Recently GROUNDFLOOR was featured in an article published on the Wall Street Journal. The article addresses the public's interest in getting involved in real estate investing while balancing the inherent risks of a recently volatile housing market. Traditional housing 'renovation and flip' investments are normally a situation where the loan is taken on by an individual and is therefore a riskier arrangement. With Internet-based microlending, the risk is spread out among many investors. In the case of GROUNDFLOOR, an investor can spread their investment dollars among multiple projects, diversifying their real estate investment portfolio, balancing risk and reward with varying rates of return and maturity dates. Plus our loans are secured, backed by the property to be used as collateral should the loan go into default.
According to the article, investors can use shorter-term microlending strategies as a good alternative to easier-to-liquidate but lower-return bonds and expensive stocks. 'Investors worried about pricey stocks and meager bond yields can be lured by the prospect of a steady income stream and average annual returns that could range from 5% to 15%, if things go well.'
The article highlights one of our investors, Michael Patzer and shares his perspective on real estate microlending. 'Michael Patzer, a 27-year-old software engineer who lives in Atlanta, says he began making loans through Groundfloor in March and so far has helped fund seven deals by putting up $300 to $1,600 for each. The loans must each be repaid after six months, and the interest rates range from 8% to 12%. He has already been paid back on two of the deals.
The complete article, also picked up by Marketwatch, can be found here.