Complex Simplicity

The team here at GROUNDFLOOR recently engaged in an important debate about complexity vs. simplicity as we prepared for some exciting updates you’ll start seeing soon. We want to hear what you think.

Almost two years ago, Nick and I started with a big mission: To help the Internet change finance. We believe that using the Web to open access, re-intermediate middlemen and increase transparency can translate into more opportunity for more people.

Broadening access to financial opportunity that was previously restricted to the wealthy and well-connected has at least two implications. Inviting more people to participate means our community of microlenders:

  1. join us with a broad range of experience with financial concepts (for example, anyone with a business degree and professional investing experience knows about Internal Rate of Return, but most people don’t appreciate its nuances), and
  2. might not have enough time and/or money to invest to justify detailed and lengthy analysis of a specific loan being considered for funding.

That sets the stage for the debate: As we continue developing our community, should we

  • a) embrace complexity and risk losing people who won’t bother getting into it? or,
  • b) embrace simplicity and risk losing people who want to dig into and debate the finer points?

Of course, we want to do both–to have our pie and eat it too. We’ll always do our best to serve something for everyone. As a startup, however, we have to make choices. Should we spend our resources and focus our energy on educating and explaining, or simplifying and clarifying? Should there be more detail, or less? In the end, our choices will always be guided by the precept that everyone is capable of understanding complex concepts, but investing with GROUNDFLOOR should never require that you spend the time to do so.

Exciting changes are coming soon. You’ll start seeing some of them in the coming weeks. We think you’ll like the way we’re opening up the future of high-yield microlending to more people, more efficiently and better than ever. Have an opinion to share, or something you want to see more or less of? Let us know in the comments below or email us at



  • Spencer Roane

    I suggest more investments that are lower risk, lower interest, and longer term. Also suggest more due-diligence by GF – visit EVERY deal, require appraisal and title search.

    • Brian Dally

      Thanks Spencer. As we diversify and start offering a greater quantity and diversity of loans, it will be interesting to see where lender demand grows the most. Which loan offered so far via GROUNDFLOOR do you see as the closest to what you’re describing?

Custer Avenue – Complete!

This week the rehabilitation of 890 Custer Avenue was completed. This home renovation, funded by our GROUNDFLOOR investors,  was done by Adam Ailion who has been working as a real estate investor and active real estate agent in Metro Atlanta for nearly 10 years.  The transformation of this home is impressive!  Prior to renovation, 890 Custer Avenue had been configured as a two bedroom, one bathroom home with no true master bedroom. The renovation plans included an addition to a room in the rear of the home, creating a third bedroom by adding an attached second bathroom and closet, creating a true master suite.

You can read more about Adam and see the ‘before’ photos of the home pre-rehabilitation.  Then read on to see the ‘after’ photos!

After Renovations

890 Custer Avenue SE Atlanta-large-001-Exterior  Front-1500x1000-72dpi

890 Custer Avenue SE Atlanta-large-006-Family Room-1500x1000-72dpi

890 Custer Avenue SE Atlanta-large-008-Kitchen-1500x977-72dpi

890 Custer Avenue SE Atlanta-large-011-KitchenFamily Room-1500x981-72dpi...

890 Custer Avenue SE Atlanta-large-016-Master Bath-1500x1000-72dpi


890 Custer Avenue SE Atlanta-large-017-Master Bath-1500x1000-72dpi

890 Custer Avenue SE Atlanta-large-025-Exterior  Back-1500x1000-72dpi




It’s Pay Day For Tift Investors!

Today, we are pleased to announce an important first, along with our newest loan going live for funding.

John Mangham‘s single family home renovation on Tift Avenue in Atlanta, the first loan ever funded on GROUNDFLOOR, is now also the first to be repaid. It is a historic single family home, purchased in foreclosure  and located in historic Adair Park, a Beltline community in Atlanta, Georgia. The home has 3 bedrooms and 2 bathrooms. The investment was secured by the property and there were no debtholders in front of GROUNDFLOOR investors – meaning that our community was paid first.

Fast facts:

  • The home was a renovation, purchased in foreclosure
  • The loan size funded by our community was $40,000
  • 39 investors contributed to the 6-month, 8% APR loan
  • The home sold for $159,900
  • The loan was repaid with interest earned after 167 days

The new loan going live for funding today, Adele Avenue, is John’s third to be offered to our community. It is a 9% APR, 6 month loan, secured by the property. Please visit the deal page to get in on it. If you’re being repaid on Tift, we’ve made it easy to reinvest and continue backing John (and at a higher rate on the new project). If you’re new to peer-to-peer real estate micro-lending, this is a great time to start. With the success of Tift Avenue we have a feeling that this one is going to go fast! On this deal there is no pledge period — it is moving directly into the funding stage.

Were you an investor on Tift?  Tell us about your experience in the comments below.

Tift before renovations

905 Tift Front 131005


Tift after renovations




Settling in Atlanta

This week we announced our move from Raleigh to Atlanta and along with that, the closing of $1 million in seed funding for our operations. Both developments are good news for our builders and microlenders as we prepare to expand first in Georgia and then nationwide.

Seed funding. Having more capital behind the company enables us to add more loans to choose from, serve more builders and support the continued growth of the GROUNDFLOOR microlending community. There is strength in numbers–of employees, microlenders, and builders. Borrowers and lenders alike will begin to notice improvements starting next week. Let us know what you think anytime at We love passing along your feedback to the team and try to respond to every bit of it we receive.

Atlanta. We first chose Atlanta to pilot the earliest concept for GROUNDFLOOR almost a year ago. The innovative Invest Georgia Exemption brought us here because it allowed us to bring microlending to everyone legally, not just the accredited two percent of investors. Since then, we’ve been impressed by much more. Atlanta is a tremendous center of real estate finance and development expertise. As we prepare for a nationwide expansion and hypergrowth, we need access to more of the very best industry talent to foster the kind of community we already see taking shape. Having our headquarters in Atlanta means you’ll get a better GROUNDFLOOR, sooner.

We’re delighted to share these developments and to move forward into the bright future ahead that we’re co-creating with you, our community. Our first weeks here in Atlanta have been even better than expected. We especially appreciate the warm welcome extended to us by so many people in the thriving startup ecosystem here, and look forward to becoming a contributing part of it.

We would love to welcome you to our growing community of investors. If you’re ready to join us or would like to learn more, go here to see a project we are currently funding and one that is coming soon.


Cabbagetown Rehabilitation

In this week’s post we are taking a closer look at the Cabbagetown District of Atlanta.  Cabbagetown is located on the east side of Atlanta, boarding the historic Oakwood Cemetery. The neighborhood includes the Cabbagetown District, a historic district listed in the U.S. National Register of Historic Places. Cabbagetown was founded 1881 and was originally the home of the Fulton Bag and Cotton Mill.  Over the years the area has seen some ups and downs in its physical condition. In recent years an amazing transformation has transpired, with many businesses, musicians and artists taking up residence.  The area also has its own neighborhood improvement association. Check it out here:  Cabbagetown Neighborhood Improvement Association.

We are pleased to be playing a role in the District’s ongoing improvements, working with local developer Frank Iglesias of Working With Houses.  Founded and based in Atlanta, Working With Houses aims to bring value back to neighborhoods damaged and devalued by the recent housing crisis. Although its work is centered primarily within the renovation of single-family residential homes, Working With Houses also provides direct assistance to homeowners with real estate challenges, purchases bank-owned properties, and assists real estate investors with win-win transactions. Frank is leading a rehabilitation of a home in Cabbagetown, working through the historic preservation process.  You can follow Frank via Twitter @workingwithhous and help fund his project  – all while earning 10% on your investment!

On a recent visit to the home we snapped these photos. If you are in the area please drive past and see for yourself. The transformation of this property is going to be amazing!

Cabbagetown Front

Cabbagetown Side 2



Visiting 1419 Gus Thornhill Jr. Dr.

The GROUNDFLOOR team recently went on-site to visit one of our currently funding projects, 1419 Gus Thornhill Junior Drive. It was great to see the property in person, meet with the owner/developer of the project Rock Shukoor and take a look around inside.

The home was originally built in 1996 and was recently damaged by fire. Rock purchased the home, which is located in the East Point neighborhood in Atlanta, Georgia and has immediate plans to rehabilitate. East Point is an area which is being revitalized and a wonderful community effort is being made to reestablish the area.  The timing for rehabilitation of 1419 Gus Thornhill Junior could not be better for investors looking to get in our 12% interest loan, secured by the property.

For more information on the East Point revitalization effort please visit their community web site here.

Some of our current and prospective investors on the project have expressed interest in seeing more images of the home.  Please continue on to see our photos of the team, the home and the fire damage.


Thornhill Team

Thornhill Porch


Thornhill Front

Thornhill Side


Thornhill Living



Thornhill Fireplace


Thornhill Garage


Put Your Money Back To Work

GROUNDFLOOR is teeing up to make its first loan repayment to investors in the next few weeks. This is extremely exciting on multiple levels, not the least of which being that we get to demonstrate one of the primary benefits of investing in peer to peer leading –earning money on your money! This milestone presents a unique opportunity to investors to start earning compound interest, also known as “earning interest on your interest.” If you invested in a GROUNDFLOOR loan you are currently earning interest on the principal you invested (also known as simple interest). If you take the money that is repaid and reinvest it in a new loan, you will now be earning interest on the principal and interest.

You may be asking how rolling over a loan is any different than investing in a long term loan. If you break down the numbers it becomes clear that earning compound interest is a more profitable long term investment strategy:

Person A – invests $1000 in a 5 year simple interest loan earning 12% APR

At the end of 5 years he has earned $1600

Person B – invests $1000 in five separate 12-month loans earning 12% APR, rolling each annual repayment into a new 12-month loan

Year 1 – Initial investment amount (principal) =  $1000
End-of-year earnings = $1120

Year 2 – Rollover amount  = $1120
End-of-Year 2 earnings = $1254.40

Year 3 – Rollover amount = $1254.40
End-of-Year 3 earnings = $1404.93

Year 4 – Rollover amount = $1404.93
End-of-Year 4 earnings = $1573.52

Year 5 – Rollover amount = $1573.52
End-of-Year 5 earnings = $1762.34

As you can see, Person B earns an additional $162.34 (this is the interest earned on interest). As it relates to GROUNDFLOOR, beyond making the money go further financially, investing in 5 separate loans also gives the investor the satisfaction of having helped make 5 projects possible, creating a greater impact in the local real estate market.


Interested In Interest?

Interested in learning more about interest?

As a peer-to-peer lending platform dedicated to opening up real estate investment opportunities to the other 98%, it is important that all of our investors understand the terms of their investment. Several folks that we have spoken with have expressed confusion at the concept of earning an annual percentage rate on a six-month loan. We thought we would take a moment to explore the concept of interest in general.

Similar to a person being charged rent each month to lease out a property, interest is essentially rent being charged on money that you have loaned to another person.  Interest can be calculated in several different ways (e.g. flat, amortized, daily, monthly, etc), but here at GROUNDFLOOR we calculate interest using an annual percentage rate – a single number that represents the cost of “borrowing money” for an entire year. Where this can get confusing is if the loan repayment period is less than a year or more than a year. The first six loans that GROUNDFLOOR has funded have all been 6 month loans. Since six months is half of a year, this means that the investor will actually earn half of the APR so, for example, a 10% APR would actually equate to a 5% return. Alternately, if a loan is being repaid over multiple years the return remains 10% per year but the investor will make more money because the money is being loaned out for a longer period of time. So for a loan with a 10% APR and a three-year repayment term, the investor would technically be making more than a 10% return at the end of the three years, but the number to pay attention to when comparing to other investment opportunities is the APR.

This month GROUNDFLOOR is offering its first 12 month investment opportunity with a $75K loan for 1419 Gus Thornhill Drive Jr. This project gives GROUNDFLOOR investors the opportunity to earn the full annual percentage rate (in this case) 12%.

Have any other questions about how investing with Groundlfloor works? Don’t hesitate to reach out.


Microfinancing: Finance Or Retail?

Microlending is the concept of lending a small amount of money to a borrower either through debt lending or equity lending.  On the surface this sounds like banking and finance. But are peer to peer lending communities strictly about finance?  Or is attracting investors to this new type of lending about something else altogether?

Traditional banking relationships involve a borrower and a lender. Sometimes there are a handful of lenders involved. But it is usually a pretty constrained relationship, the type we call a one-to-one relationship with one borrower and one lender. With peer t0 peer lending there are many investors involved in funding a project. Likewise in consumer retail, where the relationship is between one brand and many consumers forming a many-to-one relationship. For this reason a borrower looking to microfinance has to employ completely different tactics than a borrower looking for traditional bank financing.

Microlending portals are essentially communities where a product (in this case, a project that requires financing) is matched with a set of customers, known as investors. Offering the right product to the right customer is Consumer Marketing 101.  But since banks haven’t traditionally treated their clients like customers, at least not in the same ways that direct-to-consumer companies have, this is a opportunity.  Just as traditional lending has started making room for microfinance or ‘crowdfunding’, the marketing folks for microlending communities need to embrace the tactics that consumer brands have been using for decades. Having to acquire a customer – or in this case an investor – one person at a time is a completely different beast. So as much as crowdfunding marketplaces fall into the finance category, they are much more similar to a marketing platform that matches customers to products. Digital marketing techniques like email marketing, social media engagement and advertising, hyper-local relationship management, link building, and paid search all need to be used.  Traditional offline promotions can also be integrated with a call to action to drive offline traffic to the online marketplace.

So back to my original question: Is peer to peer microfinancing about only finance? Clearly the answer is NO. Rather it’s about building a community and shaping it into a marketplace, drawing in investors to match with borrowers (customers paired with product).  It’s non-traditional for finance and the ways in which projects are marketed, promoted and subsequently funded are new.  And there is good news here as we see many solid ways to use consumer marketing tactics that have been successful.

I’d love to hear from others who work on the marketing side of peer to peer financing marketplaces. What traditional tactics have worked for you? Are you focused mostly on digital marketing? What approaches have really resonated with your lending community?

Please comment below or email me directly:


Peer-to-Peer Microlending And What’s Important

As the concept of being the bank for another person via peer-to-peer microlending comes into its own we are noticing some developing trends in the deciding factors driving our investor base. In our previous post we reviewed a recent survey that was put forth to our community. We wondered –  What are the important pieces of information that influence an investment decision? So instead of wondering, we decided to ask.  Check out the interesting findings!

So What IS important

Affinity For A Project.

As humans, we are drawn to things that we can connect with. Whether that means connecting with another person in a relationship or connecting with an object that we have affinity for.  Investors have shown the need to take a personal interest in a project before committing to a loan. It may be the architecture of the home or the type of project – for example a community rehabilitation. Regardless of the reason, a connection is usually made before a pledge is entered on a project.

Knowing The Neighborhood.

There are several reasons this is important. First, a local investment has appeal because it is a known entity to the investor. A project in a nearby neighborhood can be easily accessed by simply driving by and taking a look.  This provides confidence to the investor that the project is tangible and supports their number one purpose for lending: to make a return. The second reason knowledge of the area is important is because of a sense of community and doing good. Many investors see this as icing on the cake when a healthy return can be made AND a neighbor can be helped to reach their goals. It’s a win-win for everyone.

Making At Least 8% Return.

Of course no one at GROUNDFLOOR was surprised by this one! Providing a return is the whole point in microfinancing. The mission and the circle of investor lending and repayment is what the business cycles around.

Just Plain Curiosity.

Some folks are simply curious about the industry and the opportunity and they are willing to give it a try. Understandably, some investors start small to build confidence before working their way up to larger commitments and multiple projects. And for someone new to the concept of microlending that makes a lot of sense.

Consistent and Persistent Returns.

Volatility in the market can be exciting and it may be important for some investors to have high-risk investments in their portfolio.  Our lenders have chosen to participate in peer-to peer, debt-based microlending because of the consistent flow of returns and the security of debt investing.  The majority of our investors tell us that they will roll over into another project once their current loan is repaid. That’s a true testament to the confidence in peer to peer lending!

Low Investment Minimum.

Investors appreciate the idea of getting in on a secured loan at a low level of  commitment.  With GROUNDFLOOR we afford the ability to participate in an offering with as little as $100.

Peer to peer microlending has gotten it’s fair share of attention over the last year and as the industry grows and evolves it will be exciting to watch what the future will bring!

Tell us what you think!  How did you decide to get involved in peer-to-peer microlending?  Did you have hesitations? Where do you think the industry is headed?
Source:  GROUNDFLOOR Investor Survey, 2014