Just before Thanksgiving, we started inviting the first investors in Georgia who pre-registered for GROUNDFLOOR to review our first project and consider making a pledge. The response has exceeded our expectations, so we’re now expanding to invite more people in Georgia who have expressed interest (register here to receive an invite).
Why has the response been so favorable? There’s nothing particularly flashy about our first project. It’s a property much like thousands of others that are acquired, renovated and rented out every month across the U.S. by experienced developers like Pat Gilroy of RPG Properties in Atlanta. As an early-stage startup, we certainly haven’t spent money on a big marketing splash. So marketing glitz can’t explain the response.
Recent conversations with investors have turned up the real reason they’re pledging: The opportunity to lend money at five per cent or more, secured by underlying real estate, is an amazing value! According to BankRate.com, the average one-year certificate of deposit yields just 0.76%. The construction loan we’re offering on our first property looks like it will pay nearly ten times that. Ten times! Even our refinancing loan on this property, offered at 5%, is 6.5 times what a CD pays.
Everyone can do that math. The banks’ racket is up. Why leave cash in the bank or stash it into a CD only to let that middleman hoover up the difference? Why accept pennies on your dollars when you could be pocketing dimes? Investing directly in real estate loans is certainly a new idea, but one whose time has come. Thanks for joining us to help make it happen.