Like all investments, investing with Groundfloor carries some risk. Whether it’s suitable depends on your risk tolerance, financial goals, and how well you understand the platform.
Here are the risks to consider:
1. Borrower Default
You’re lending money to real estate developers, so recovery could take time through foreclosure should the borrower default and outcomes vary.
2. Limited Liquidity
Groundfloor funds are mostly illiquid. While you can cancel your investment, you have up to 48 hours to do so. Groundfloor does provide more liquidity through Rollover Notes, as you have up to 1 month to cancel your investment.
3. Market Risk
If a property doesn’t sell or sells below its expected value, it can impact returns. Still, Groundfloor’s asset-backed approach is not subject to daily market swings, making it less volatile than many traditional investments and offering a more stable path to potential returns.
4. Loan Grading
While you can choose your risk level when investing into individual loans, real-world outcomes may not always align with the assigned loan grades. Loans are graded A–G with “A” being the least risky.
Potential Advantages
Low minimum thresholds: initial investment of $100, followed by minimums as low as $1 per loan
High potential returns, with fixed returns available exclusively through Groundfloor Notes
Diversification across many loans to reduce exposure (for example, the Flywheel instantly diversifies your funds across hundreds of loans all at once)
Not limited to accredited investor (open to the general public)