and transparency.


Groundfloor Review at a Glance

Minimum Investment: $10

Prospective Returns: 8-15%+ (long-term average ~10%)

Fees: None charged to investors (Groundfloor charges lender fees to borrowers)

My Take: A flexible short-term investment offering solid returns, acceptable risk, and a strong track record.


What Is Groundfloor?

Groundfloor is a hard money lender. That means they issue purchase-rehab loans for real estate investors looking to buy fixer-uppers, renovate them, and then sell as a flip or refinance using the BRRRR strategy.

Hard money loans are inherently short-term, high-interest loans. Also called bridge loans, they simply help investors buy properties and rehab them. Groundfloor issues ground-up construction loans as well for new real estate projects.

Lending in 35 states, Groundfloor leaves plenty of room for a diverse investment strategy, at least geographically:

what is groundfloor and where do they lend

Because Groundfloor provides investment property loans, they can foreclose on defaulting loans much faster than homeowner loans. Real estate investors don’t get the same mortgage protections that homeowners do. Between a faster foreclosure process and low LTVs (loan-to-value ratios), Groundfloor can recover money from defaulting borrowers relatively quickly.

Note that Groundfloor offers real estate debt investments, not equity investments. You don’t buy fractional ownership in real estate like some crowdfunding platforms such as Arrived, Fundrise, or Streitwise. Instead, you buy a debt secured by real property.

For legal reasons, Groundfloor calls these loan investments LROs: “Limited Recourse Obligations.” Now you know what the heck they’re talking about.


How Groundfloor Works

When you create an account on Groundfloor, you link your bank account and transfer funds to it, like any real estate crowdfunding website. From there, you can either invest automatically or manually pick and choose individual loans to fund with as little as $10 apiece.

Since late 2023, Groundfloor has steered investors toward their Auto Investor Account. When you transfer in funds, Groundfloor instantly diversifies your account by spreading investments across dozens or even hundreds of projects at once. Their mobile app lets you set up your account, view your accrued interest, total loans you’re invested in, details of your returns, your average realized returns, and more.

“What if I’d rather pick and choose investments manually?”

Groundfloor grades each real estate loan based on risk. Grade “A” loans represent the lowest risk, while loan grades “F” and even “G” represent high risk. Loans pay interest based on their risk level.

When I first started investing on Groundfloor, I tried to pick and choose winners: loans that paid decent interest but still seemed reasonably safe. I later realized that was a mistake.

Loans are a numbers game, in the sense that a minority percentage of them will default. Of those, some will end up catching up and paying off the loan in full, and some won’t. A small minority end up in foreclosure, and a few lose money.

Nowadays, I simply spread my investments across most loan risk levels. That usually means $10-30 per loan, spread across thousands of loans. Most perform just fine. Some default, and of those, most pay some or all of the interest owed me. Occasionally a loan will lose some of its principal.

But averaged together, Groundfloor loans have consistently earned around 10% per year.


Groundfloor Notes

In 2023, Groundfloor sadly discontinued its sister service called Stairs by Groundfloor. Like Concreit, it was backed by a pool of loans, and it allowed investors to pull out their money at any time, penalty-free.

In Stairs’ place, Groundfloor rolled out its Notes program to a wider audience, and rolled out the Auto-Investor Accounts which brings most popular Stairs features into the main Groundfloor investing experience.

With Notes, you can lend money to Groundfloor, rather than putting money toward individual hard money loans.

The longer the promissory note, the higher the interest rate. At the time of this writing, they offer one-month, three-month, and 12-month notes. Groundfloor discontinued their 24-month note in March 2024.

That same month, they released “Rollover Notes” that automatically reinvest your principal when the note matures. These pay an interest rate 25 basis points higher than the one-and-done alternative notes, and you can cancel any time within the 30-day reinvestment window. That keeps them a relatively liquid investment. 

Groundfloor notes require a minimum investment of $1,000, and offer one more option to park your money for relatively short-term investments.


Groundfloor Labs

One of the things I appreciate about Groundfloor is that they never stop innovating and testing new investment ideas. That’s how Stairs was born, and they continue offering experimental investments to this day.

For example, Groundfloor Labs is currently experimenting with “factoring advances.” These are cash advances to real estate investors, based on their current property cash flows, with a personal guarantee from the property owner. They often pay internal rates of return in the low to mid-teens.

Unfortunately, only shareholders and accredited investors can currently invest in Groundfloor Labs. But like accessing the Stairs Exclusive Note, if you contact them and ask them nicely, they might just let you into the super secret Labs club.


Interview with Founder Brian Dally

I had the pleasure of hosting Groundfloor’s founder, Brian Dally, on our Live Off Rents podcast. Give it a spin below!

Review of Groundfloor Advantages

Groundfloor comes with plenty of upsides for investors. Don’t expect to get rich off it, but it can add a welcome injection of diversity in your investment portfolio.


Solid Returns

No Groundfloor review is complete without breaking down their historical returns, so let’s start there. Since launching in 2013, Groundfloor has returned an average of around 10% for investors.

And despite declining home prices in much of 2022 and 2023, Groundfloor continued delivering those returns. They closed 2023 with an average return of 9.30% across 1,421 loans that repaid last year. While that’s slightly below their ~10% average, they performed a lot better than Fundrise, Streitwise, and most other real estate crowdfunding investments. 

In other words, Groundfloor pays similarly to historical stock market returns, but without all the drama.

Alternatively, you can lend money directly to Groundfloor, but expect lower interest rates unless you’re willing to invest a lot.


Low Minimum Investment

You can invest as little as $10 in Groundfloor loans, and $1,000 in Groundfloor notes.


Easy Diversification

Having invested in Groundfloor since 2018, I have money in thousands of Groundfloor loans. That suits me just fine — I don’t have to stress out about any one investment not performing.

In the Groundfloor app, they also have a tool called the DiversiMeter, which shows you how well your portfolio is diversified. The more money you put in, the more you spread across many loans, making your diversification higher and your portfolio more stable.

Real estate investments? Awesome. Being a landlord? Less fun.

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Investing Automation

Groundfloor lets you set up one-time or recurring transfers. For recurring transfers, you can select weekly, biweekly, monthly, or semimonthly payments on the date of your choosing.

And with their Auto Investor Account feature, they spread your money across many loans without you having to pick and choose them.


No Investor Fees

I’m hard pressed to come up with another real estate crowdfunding site that doesn’t charge any fees to investors at all.

How does Groundfloor do it? Simple: they earn all their fees from borrowers. They’re a mortgage lender, after all!

In fact, the model boasts an elegant simplicity. They earn money on lender fees, and you earn money on loan interest. They front the money for the loans, then raise it back from capital investors like you and me.

Take a moment to appreciate how there’s no conflict of interest there, unlike any other real estate crowdfunding investment, real estate investment trust (REIT), or real estate syndication. All of the others can and do charge fees, hidden or overt. Groundfloor keeps the model beautifully clean and simple.


Quick Turnaround on Investments

Most real estate investments require long-term commitments. In many cases, that means five years or longer.

That’s true whether you buy rental properties, or invest in real estate crowdfunding or real estate syndications. Real estate is an illiquid asset — it costs a lot of money and time to buy or sell.

With Groundfloor, you invest in short-term loans backed by real assets. You see the remaining loan term before investing, in some cases just a few months. And with Auto Investing, you’re diversified in dozens or even hundreds of projects at once so you can start to see repayments trickle in as soon as seven days.

That doesn’t mean you’re guaranteed to get your money back by then, of course. You get paid when the borrower repays the loan, and they don’t always do that on time.


Diversification from Stocks

One of my pet peeves about publicly-traded REITs is their volatility and correlation with stock markets. It’s the price you pay for easy liquidity and convenient investing through your brokerage account.

Groundfloor offers assets that share almost no correlation with stock returns. Month after month, year after year since 2013, Groundfloor has generated returns around 10%. And while historical stock returns are similar, stock markets gyrate every which way from Tuesday, causing panic attacks every time they come crashing down.


Non-Accredited Investors Allowed

Too many real estate crowdfunding platforms only serve wealthy accredited investors.

But the people who need the strong rates of return, cash flow, and diversification from real estate the most aren’t millionaires; they’re middle-class investors. Retail investors like you and me who can’t buy dozens of rental properties with a snap of the fingers.

Anyone can invest in Groundfloor, making it an easy and affordable way to diversify.


International Investors Allowed

Most U.S. real estate crowdfunding sites only allow American investors to participate. Groundfloor allows foreign investors as well, again serving a broader audience and giving access to people who often have trouble investing in U.S. real estate.



Every month, Groundfloor publishes a report on loan performance for the month, the quarter, and the year. All loans are also qualified by the U.S. Securities and Exchange Commission.

Not many other real estate investment platforms do that. Hard stop.

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Groundfloor Disadvantages

Every investment has downsides. So what words of caution do you need to hear before investing through Groundfloor?


No Liquidity or Timeline Guarantee

Once you invest in a loan, you’re committed. You can’t pull your money out of it — you have to wait until the borrower repays the loan. Which isn’t always on time. 

So yes, you can invest in loans scheduled to repay in three months from now, but that doesn’t mean the borrower will actually meet that timeline. You could wait many months longer before getting your money back.

Consider it a reminder that “short-term” does not mean the same thing as “liquid.”

However, with its newest product, Rollover Notes, you now have a liquid option. If you decide to cancel your investment in a Rollover Note, you can do so within the first 30 days.


No Granular Control Over Automated Investing

I love that Groundfloor offers automated investing, but it remains a blunt instrument. You can only enter the amount you want to automatically invest in each loan based on its risk grade.

I’d love to see other filters and requirements for my automated investments, such as LTV. For example, I’d want to set my auto investments to $20 for loans with an LTV under 70%, but only $10 for loans with LTVs over 70%.

Groundfloor tells me that they might add more precise control over automatic investing. Some day. Maybe.


Groundfloor Company Still Not Profitable

As a business, Groundfloor has yet to turn a profit.

Yes, they collect revenue by charging lender fees to borrowers. They also have plenty of expenses to cover, and have been reinvesting revenue to fuel growth.

Granted, your investment with them is still backed up by liens against real estate. Even if Groundfloor declares bankruptcy tomorrow, your money is tied to real estate loans, not to Groundfloor as a company. But it’s hard to imagine they’d do such an efficient job collecting loan payments and foreclosing on delinquent borrowers if they fell into bankruptcy.

I don’t lose sleep over this, but it does add slightly to the level of risk.


Groundfloor Review: How It Compares

To cap off our Groundfloor review (and all our crowdfunding reviews), we compare them to their closest competitors to see how they stack up.

For non-accredited investors, the closest competitors are other real estate crowdfunding platforms that let you invest with small amounts of money.

Fundrise comes to mind as one of the best competitors. They too let you invest with as little as $10, and that investment gets spread among several of their funds and “eREITs.” Some of those funds and eREITs own equity in properties, others own debt secured by property (like Groundfloor). Fundrise hits you with a penalty if you sell within the first five years, however.

Concreit offers a direct competitor to Stairs by Groundfloor, with a nearly identical model and returns. It’s a single pooled fund, mostly comprising hard money loans, although it owns one or two equity investments as well. They pay 6.5%, and while they technically let you withdraw funds at any time, in reality it takes 30-60 days to hit your bank account.

Arrived, Ark7, and serve as three other competitors, albeit with a dramatically different investing model. These real estate platforms let you buy fractional ownership in specific single-family rental properties, with as little as $50-100. Arrived doesn’t offer liquidity, but Ark7 and Lofty do offer secondary markets to sell shares on demand.


Is Groundfloor Legit?

Not many real estate crowdfunding platforms let non-accredited investors get started with $10 in short-term investments. Nor do most real estate investing platforms deliver consistent returns around 10% year after year, either.

Does Groundfloor come with risk? Absolutely. In a cooling housing market — like we saw in 2023 — the risk of defaults goes up for hard money loans. Investors looking to flip houses are having a harder time unloading them, and BRRRR investors are having a harder time refinancing at reasonable interest rates. As you review Groundfloor as a possible investment, consider your own risk tolerance.

Even so, Groundfloor has yet to let me down, and I’ve been investing with them for years now. In fact, I have more of my personal money invested with Groundfloor than any other crowdfunding site. That speaks louder to my confidence in Groundfloor than any words I can type out in a review of Groundfloor.


Ever invested in Groundfloor? What would you add to this Groundfloor review, based on your experiences?


Who’s the Author?

G. Brian Davis is a real estate investor and cofounder of SparkRental who spends 10 months of the year in South America. His mission: to help 5,000 people reach financial independence with passive income from real estate. If you want to be one of them, join Brian and Deni for a free class on How to Earn 15-30% on Fractional Real Estate Syndications.

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