Groundfloor Review: Pros, Cons, And Alternatives

Groundfloor is a real estate investment company focused on fractional real estate investing, note investing, and more.

It's the first company qualified by the SEC to offer real estate debt investments via Regulation A for non-accredited investors.

As of January 2026, Groundfloor has lent out over $2.2 billion across 5,800+ projects. Investors to date have received annualized average returns of 10% with a loss ratio (the ratio of principal lost to total principal invested) of less than 1% since 2013.

The numbers sound enticing, but is Groundfloor right for you? Here’s what you need to know in our Groundfloor review.

What Is Groundfloor?

Groundfloor is a fractionalized real estate lending and investing platform. As an investor, you are funding loans for residential real estate projects, including Fix and Flip properties, new construction properties, and buy-and-hold properties. 

You can start investing with nominal fees and a $100 initial minimum investment. This lets both accredited and non-accredited to pool funds and invest in real estate projects, and investors earn repayments from these projects relative to their investment.

Groundfloor has a mobile-first approach and its app makes investing easy and accessible for both non-accredited and accredited investors, though you can invest on your desktop and mobile browser as well. With the Flywheel Portfolio, which launched in October 2024, your funds will automatically and instantly be invested and diversified across a collection of hundreds of loans. Because you are automatically invested across so many projects at once, you can start to see repayments trickle within as little as seven days.

In the app, you can see your Portfolio Summary, a Projections chart, a Repayments Breakdown, and more. All of this shows you your accrued interest, total loans you’re invested in, an estimate of your portfolio’s value over time, your average realized return, and more. The Groundfloor app is available on iOS and Android devices.

Groundfloor works with investors nationwide. They work with borrowers in 35 states.

Borrowers can get loans for $75,000 - $2,500,000 with origin points between 2.00%-4.00%. Anyone who has worked with a hard money lender knows that these are screaming deals. They will fund up to 100% of the cost of a project for qualified borrowers, and up to 70% of the after flip value, based on experience. Groundfloor also offers a unique deferred payment loan option, which means you will have no payments during the term of the loan.

What Are You Actually Investing In? 

Groundfloor’s default investment offering is 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 (read on to learn more about these benefits!).

The Flywheel Portfolio combines 200 – 400 short-term real estate loans into a single investment portfolio. This innovative 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! You don’t need to know the ins and outs of every loan but below is more detailed information about what you’re investing into.

LROs - debt investments

• Limited Recourse Obligation (LRO)
• A debt security that Groundfloor submits to the SEC for qualification on our platform. Groundfloor typically holds a first lien position on each loan, and each loan is backed by the underlying real estate asset(s)
• Groundfloor prefunds the loans

Types of projects

Purchase And Renovation

A project type in which an individual or investor purchases a property with the intention of renovating and improving it. The renovation may include cosmetic updates, such as painting and flooring, or more extensive renovations, such as adding additional rooms or updating plumbing and electrical systems. This type of project typically requires a significant amount of planning, budgeting, and coordination with contractors and designers.

Refinance-Rehab 

A project type in which an individual or investor refinances an existing mortgage on a property with the intention of using the funds to complete a renovation or rehabilitation of the property. This type of project can allow for lower interest rates and a longer repayment period, and may provide more flexibility in terms of budgeting and project timelines.

Refinance-Cash Out

A project type in which an individual or investor refinances an existing mortgage on a property and takes out a larger loan than the current mortgage balance. The additional funds can be used for any purpose, such as financing a renovation, paying off debt, or making other investments. This type of project can provide access to cash that may not be available through other types of financing.

New Construction 

A project type in which an individual or investor builds a new property from the ground up. This type of project typically requires significant planning, design, and construction work, and may involve working with architects, engineers, and contractors. The project may be a residential or commercial property, and may involve the construction of a single unit or multiple units.

How Groundfloor Works

Many investors who will never pick up a hammer, talk to a home inspector, or rehab a house want access to Real Estate investments within their portfolio. Most of these investors will gain real estate exposure by purchasing REITs.

Groundfloor is a lending marketplace. The Groundfloor Team is loaded with Real Estate Experts, with over 100 years of collective real estate experience, but there are no guarantees. 

Investing with Groundfloor is easy. Just sign up, connect your account, and transfer funds into the Flywheel Portfolio. Funds will automatically be invested and diversified across a collection of hundreds of loans, and if you turn on automatic reinvesting, you’ll get compounding returns without having to lift a finger.

There aren’t any upfront fees with the Flywheel, but there is a 0.50% to 1% management fee assessed at the time those funds are disbursed back to you, along with your share of interest. Groundfloor’s annualized 10% historic returns are also included in this fee.

According to Groundfloor’s recent analysis, loans that have gone into default have still historically returned 10% interest on average. Groundfloor is almost always in first lien position on the home. So some or all of the principal can be returned to you in the event of a loss as well.

Since launching in 2013, Groundfloor’s loss ratio (the ratio of principal lost to principal invested) has been less than 1%. If a loan experiences a loss, it could be the loan you fund. As an investor, you don’t have control over the project. You’re outsourcing that work to others.

The key to successful investing on Groundfloor is diversification and fractionalization, which they automate for you in the Flywheel Portfolio. Investors who have diversified their portfolios into a large number of loans can still realize high overall rates of return, even when losses occur. In fact, Groundfloor's analysis shows that a model portfolio consisting of an equal investment made into all 3,663 loans repaid as of 2023 would've earned an annualized net return of 9.84%. It’s a great concept, and Groundfloor now has over 10 years of data that you can review in the many analyses the company has available on its blog.

However, it’s a good idea to take some time to become comfortable with Groundfloor’s model before you commit money. Luckily, the company’s $10 minimum investment size and no fees allows you to try the platform out and get a feel for how it works first, without having to invest large sums.

Groundfloor Offers Broad Exposure Potential

Groundfloor doesn’t require you to fund an entire loan yourself. That’s a good thing because the loans are between $75,000 -$2.5M. You can gain exposure to loans in up to 32 states. Transparent deals in diverse geographic regions can give you a margin of safety.

A common maxim in real estate is “All Real Estate is Local.” It’s true, but that doesn’t mean that you need all your real estate in one location. To invest through Groundfloor you don’t have to be super-knowledgeable about one particular real estate market. Instead, you can diversify your lending into a number of loans spread across different borrowers in different geographic regions.

The opportunity for diversification across a growing number of high quality loans is one of Groundfloor's biggest strengths. Their $10 minimum investment per project is an intentionally low barrier to diversification, allowing you to easily diversify your portfolio across many projects if you so choose.

But as an investor, you also need to be mindful about maintaining diversification. As of October 2024, with the Flywheel Portfolio, Groundfloor automatically diversifies you across a collection of 200-400 loans to greatly mitigate risk and offer more stable, consistent returns. 

Remember, make sure you understand all the risks of crowdfunding platforms.

Introducing Groundfloor Notes

Groundfloor recently opened up access to a new product, Groundfloor Notes, which aims to provide investors with real returns and short-term liquidity. Groundfloor Notes are debt investments that provide a fixed interest rate for a fixed term. According to Groundfloor, Notes combine the benefits of savings and investing into a single convenient investment experience. 

Groundfloor Notes are secured by pools of loans that Groundfloor has originated, but not yet funded as LROs. The shorter holding periods and fixed repayment dates mean that Notes have a lower risk profile than Groundfloor LROs. 

Each Groundfloor Note offers different term lengths, interest rates, and investment minimums, and Groundfloor releases new Note options each month. For example, at the time of writing, Groundfloor is offering interest rates between 4% and 10% on Notes with terms ranging from 30 days to 12 months. 

When Notes was first launched, it was only available to accredited investors, but all Groundfloor investors now have access. Current Notes offer 4%-10% interest with a minimum investment as low as $1,000. And with Groundfloor Rollover Notes, investors can enjoy much more liquidity than other Groundfloor products. 

Groundfloor Notes are not FDIC-insured. 

Benefits Of Investing In Groundfloor Notes

• Passive income opportunity: Unlike physical real estate investing, which often requires a lot of hands-on effort, once you invest in Groundfloor Notes, your work is done, and you can enjoy receiving passive income.
• Offers Diversification: When you invest in Groundfloor Notes, your money is secured by a real physical property, making it a great way to diversify a portfolio otherwise made up of stocks and bonds. 
• Potential for High Returns: If you're willing to tolerate some risk, Groundfloor Notes give you the potential to earn much higher returns than keeping your cash in a checking or savings account.  

Who Shouldn’t Use Groundfloor?

Groundfloor isn’t an appropriate investment for someone who needs high liquidity. If you need your cash to pay for school, buy a car or start your own business, don’t use Groundfloor.

Groundfloor also isn’t appropriate for investors with little to no risk tolerance who are looking for a principal guarantee. While the platform has earned solid returns over the long-term, your investment is not guaranteed, nor is it FDIC-insured. If a borrower defaults on its loan, there is a chance that you could lose money. 

How Does Groundfloor Compare?

Groundfloor is not the only platform where you can invest in real estate related assets. However, they take a different approach by focusing on lending (versus owning an actual cash flowing property). That does give them some unique angles.

Their closest competitor would be Peerstreet, however, Peerstreet declared bankruptcy on June 26, 2023, and it's no longer in business. There are also online platforms like Fundrise that allow you to invest in a pool of real estate.

See this quick comparison:

Who Can Profit From Groundfloor?

If you’re willing to take on a bit more risk in exchange for somewhat higher returns, Groundfloor might be a great investment for you. Groundfloor could function like high-yield bonds in a well-diversified portfolio. It's not as liquid but the minimum to invest is just $10 per project. 

Investors who don’t need immediate liquidity, and are willing to experiment, should look at Groundfloor, and especially the Flywheel Portfolio. It’s a passive way to get into the real estate project action. This will appeal to a lot of investors.

The addition of Groundfloor Notes offers investors liquidity, with terms as short as 30-days, and more attractive interest rates than savings accounts and T-Bills. Keep in mind, however, that Notes are not FDIC-insured. 

Borrowers who can meet Groundfloor's rigorous standards will receive low-cost loans with terms that are favorable to flippers. The majority of Groundfloor's borrowers choose its deferred payment option, so they don’t have to make payments on the  loan during the course of the fix and flip project. As a borrower, this should be a source to consider.

Check out Groundfloor here >>