Anybody invested in Ground Floor LROs or Notes?
West palm beach, FL · Member since 2016 · 36 posts · 5 votes
Anybody invested in Ground Floor LROs or Notes?
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
3y@Matthew J.
Recommend join groups like left field investors to find additional sponsors. Also check some broker-dealer sites such as dalmorefg.com who brokers the majority of regulation. A+ offerings
I would not listen to anyone online anyways about what would happen and have an attorney review the offering and subscription agreement.
Typically if a company goes bankrupt the assets are liquidated and what’s left (which is usually not much) it goes to preferred share holders then common share holders.
7e investments53 Reviews
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- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes3y
@Matthew J.
Really need to understand the offering and what you are investing in. If they cannot answer your questions to me that’s a red flag but I don’t know how aggressive you have been in getting questions answered. There are numerous private debt funds out there to invest in. Have you researched other funds? Why did you choose groundlfoor?
7e investments53 Reviews - West palm beach, FL · Member since 2016 · 36 posts · 5 votes3y
Quote from @Chris Seveney:
@Matthew J.
Really need to understand the offering and what you are investing in. If they cannot answer your questions to me that’s a red flag but I don’t know how aggressive you have been in getting questions answered. There are numerous private debt funds out there to invest in. Have you researched other funds? Why did you choose groundlfoor?
I googled with many keywords and I was only able to find ground floor and fundthatflip which I already invested in. I was looking for crowdfunding hard money loan. If you know any other hard money loan crowndfunding sites please let me know
Ground Floor is not new and I already received many responses to my questions in reddit and facebook but nobody seems to grasp the underlying risk thorougly. In this forum ground floor was discussed numerous times but nobody discussed what happens if GF bankrupts.
- Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes3y
@Dmitriy Fomichenko I think invests via Groundfloor, so maybe he can help.
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes3y
@Matthew J.
Recommend join groups like left field investors to find additional sponsors. Also check some broker-dealer sites such as dalmorefg.com who brokers the majority of regulation. A+ offerings
I would not listen to anyone online anyways about what would happen and have an attorney review the offering and subscription agreement.
Typically if a company goes bankrupt the assets are liquidated and what’s left (which is usually not much) it goes to preferred share holders then common share holders.
7e investments53 Reviews - Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Matthew J.:
So I have been researching crowdfunding Hard Money Loans and I found Ground Floor. There are 2 types of investments, one thru LROs and another is Notes. I was not able to find any info in regards to their risks in case GF goes bankrupt. Customer service replies are not clear to me.
Does anyone here know what happens to LROs and Notes seperately if GF bankrupts? What are the individual risks here?
Forget FTF.
For groundfloor, the notes are the safest compare to individual lending but still ****it's not actually being "secured" to any asset****LOL.
The risk is still huge.In case GF gone bankrupt , your money is gone, it's very simple.
- West palm beach, FL · Member since 2016 · 36 posts · 5 votes3y
Quote from @Carlos Ptriawan:
Quote from @Matthew J.:
So I have been researching crowdfunding Hard Money Loans and I found Ground Floor. There are 2 types of investments, one thru LROs and another is Notes. I was not able to find any info in regards to their risks in case GF goes bankrupt. Customer service replies are not clear to me.
Does anyone here know what happens to LROs and Notes seperately if GF bankrupts? What are the individual risks here?
Forget FTF.
For groundfloor, the notes are the safest compare to individual lending but still ****it's not actually being "secured" to any asset****LOL.
The risk is still huge.In case GF gone bankrupt , your money is gone, it's very simple.
Can you tell me why Notes are safer than LROs? I found some info below maybe it helps. Why did you say notes are not tied to any asset? It says "secured" next to it. Also why did you say forget fundthatflip? What is wrong with them?
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes3y
@Matthew J.
It depends 100% on the offering - for example we have a note fund and we kept it very simple. You invest in the company that actually owns the loans. Not only that but you are buying preferred equity shares and we have no leverage so you are not at the bottom of the capital stack.
When companies issue unsecured bonds or have one company holding assets and the other you invest in as unsecured assets realize you may be last in the capital stack as unsecured creditor.
People are waking up to this now because of peer street.
If you have questions and do not understand this it’s worth a $200 phone call to an attorney that says if these loans or projects go bad - what happens to me?
7e investments53 Reviews - West palm beach, FL · Member since 2016 · 36 posts · 5 votes3yI only know fundthatflip, groundfloor and fundrise. Fundthatflip requires investors to be accredited which I am not. Fundrise I am still researching. Groundfloor I got access to their facebook groups and found answers to many questions except 1. Which one gets paid first when GF bankrupts? Notes or LROS?
Quote from @Chris Seveney:
@Matthew J.
Really need to understand the offering and what you are investing in. If they cannot answer your questions to me that’s a red flag but I don’t know how aggressive you have been in getting questions answered. There are numerous private debt funds out there to invest in. Have you researched other funds? Why did you choose groundlfoor?
Do you have a list of all platforms? - Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes3y
@Matthew J.
Other debt funds
7e investments (which is mine)
PPR
Aspen Funds
Labrador lending
These are just a few others I can think of off top of my head but there are many others as well.
Go search sec Edgar search then out keyword I. Parenthesis - it will show all the reg d and reg an offerings that are available.
7e investments53 Reviews - West palm beach, FL · Member since 2016 · 36 posts · 5 votes3y
Quote from @Carlos Ptriawan:
Quote from @Matthew J.:
So I have been researching crowdfunding Hard Money Loans and I found Ground Floor. There are 2 types of investments, one thru LROs and another is Notes. I was not able to find any info in regards to their risks in case GF goes bankrupt. Customer service replies are not clear to me.
Does anyone here know what happens to LROs and Notes seperately if GF bankrupts? What are the individual risks here?
Forget FTF.
For groundfloor, the notes are the safest compare to individual lending but still ****it's not actually being "secured" to any asset****LOL.
The risk is still huge.In case GF gone bankrupt , your money is gone, it's very simple.
Carlos it says secured next to Notes. But you are saying it is not secured by any asset. Can you explain further
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes3y
@Matthew J.
The way it reads is they buy secured notes but your investment is not a secured note. You have a LRO which is unsecured and they can change it at anytime
7e investments53 Reviews - West palm beach, FL · Member since 2016 · 36 posts · 5 votes3y
Quote from @Chris Seveney:
@Matthew J.
The way it reads is they buy secured notes but your investment is not a secured note. You have a LRO which is unsecured and they can change it at anytime
you are saying "your investment is not a secured note" but it says "secured promissory note" next to the Notes offering.
I am confused
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes3y
@Matthew J.
You are confusing what they are buying versus what you are buying
You are buying a LRO. They are taking YOUR money and investing it in secured notes.
Just like Apple takes your money when you buy shares of stock and creates iPhones - you are not buying iPhones you are buying shares of a company. The company will tell you about those shares and all the risk
My recommendation is to avoid any types of these offerings as if you don’t know what your investing in, your gonna get burned.
Check out posts on Peer street to understand the difference as they invested in secured notes but investors were not secured.
7e investments53 Reviews - West palm beach, FL · Member since 2016 · 36 posts · 5 votes3y
Quote from @Chris Seveney:
@Matthew J.
You are confusing what they are buying versus what you are buying
You are buying a LRO. They are taking YOUR money and investing it in secured notes.
Just like Apple takes your money when you buy shares of stock and creates iPhones - you are not buying iPhones you are buying shares of a company. The company will tell you about those shares and all the risk
My recommendation is to avoid any types of these offerings as if you don’t know what your investing in, your gonna get burned.
Check out posts on Peer street to understand the difference as they invested in secured notes but investors were not secured.
Chris I agree with you on LROs which are unsecured
Notes are secured promissory notes. So what you are saying is GF is buying secured investments with the money they gather from Notes but the Notes itself is not secured for buyers of Notes like me?
Did I understand correctly?
- Member since 2019 · 72 posts · 53 votes3y
Quote from @Chris Seveney:
@Matthew J.thew J.
Other debt funds
7e investments (which is mine)
PPR
Aspen Funds
Labrador lending
These are just a few others I can think of off top of my head but there are many others as well.
Go search sec Edgar search then out keyword I. Parenthesis - it will show all the reg d and reg an offerings that are available.
@Matthew J. I would add our (RD Advisors) fund RD REDF II,LP to Chris's list. Also it's probably good to compare offerings for structure as everyone is a little different. We're a regionally focus (c. 90% of our loans in the Boston MSA) - others might be pro's at ground up lending, or cannabis etc... and different minimums etc...
We did a webinar awhile back on debt investing which I believe people found useful. We've also raised on Crowdstreet in the past so while we aren't a crowdfunding website we offered our fund on their platform (they just introduce to be clear, it doesn't go through them)
Chris, you are a wealth of knowledge. I'm in the industry and I appreciate your posts here. I have no idea how you find the time to answer all the questions you do but it is impressive!
- West palm beach, FL · Member since 2016 · 36 posts · 5 votes3y
Quote from @Sean Kelly-Rand:
Quote from @Chris Seveney:
@Matthew J.thew J.
Other debt funds
7e investments (which is mine)
PPR
Aspen Funds
Labrador lending
These are just a few others I can think of off top of my head but there are many others as well.
Go search sec Edgar search then out keyword I. Parenthesis - it will show all the reg d and reg an offerings that are available.
@Matthew J. I would add our (RD Advisors) fund RD REDF II,LP to Chris's list. Also it's probably good to compare offerings for structure as everyone is a little different. We're a regionally focus (c. 90% of our loans in the Boston MSA) - others might be pro's at ground up lending, or cannabis etc... and different minimums etc...
We did a webinar awhile back on debt investing which I believe people found useful. We've also raised on Crowdstreet in the past so while we aren't a crowdfunding website we offered our fund on their platform (they just introduce to be clear, it doesn't go through them)
Chris, you are a wealth of knowledge. I'm in the industry and I appreciate your posts here. I have no idea how you find the time to answer all the questions you do but it is impressive!
I think in all these crowdfunding sites, the missing point is the risk level. I am not sure if they do this on purpose or not but it is never clearly explained. I am still researching for Ground Floor, FundThatFlip and Fundrise/privateEquity with no avail. In this thread after many days and several questions, there has yet to be an answer so as to which gets paid first LROs or Notes when Ground Floor bankrupts.
I asked the same question in Ground Floor facebook groups snd no one was able to.answer among 1268 members. I sent an email to several team members in Ground Floor none of then replied back. Then I found high level people in Ground Floor in linkedin and asked the same question there and still no replies.
Why dont they want to answer? The more scary question is howcome thousands of people investing in an instrument without knowing the risk level? unbelievable
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes3y
Quote from @Matthew J.:
Quote from @Sean Kelly-Rand:
Quote from @Chris Seveney:
@Matthew J.thew J.
Other debt funds
7e investments (which is mine)
PPR
Aspen Funds
Labrador lending
These are just a few others I can think of off top of my head but there are many others as well.
Go search sec Edgar search then out keyword I. Parenthesis - it will show all the reg d and reg an offerings that are available.
@Matthew J. I would add our (RD Advisors) fund RD REDF II,LP to Chris's list. Also it's probably good to compare offerings for structure as everyone is a little different. We're a regionally focus (c. 90% of our loans in the Boston MSA) - others might be pro's at ground up lending, or cannabis etc... and different minimums etc...
We did a webinar awhile back on debt investing which I believe people found useful. We've also raised on Crowdstreet in the past so while we aren't a crowdfunding website we offered our fund on their platform (they just introduce to be clear, it doesn't go through them)
Chris, you are a wealth of knowledge. I'm in the industry and I appreciate your posts here. I have no idea how you find the time to answer all the questions you do but it is impressive!
I think in all these crowdfunding sites, the missing point is the risk level. I am not sure if they do this on purpose or not but it is never clearly explained. I am still researching for Ground Floor, FundThatFlip and Fundrise/privateEquity with no avail. In this thread after many days and several questions, there has yet to be an answer so as to which gets paid first LROs or Notes when Ground Floor bankrupts.
I asked the same question in Ground Floor facebook groups snd no one was able to.answer among 1268 members. I sent an email to several team members in Ground Floor none of then replied back. Then I found high level people in Ground Floor in linkedin and asked the same question there and still no replies.
Why dont they want to answer? The more scary question is howcome thousands of people investing in an instrument without knowing the risk level? unbelievable
The reason no one is answering is because there are NO notes issued to an investor. Not sure I can explain it any clearer. Replace Notes with pantyhose. Groundfloor buys pantyhose and investors give Groundfloor money to buy more pantyhose. Once someone invests, groundfloor issues the buyer a LRO. If they go bankrupt the pantyhose is the product they will sell to pay back the LRO's but the LRO's are not secured.
The answer of why people invest without risk level is because they think its cool product.
7e investments53 Reviews - Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Matthew J.:
Quote from @Sean Kelly-Rand:
Quote from @Chris Seveney:
@Matthew J.thew J.
Other debt funds
7e investments (which is mine)
PPR
Aspen Funds
Labrador lending
These are just a few others I can think of off top of my head but there are many others as well.
Go search sec Edgar search then out keyword I. Parenthesis - it will show all the reg d and reg an offerings that are available.
@Matthew J. I would add our (RD Advisors) fund RD REDF II,LP to Chris's list. Also it's probably good to compare offerings for structure as everyone is a little different. We're a regionally focus (c. 90% of our loans in the Boston MSA) - others might be pro's at ground up lending, or cannabis etc... and different minimums etc...
We did a webinar awhile back on debt investing which I believe people found useful. We've also raised on Crowdstreet in the past so while we aren't a crowdfunding website we offered our fund on their platform (they just introduce to be clear, it doesn't go through them)
Chris, you are a wealth of knowledge. I'm in the industry and I appreciate your posts here. I have no idea how you find the time to answer all the questions you do but it is impressive!
I think in all these crowdfunding sites, the missing point is the risk level. I am not sure if they do this on purpose or not but it is never clearly explained. I am still researching for Ground Floor, FundThatFlip and Fundrise/privateEquity with no avail. In this thread after many days and several questions, there has yet to be an answer so as to which gets paid first LROs or Notes when Ground Floor bankrupts.
I asked the same question in Ground Floor facebook groups snd no one was able to.answer among 1268 members. I sent an email to several team members in Ground Floor none of then replied back. Then I found high level people in Ground Floor in linkedin and asked the same question there and still no replies.
Why dont they want to answer? The more scary question is howcome thousands of people investing in an instrument without knowing the risk level? unbelievable
anything that starts with crowd is super risky LOL
everyone was having this question long long time ago.
track record matters, you should really joining some private investors group my friend.there's reason why those "online real estate" is receiving investment from the internet, it is because their due diligence process is less and less ; and it's too much heavy into the tech side.
if you want to invest, invest to company or fund where the fund already exist when your grandpa still young LOL
or invest to a company that they do NOT need to chase investor.got my point ? :)
- Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Chris Seveney:
Quote from @Matthew J.:
Quote from @Sean Kelly-Rand:
Quote from @Chris Seveney:
@Matthew J.thew J.
Other debt funds
The answer of why people invest without risk level is because they think its cool product.
This your last statement key here is the point, and why they are cool , then you have to extract and reverse-engineer the statement. There's no such thing as guaranteed investment.
- West palm beach, FL · Member since 2016 · 36 posts · 5 votes3y
Quote from @Chris Seveney:
Quote from @Matthew J.:
Quote from @Sean Kelly-Rand:
Quote from @Chris Seveney:
@Matthew J.thew J.
Other debt funds
7e investments (which is mine)
PPR
Aspen Funds
Labrador lending
These are just a few others I can think of off top of my head but there are many others as well.
Go search sec Edgar search then out keyword I. Parenthesis - it will show all the reg d and reg an offerings that are available.
@Matthew J. I would add our (RD Advisors) fund RD REDF II,LP to Chris's list. Also it's probably good to compare offerings for structure as everyone is a little different. We're a regionally focus (c. 90% of our loans in the Boston MSA) - others might be pro's at ground up lending, or cannabis etc... and different minimums etc...
We did a webinar awhile back on debt investing which I believe people found useful. We've also raised on Crowdstreet in the past so while we aren't a crowdfunding website we offered our fund on their platform (they just introduce to be clear, it doesn't go through them)
Chris, you are a wealth of knowledge. I'm in the industry and I appreciate your posts here. I have no idea how you find the time to answer all the questions you do but it is impressive!
I think in all these crowdfunding sites, the missing point is the risk level. I am not sure if they do this on purpose or not but it is never clearly explained. I am still researching for Ground Floor, FundThatFlip and Fundrise/privateEquity with no avail. In this thread after many days and several questions, there has yet to be an answer so as to which gets paid first LROs or Notes when Ground Floor bankrupts.
I asked the same question in Ground Floor facebook groups snd no one was able to.answer among 1268 members. I sent an email to several team members in Ground Floor none of then replied back. Then I found high level people in Ground Floor in linkedin and asked the same question there and still no replies.
Why dont they want to answer? The more scary question is howcome thousands of people investing in an instrument without knowing the risk level? unbelievable
The reason no one is answering is because there are NO notes issued to an investor. Not sure I can explain it any clearer. Replace Notes with pantyhose. Groundfloor buys pantyhose and investors give Groundfloor money to buy more pantyhose. Once someone invests, groundfloor issues the buyer a LRO. If they go bankrupt the pantyhose is the product they will sell to pay back the LRO's but the LRO's are not secured.
The answer of why people invest without risk level is because they think its cool product.
Thanks for your patience
I understood that LROs are definitely not secured and in the case of Ground Floor's bankruptcy, they are probably at the bottom of the stack.
So Notes are relatively more secured?
- Member since 2019 · 7k+ posts · 4k+ votes3y
Thanks for your patience
I understood that LROs are definitely not secured and in the case of Ground Floor's bankruptcy, they are probably at the bottom of the stack.
So Notes are relatively more secured?
That also depends :
1. If the note for particular property is individually owned by its own LLC and not an aggregated LLC
2. if the valuation itself is true and correctThe problem with PS is it's super messy because of the two factors above.
Pro tips: if you want to invest in a notes, invest to local note or local HML fund that's specialized in that particular region.In essense, if you buy into any "debt funds" nationwide, your risk is basically the macro economy structures, it's hard to explain, but if volatility is rising you HAVE TO MOVE money from aggregated/nationwide funds into a specialty investment.
During downturn, it's best to just invest at public investment company because their valuation usually has discount compare to the (non-transparent) private entity.hope it helps.
- Member since 2019 · 7k+ posts · 4k+ votes3y
so, in rising interest rate environment, the worst place to put money is investing into private company. Especially something like an unsecured aggregated notes that invested nationwide. You'd better put the money into 0% Chase checking account.
- Member since 2019 · 72 posts · 53 votes3y
@Matthew J. - it's a fair question but part of it is legalese. "Risk" is a vague term - so for the sites really what they need to disclose is facts - do you own a direct participation in the loan or is it indirect. What you are asking is: "Am I knowingly taking the risk the the borrower on the loan doesn't pay or am I unknowingly taking the risk that the platform isn't profitable and doesn't get the next venture round?" Correct? @Chris Seveney explains it well.
Our team put out a post on linkedin on the PeerStreet bankruptcy that did a bit to describe the structure so that might be useful reading to ask the specific questions on the structure. We'll do an update in a week or two.
We tried crowdfunding our fund but we found that investors don't view a fund of senior debt investments that sexy and didn't seem to risk weight investments. I.e. investors that self-direct seem to prefer direct investments into a single property versus diversification into a strategy (it's also harder to underwrite a manager / strategy than it is a single investment) - that's my personal experience.
@Carlos Ptriawan - made fair points on risk levels and experience. We're a local private lender, so perhaps biased, but agree with his assessment that the local sharp shooters (local/regional funds) are better positioned to know the lending landscape than a national player. Another question to ask is how much money does each manager have in each loan/strategy (in our case its substantial). Another lender in the market commented that "you lend like its your own money" i.e. we really care because it is our funds. The same can not be said of a platform that syndicates investors to investors without holding a piece of the risk.
I am not saying crowdfunding doesn't have it's place however the disclosures don't seem to be as clear as they should have been and the managers don't seem to hold enough residual risk. Also for many of the platforms it's only the loans that can't be sold to the institutions that go onto the platform for retail investors which has it's own inherent risks.
- Member since 2019 · 7k+ posts · 4k+ votes3y
The problem with general investor is simple, they do not know what they do not know.
While generating 8% income from note online seems cool, but that's only 15% of the story.
But usually investor only focus on that 15% only while forgetting the rest of 85% that they "do not know".So rather than investing blinding, investor should increase their education level and interact more and more to more established investor.
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes3y
Quote from @Carlos Ptriawan:
The problem with general investor is simple, they do not know what they do not know.
While generating 8% income from note online seems cool, but that's only 15% of the story.
But usually investor only focus on that 15% only while forgetting the rest of 85% that they "do not know".So rather than investing blinding, investor should increase their education level and interact more and more to more established investor.
I agree. Besides education it is also people chasing returns. There is a guy who posts the sam ad here in classifieds that says earn 15-50% in passive investments. Anyone who would even click on that should realize they are probably going to lose all their money. That is one example but people just look at a sponsors targeted returns and think they are actual. They never read anything because "a buddy told them they heard its a good investment" only to find the buddy did not invest but heard from a biggerpockets post which was from the sponsor...
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