So far I am disappointed in Groundfloor. I invested in them starting in January. $50 per loan. In pretty much every loan they had. Of about 70 loans so far, 20 have paid off early. Despite their site saying I got 10% I got about 3% due to the short term. This drastically reduces my return. I have 50 more outstanding so I guess we will see. But I have received $28.00 total. Sad.
Currently, one loan is in default. I would like to tell you why but the updates have been so vague and confusing I have no clue what is happening and am just hoping for the best. You should note this is an A graded loan. So the grades are not a good indicator of safety. I used alternate sources to check the loan out but there is only so much you can do from the outside. I am frankly confused as to how Groundfloor could ever lose money. They have a lien on the property. So the property (or funds) can't be sold until the lien is satisfied right? The information they have provided on each loan is usually wrong. With some D investments being fast and hassle free and A investments going into default.
There is no opportunity to sell your investment once invested ( like Lending Club) and for the paltry money received back, I do actually think Lending Club would be a better place to stash my money.
Groundfloor needs to do a few things
(1) be more careful on what loans they fund. They should, by now, have a good database of flippers with good track records. Incentivize those people do work with them more often.
(2) fund more loans. Some states they have very little going on, such as Massachusetts and Washington, though the states are real estate hot spots. Stop with all the Georgia and Florida loans.
(3) Get more investors. Loans shouldn't sit around for weeks waiting for people to fund it and they shouldn't have to hit up their investors for more cash. I see almost nothing on the "investor junkie" sites telling people this things exists.
(4) I am getting tried of seeing massive loans on homes that just don't seem to justify it. If the flipper cannot make more than 30% on the investment is seems like a recipe for disaster. The loans should be small enough that it is likely they will finish the job.
I think the concept can work. I just think they are doing a poor job at the moment.
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