Looking for feedback from anyone who has had experience with GroundFloor either as an investor who purchased equity in one of their loans or has used them as source for funding. Thanks.
Has anyone else experienced a high default rate on their Groundfloor account? I've lent to about 70 projects and currently have 7 of 41 active loans in a state of default. Most of the defaulted loans are "A" and "B" loans which is particularly concerning.
Hi Ricardo, thanks for the comment. I work at GROUNDFLOOR and would love to speak a little more to this. First, please bear in mind that a default on our platform does not necessarily indicate that there will be a loss on that investment - in fact, the majority of defaulted loans on our platform repay in full, often with a higher interest rate than expected. This is because the interest charged to the borrower increases over the default period, and that interest rate is passed along to investors. Second, our Asset Management team places loans in default for a variety of reasons to ensure quality control, tracking, and overall management. I'd be happy to direct you to some resources on our website that go into this in more detail privately - BP does not allow me to post the links here. Just shoot me a DM if you would like these links.
Investor · Norwalk, CT · Member since 2019 · 20 posts · 9 votes
7y
I have been lending through GF for a little more than a year and I really like it. I've tried to diversify across many properties just to minimize risk. I tend to not chase the high yield and just focus on the Grade A and Grade B loans. I prefer monthly interest payments. I would say many loans are paid back well ahead of time - which is something I like because I feel like I'm constantly cycling through capital. I have NOT lost any money yet. A few loans have been extended. A few were technically in default but they were paid back + additional interest. If you have any other specific questions on the lending side, please let me know.
Thanks much for your response and I'm glad to hear you've had a great experience with BP. I've hesitated to invest until I had some feedback. I plan to begin this week and as with you, I'm not chasing the high returns but will be investing in A & B grade only. Thanks again. Your feedback is most helpful.
Investor · Columbus, OH · Member since 2017 · 861 posts · 1k+ votes
7y
I did some research into Groundfloor Finance. Take a look at their SEC filings, specifically the bit that says something like "our auditors have expressed serious reservations about our ability to continue operating as an ongoing concern" and how the founders are all taking pay cuts to stay operating.
Investor · Norwalk, CT · Member since 2019 · 20 posts · 9 votes
7y
Before making an actual investment, here are a few things I tend to do:
1) GF will show you if a borrower has borrowed through GF before. Obviously having a good pay back track record is more favorable for me.
2) I like to pop the address into Google Map and use Street View to look around the neighborhood and the surrounding houses. ***CAUTION*** --> Street View data might not be most recent. But look at the fine print ... if the data was from 2017, 2018, that's good enough for me. Sometimes you can tell other properties have been renovated. Other times, you will notice the house you are interested in is the WORST in the neighborhood. That's actually a good sign for me.
3) I also like to use Google Earth view to zoom out and see how far the house is from city center or schools or shops, etc. I tend to avoid places too far from a city. [Tip: You are going to see a lot of Atlanta area houses.]
4) Sometimes it is obvious the borrower just needs a short bridge loan - even though the term of the loan is for 12 months. You can check when a house was bought originally by the borrower. I've invested in houses where the pictures on Zillow are already updated and they are already listed for sale again. For me, that's a good sign.
5) I tend to avoid really large sizable loans because I find those to take a lot of people and time to fill. And then as you are waiting for them to fill (right now I'm waiting for two to fill), GF might release another batch of loans that are more interesting and you regret committing to the big ones. Having said that, you can cancel your commitment before the loan is filled. But I've never done it.
Good luck to you. Would love hear your experience or tips you observe as well.
Real Estate Agent · Ivor, VA · Member since 2011 · 73 posts · 21 votes
7y
I have been investing in their loans now for about a year and have earned a little over 11 percent..Just be sure to spread your money around into as many properties as possible just in case one goes south. Also if you sign up with this link they will give you a 10 dollar credit. GROUNDFLOOR
San Diego, CA · Member since 2017 · 105 posts · 55 votes
7y
I've been investing my Self-Directed IRA with Groundfloor for a little over a year. So far it has worked out well. The service has become much more popular over the past year, I believe they're no longer accepting IRA rollovers due to high demand. They are also in the process of a stock offering in the company itself.
I've been investing in Grade C and D properties so far in order to get double digit returns. I've had two loans pay off early (around 6 months into a 12 month loan), one loan pay right on time, and currently have two loans which are in default but look like they will only be slightly delayed. Overall I think Groundfloor does a pretty good job with data presentation and communication. It would be nice if there was better info available on the background of the deal sponsors, and if more details was included on the monthly updates on the projects. But overall it seems to go pretty smoothly, and the investing portal is very easy to use.
I have noticed that the quality of loans seems to fluctuate quite a bit over time, so don't rush yourself into a questionable deal just because it's all they have available at the current time. For instance right now they only have new construction loans available, which are riskier in my book so I would expect higher returns than what are being offered. Recommend sticking to renovation loans and do your homework online into the sponsor, market, ARV, etc.
Investor · Gardena, CA · Member since 2016 · 41 posts · 14 votes
6y
Has anyone else experienced a high default rate on their Groundfloor account? I've lent to about 70 projects and currently have 7 of 41 active loans in a state of default. Most of the defaulted loans are "A" and "B" loans which is particularly concerning.
Specialist · Crested Butte, CO · Member since 2015 · 104 posts · 25 votes
1d
sorry to hear that! Our SoCal development group is looking for partners/investment in our projects, we have a $20M 90% construction loan - would GF be a good place to raise the 10% ? (our projects are about 45-55% ltv)
Has anyone else experienced a high default rate on their Groundfloor account? I've lent to about 70 projects and currently have 7 of 41 active loans in a state of default. Most of the defaulted loans are "A" and "B" loans which is particularly concerning.
Hi Ricardo, thanks for the comment. I work at GROUNDFLOOR and would love to speak a little more to this. First, please bear in mind that a default on our platform does not necessarily indicate that there will be a loss on that investment - in fact, the majority of defaulted loans on our platform repay in full, often with a higher interest rate than expected. This is because the interest charged to the borrower increases over the default period, and that interest rate is passed along to investors. Second, our Asset Management team places loans in default for a variety of reasons to ensure quality control, tracking, and overall management. I'd be happy to direct you to some resources on our website that go into this in more detail privately - BP does not allow me to post the links here. Just shoot me a DM if you would like these links.