Groundfloor's innovative model leverages existing securities law to allow everyday people the ability to invest fractionally in real estate projects happening around the country.
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In order for Groundfloor to offer loans for funding on our platform, we first must transform the loan into an investment security (an LRO, or Limited Recourse Obligation) by amending it into our overall securities offering, and then qualifying that amendment with the US Securities & Exchange Commission. Once qualified, the loan then becomes available for funding on the Groundfloor investment platform. Individual investors can invest fractionally (with an initial $1000 investment to open account) in loans of their choosing until the loan is fully funded.
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After investing, Groundfloor provides monthly project updates that are accessible through the the investor dashboard. Some loans pay monthly interest along the way, while others pay all accrued interest only at the end (Deferred Payment loans). Finally, once the work is completed and the home is either sold on the market or refinanced, the final distribution of any remaining interest due and the investor’s share of principal is paid out.
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Please note that because our investors are purchasers of Groundfloor's Limited Recourse Obligations, they and our borrowers are prohibited from interacting or contacting each other. All communications about monthly project updates are reviewed, edited, and published for our investors by the Investor Services Department.
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For a more detailed look at how loans end up on our platform, please refer to our blog post on the subject.