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What is an LRO and what am I actually investing in?

Last Updated: Jul 17, 2019 11:20AM EDT
GROUNDFLOOR is a unique platform that allows everyday investors to invest fractionally in real estate projects happening around the country. In a few words, GROUNDFLOOR pre-funds loans to real estate developers, then works with the U.S. Securities & Exchange Commission (SEC) to convert these loans into securities that are then sold to investors. 

When you invest with GROUNDFLOOR, you are investing in a Limited Recourse Obligation (LRO), which is a debt security that GROUNDFLOOR submits to the SEC for qualification on our platform. GROUNDFLOOR holds a first lien position on each loan, and each loan is backed by the underlying real estate asset(s). 

You choose which projects to invest in and how much to invest in each project. The LRO you are buying corresponds to the project that you have chosen to fund. Each LRO's performance is determined by the performance of the borrower's loan, and each LRO will be repaid to investors from the cash the borrower uses to repay the loan.

A loan may have its own LRO or be part of a series of LROs.  For LROs that are part of a series, an individual LRO within the series may have either a senior or junior lien position.  Please refer to the Financial Details and the Project Specific Risk factors on the Loan Detail page for information on LRO specific lien position.

In addition to the Loan Detail page, you can always consult our offering circular for complete details on individual LROs.

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