Introduction

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to GROUNDFLOOR and 1429 Allene Avenue

 

 


  • Alex

    Uhmmm… hacked?

Follow, Evaluate, Invest!

Today we have rolled out an important and

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exciting improvement to GROUNDFLOOR. Effective immediately, “pledging” to invest is a thing of the past. Investors in qualifying jurisdictions are now free to invest directly and on the spot in any property that has been made available for funding where you live.

This development greatly simplifies the process of investing for everyone. It puts your money to work faster and within a definite timeline. Here’s how it works:

  • Every property available for funding clearly display a fixed loan funding deadline
  • We initiate payment from your linked bank account immediately when you click “invest”
  • If the loan is not fully funded by the deadline, your investment will be returned automatically within five business days after the deadline
  • We stop accepting investments for a property upon achieving its funding goal
  • You can always “follow” a project to keep up with it, even if you’re not ready to invest (or missed the opportunity)

Many months ago, when we launched our first pilot project in Atlanta, no one knew how quickly or through what process loans would fund the most efficiently and most quickly. We received helpful feedback and suggestions from our growing community of investors–and we listened (and acted). Please let us know what you think below in the comments or by emailing founders@groundfloor.us.

 


0 Comments

Investing… In 30310?!

This week, in case you missed the news, we successfully funded our third property, a new condominium construction project in Powder Springs, GA. It featured an attractive rate, and many investors liked the fact that it was new construction. For some, “new” just seems more comfortable than renovation or “fixing and flipping.”

But what is it that leads one to invest in any specific asset, opportunity, company or property than another? Sure, we all want to know that our investments are “smart” — which for most means the opportunity to earn a fair return for a given level of risk. Sometimes people invest or donate out of care or concern for the cause benefitted by the investment. There’s also ego, fear, image, opportunism and investing as a favor.

At GROUNDFLOOR, we believe everyone already is or can be an investor. We don’t think that word should convey some special designation reserved for those who have elite skills in running numbers, doing diligence and keeping abreast of market developments. If you have a bank account, certificate of deposit, cash value life insurance policy, brokerage account or retirement assets, you qualify.

If everyone’s an investor, then everyone also needs an investment strategy. That is, we all need a way to decide where to sock away our hard-earned money, and how much in which assets and types of assets. The path of least resistance isn’t smart (such as leaving your money in the bank), but neither is winging it and taking risks that you don’t understand. So what is a busy person without spare time, energy and interest to do?

GROUNDFLOOR is here to help. We started with

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a vision of helping to solve that problem for you, and have since built an investment product that delivers. How? Real estate is tangible. You know what you’re getting. Because you’re lending money (not buying into ownership), you know when you can expect to see it back, and how much you’ll be receiving in return. That much is easy enough to understand. But how can you go about choosing the right properties? Is that hard? Does it require expertise?

Take our 1429 Allene Ave Renovation project for example. Is it right for you? Give us three minutes with our new video (below), and we think you’ll know. Do you trust the borrower? Do you like the property, and believe it could sell? As a lender, you just need to know that it would sell for more than the total amount borrowed. Perhaps you’re concerned about the location anyway. At least one investor communicated that to us this week. Afterall, the zip code 30310 (which contains a great variety of neighborhoods, in actuality) doesn’t have the best reputation–at least with the banks.



Each person has to decide for himself whether this or any investment, fits his or her strategy. For some, helping to regenerate such a neighborhood might be exactly the place they want to put their money to work–for the social good, but also because often that kind of context obscures the best opportunities that would otherwise be in plain sight. For some, the more conservative option of making a loan in that situation might be the perfect vehicle, rather than an equity investment. But most big banks certainly won’t lend on a property in this neighborhood. What of that? For good reason? We think the Web is (all of you are) as good an arbiter of that as anyone–and in many ways a better one.

Watch the video, and tell us what you think in the comments below! And if you reside in Georgia, please consider joining us as we fund the property in the coming days and weeks.


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First Financings Complete

This week we announced our news that GROUNDFLOOR completed the

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nation’s first-ever crowdlended, peer-to-peer real estate transactions. We’re very proud to have connected our growing community of investors and borrowers to participate in this historic end-run around the usual intermediaries.

The news has been met with excitement amongst proponents of true crowdfunding (i.e. those who aren’t confused by the loud labeling of accredited investor funding by some as “crowd” funding). Anyone waiting on the JOBS Act Title III crowdfunding provisions cheers intrastate and other approaches to achieving the same objectives (count our co-founder Nick Bhargava, one of the principal contributors to Title III, among them).

Why the excitement? Over half of the investments in our 905 Tift Ave Renovation and the Riverpark Townhomes New Construction were $500 or less. So everyone not only can, but is, participating. The projects pay 10-20 times what a comparable CD would pay. In an industry riddled with illiquidity, they pay back in six months or less. GROUNDFLOOR delivers an unparalleled value for the individual investor–and people are taking notice.

Even so, the press in Atlanta, where much of the action in providing access to the other 98% is actually happening, have been slow to cover what’s happening there. They haven’t devoted much digital ink to the state’s innovative Invest Georgia Exemption and the early advances that have been made utilizing it. We suppose that true revolutions can be difficult to spot, even in one’s own back yard. Equally, perhaps they are risky to herald. No doubt, at the first whisper of fraud, the same editors will be quick on the trigger!

For the time being, the victory is therefore a quiet one. In a week that has seen two incredible venture capital financings of accredited investor financing platforms that operate in the real estate sector, that’s perhaps indicative of where the rest of us fit into the scheme of things, at least for now. Indeed, it’s tough to compete with the big numbers that serving the top 2% of the U.S. can quickly put up.

We have more than a feeling that there’s much more to this story, yet to be written. Never before have banks and Wall Street been displaced by the crowd in financing real estate this way. With this milestone, we proudly join other innovators who have gone before us in the arena of consumer finance.

Thanks for being with us as we move toward completion of this initial chapter. If you live in Georgia, we welcome your participation in the funding of our next set of projects. If you don’t, rest assured that plans are well underway to bring GROUNDFLOOR to many more people beyond Georgia soon.

 


5 Comments

Update on 748 Charles Allen

Those who have been following GROUNDFLOOR for awhile know that 748 Charles Allen was our–and the nation’s–very first 100% crowdlended real estate transaction open to participation by all. Along the way we experimented with a couple of different ways of structuring the loan, explaining how it works and attracting people to invest in it.

As sometimes happens on the bleeding edge of innovation, some of these tests took longer to complete than planned. Fast forward three months and it’s time for development of the project to start. The loan is half-full (see how optimistic we are?). How to proceed? Developer Pat Gilroy decided that, rather than canceling the loan and leaving the funding up to the banks, it would be better to offer a new and different loan that can fund more quickly.

We learned a lot observing the way our two most recent loans on other properties oversubscribed in five days and then just over 48 hours. The changes we are making with this new loan on Charles Allen benefit from that experience. Notably, it offers a higher rate (10%) and a smaller amount to fully fund. To participate, head on over to the new 748 Charles Allen project page and pledge now (Georgia investors only).

This is our first loan to offer the security of a second-lien (also known as “mezzanine”) position. For more about the details of what that means for noteholders, see our new Charles Allen Project FAQ posted today. We also invite comments on this post below, and for you to write us at founders@groundfloor.us anytime with suggestions, critiques or

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observations.

 


0 Comments

New Construction, New World of Investing

In case you missed it, the offering we introduced last week, 905 Tift Ave, fully subscribed in just five days. For over one-third of the investors who made a pledge, this was their first. The other two-thirds had previously pledged to invest in on our original offering, 748 Charles Allen.

We’re seeing a similar pattern with Riverpark Townhomes, which opened to accept pledges yesterday. In the first 24 hours, just like last week, over $20,000 has been pledged for this project by 25 investors. Unlike many purported “crowd”

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funding campaigns offering access to invest in real estate, it is also of course open to all investors, not just the accredited 2%. It too offers an amazing interest rate and security in the underlying property.

The similarities end there, however. This one, distinct from the previous two we’ve offered, is:

  • A new construction project, instead of a renovation
  • For townhomes, instead of a single family for sale or a multi-family rental
  • Located in Woodstock, a compelling suburb north of Atlanta, instead of in-town
  • For another development team new to GROUNDFLOOR, Troy & Gaby Yohn

This initial set of three offerings in Georgia (plus the growing list of future offerings) provides an initial indication of the diversity and breadth of opportunity investors can come to expect, especially as we expand to new states in 2014. As the Web gains steam in financing real estate development and opening more opportunities for everyone to invest, we’ll continue to grow into new types of projects, in new locations, from a variety of developers.

Interested in hearing more about how all of this works? This week we’re trying something new. We’re holding a lunchtime webinar on Friday, February 21 featuring GROUNDFLOOR co-founder Nick Bhargava and 748 Charles Allen developer Pat Gilroy.

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Sign up to attend. It’s free, and a great opportunity to ask your questions in real-time and to get involved.

 


2 Comments

Introducing 905 Tift Ave

Yesterday, independent developer John Mangham launched our second property for funding, 905 Tift Ave. Like our first property, 748 Charles Allen, this is a renovation project offering its backers an attractive interest rate to crowdfinance a loan that is secured by the value of the underlying property. In the first 24 hours, 905 Tift Ave was already 53% funded with 23 investors pledging $21,000.

Innovators like John and Pat are stepping up to cut out the bank and borrow direct from a new and better source of capital: You, the individual investor. As a result, we’re able to offer an extraordinary investment value. There isn’t a comparable risk-adjusted return like this

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available anywhere. Most uniquely of all, we’ve intentionally designed GROUNDFLOOR to be open to anyone, with no minimum income or wealth requirements, and offering an opportunity to get started with as little as $100. While our current offering limited by the constraints of securities law to the state of Georgia,

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we will be expanding to additional states very soon. Sign up for an investor account to be notified when we’re available where you live.

This loan differs in a few respects from our original issue. It is a shorter term (six months instead of one year). A single-family house, the business plan is to renovate and sell, rather than leasing it out. Like Pat before him, however, John has done this successfully many times in the very same neighborhood, with the very same type of property. Both of these developers are experienced hands who are utilizing GROUNDFLOOR’s innovations in securities regulation to offer everyone the chance to tag along, financially.

Funding real estate development this way, 100% bank-free, is a triple win:

  1. Developers get better access to capital
  2. Neighborhoods receive much-needed investment for further development
  3. Individual savers and investors earn above-market returns

Questions or comments about how it all works and where we’re going from here? Feel free to use the comments below, write us at founders@groundfloor.us or comment/ask on the project page itself.


0 Comments

More Properties, More Opportunities

This week we’ve rolled out a few new features to lay important parts of the foundation for what you’ll be able to do with GROUNDFLOOR in 2014.

We launched the nation’s first 100% crowdlended real estate financing in late 2013. Over 180 investors in Georgia have pledged more than $129,000 so far to be a part of it. While we’re continuing to expand our Georgia offerings, soon we’ll be ready to announce our expansion to accept more investors, for more projects, in more states. As we prepare for that, we’re eager to hear from you. Use the comments below to ask questions or provide feedback publicly, or write us anytime at founders@groundfloor.us.

 


0 Comments

Consumption —-> Investment

With the holidays passing behind us and the new year dawning, many people transition from consuming to investing. Gustatory indulgence gives way to new diets and resolutions to exercise. We refocus time spent relaxing with family and friends toward re-establishing productive routines. This time of year also finds us assessing, retrenching and plotting the way forward for our spending, saving and investing.

At GROUNDFLOOR, we believe everyone deserves equal access to financial opportunity. In 2013, that commitment led us to launch in Georgia. The state’s innovative regulatory construct set the stage for us and a few other crowdfinance pioneers to start serving more than the accredited top 2% of investors. For 2014, we’re preparing to expand into additional states, as we continue to broaden the types of properties and loans available for you to crowdlend. That’s our own focus on investment as we turn to the new year.

It’s a good time to be thinking: What’s yours? By many accounts, 2014 promises to bring a broad wave of innovation in crowdfinance. Experts expect nationwide implementation of Title III of the JOBS Act. Numerous states have declared their intention to follow in Georgia’s footsteps. There will undoubtedly be new opportunities to invest in asset classes that have heretofore been inaccessible to the non-accredited 98%. It could be a coming of age for crowdfinance. A phenomenon that started with backing independent projects of interest for early adopters on Indiegogo and Kickstarter could now expand into taking equity in startups, funding the growth of small businesses and earning secured interest in direct real estate investments for a new mass market of savers and investors. No one can know for sure how quickly this new market will take shape, or what shape it will take, but it is quite evidently upon us.

As you make your own transition into 2014, have you determined how the new crowdfinance options for investing fit with your financial strategy? Is there a particular type of opportunity you’re anticipating? If so, we’d like to hear about it in the comments below or by email at founders@groundfloor.us. We’re curious what types of crowd investments you see as the

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most promising. And of course, if you have questions, comments or critiques about the particulars of crowdlending with GROUNDFLOOR as represented in our first property offering in Midtown Atlanta, we’d be grateful for the opportunity to discuss those with you too. Happy New Year!

 


2 Comments

Real Crowdinnovation

Today we’re announcing our second property to be crowdlended in Georgia via GROUNDFLOOR, along with an important improvement to the way we offer our loans to investors. These developments are significant for two different but very much related reasons.

Nick and I started GROUNDFLOOR with an uncompromising focus on creating new and better financial products available to all, with no exclusions based on income or

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wealth. We set out to serve unaccredited investors. Traditionally, by contrast, finance has started at the top. Afterall, so the thinking goes, that’s where the “smart money” is. Life is good at the top of the market. Accredited investors are indeed easier to serve through existing regulations, do have more money to invest and surely have their own distinct problems to be solved.

We think the non-accredited 98% are what the “crowd” in “crowdfinance” is all about. That’s why we’re innovating in Georgia now, rather than coordinating millions of dollars in transactions between financially powerful parties nationwide and leaving the true crowdwork for later. Our announcements today are born of that pioneering effort. We launched. We listened. We learned. (And, we’ll continue to do so!).

For example, we gleaned that having one loan offered at a given rate is better than the flexibility afforded by having two (one with a set rate, and the other being priced by auction). Developer Pat Gilroy’s 748 Charles Allen multifamily renovation is now offered as a single one-year secured loan rather than two different loans. The offered rate (currently 8.75%) decreases as funding commitments increase, rewarding those who act to get in on it first.

We also validated and learned more about investors’ interest in allocating investments amongst a variety of assets and terms. Over the coming weeks and months, we’ll fulfill that demand with geographic diversity, new categories of real estate, a range of loan terms and different capital structures. Today’s introduction of developer Rick Tuley’s group of rental townhomes in Woodstock, GA is a first step in that direction. In addition to being our first property of this type, the loan will be our first to feature profit-sharing. It pays interest over a five-year term, plus a bonus at the end based on the increase in property value.

Profit-sharing on a loan is the kind of benefit that, previously, only sophisticated institutions or accredited investors could negotiate for themselves. Consistent with our original mission, we’re excited to offer it to everyone. To our knowledge, no one has ever done that before, certainly not in real estate. Will it work? We think so, and will undoubtedly make adjustments along the way as we did with our first version of an auction rate construction loan. Time, in conjunction with continued innovation at the forefront of true crowdfinance, will tell.

Have an opinion or reaction to share with us? Email us anytime at founders@groundfloor.us, or use the commenting feature to this blog. We look forward to the discussion.


0 Comments