🏡 What is Groundfloor?

Groundfloor, founded in 2013 and headquartered in Atlanta, is an online real estate lending marketplace. It offers fractional real estate debt investments starting at just $100, making it accessible to both accredited and non-accredited investors (blog.groundfloor.com).

Unlike traditional REITs that invest in property equity, Groundfloor focuses on first‑lien mortgage loans—short-term financing (6–24 months) for residential development projects, secured by real estate. Loans typically carry interest rates of 5–15%, with most repayments occurring within a year .

The Flywheel Portfolio: Groundfloor’s eREIT Alternative

Groundfloor offers the Flywheel Portfolio, its REIT-like product under Regulation A+. It pools investor capital to finance hundreds of short-term mortgage loans.

• Minimum investment: $100

• Target returns: approximately 9–14.5% annual (businessinsider.com)

• Fee: ~0.25% quarterly asset-management fee (businessinsider.com)

• Liquidity: loans generally resolve within 36 months, with monthly principal + interest distributions (businessinsider.com)

Groundfloor reports historical loan returns around 10–12% annually on six- to twelve-month loans (blog.groundfloor.com).

Recent Performance

Groundfloor’s publicly disclosed performance trends show:

Historic loss rate remains low—around 0.9% overall, with recent months at ~2% .

What Makes Groundfloor Unique?

1. First‑lien simplicity – Mortgage-backed debt is generally senior and secured.

2. Short-term structure – Loan durations of 6–12 (up to 36) months allow more frequent capital turnover.

3. Low entry point – Starting at $100, it's democratized real estate lending.

4. Auto‑invest available – Targeted diversification with automated allocation (businessinsider.com).

5. Regulatory clarity – Groundfloor qualified for SEC’s Reg A+ early and elects to be taxed as a REIT starting 2023, with associated tax transparency (sec.gov).

Risks to Consider

• Loan performance: While loss ratios under 1%, individual loan defaults can occur—average monthly losses hover around 2% (blog.groundfloor.com).

• Illiquidity concerns: Though short-term, loan prepayment or sales could accelerate liquidity, there's no market for reselling your eREIT stake.

• Tax complexity: Groundfloor is taxed as a REIT; distributions may include different character (interest, return of capital), impacting tax obligations (sec.gov).

Comparison with Traditional eREITs

Platforms like Fundrise offer equity or debt-based eREITs with dividends from rental and property appreciation, targeting 8–12% returns (en.wikipedia.org). Groundfloor is debt-focused, with shorter terms, and yields averaging 10–12%, making it a compelling alternative for yield‑seeking investors.

Is Groundfloor Right for You?

✅ Pros:

• High historical yield (~10%)

• Low entry barrier and short terms

• Diversified loan exposure via Flywheel

• Transparent track record and regulatory compliance

⚠️ Cons:

• No guaranteed returns—risk of defaults

• Limited liquidity compared to stocks or public REITs

• REIT tax mechanics may complicate filings

Ideal for investors seeking higher-yield, short-term fixed income with moderate risk tolerance and a willingness to navigate occasional defaults and REIT-related tax treatment.

Final Thoughts

Groundfloor’s mortgage eREITs, especially the Flywheel Portfolio, blend real estate debt yields with 6–12 month loan durations and strong transparency. With consistent 10–11% returns and a well-defined risk profile, it offers a distinct alternative to traditional public or private REITs—suitable for investors aiming for reliable yield plus manageably low entry hurdles.

Disclaimer: Past performance isn’t a guarantee of future results. As always, diversify your investments and consult a financial advisor to assess tax impacts and overall fit.