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How to Invest in Real Estate Loans on GroundFloor

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    Name
    Chris
    Twitter

Introduction

Welcome to my review and tutorial of investing in LROs on GroundFloor. A LRO is Limited Recourse Obligation. I chose to invest in LROs in GroundFloor because of the higher interest rates they offer, the relatively short-duration of the loans and the loans are secured by real estate.

As always, this information is for informational purposes only and is not intended to be personal financial advice. There's an inherent risk involved with financial decisions and the website owner will not be held liable for decisions others make.

Results

1198 GF return

On Jan 27, 2022, I transferred my first deposit into GroundFloor. A few days passed beforet he funds became available for investing. On Feb 3, 2022, I made my first investment of $250 in 1198 Milmar Dr NW #2. On Oct 19, 2022, the buyer performed on the loan. I received $267.74 for a return of 17.74, or 10% annualized, on the loan. Since I've opened the account, I've repeated this pattern more than 400 times with returns from 9% to 14%. A couple returned a lower rate because the platform and the borrower settled. I only recall 1 that didn't return the original principle.

Summary

I created an account at GroundFloor and invested various amounts in multiple LROs for rates between 9% and 14%. I setup auto re-investing to reinvest paid back principle and interest in new loans.

Steps

Step 1. Create the account

  1. Here's my referral link: https://app.groundfloor.us/r/y7628c. Use it to create an account. You'll get $100 and I'll get $100 too when you do some investments.

Step 2. Transfer funds.

  1. In my GroundFloor account, I clicked "Investor Account" at the top right, then "Transfer Funds."

  2. On the left, I clicked "Bank Accounts" and added my bank account.

  3. I clicked "Investor Account" at the top right again, then "Transfer Funds." I left "Make a one time transfer" selected and clicked "Continue." Under "From Account", I selected my bank account. Under "To Account", I selected "Investor Account". For "What amount do you want to transfer?", I entered my initial deposit amount. I clicked continue and confirmed the transfer.

Step 3. Invest the funds.

  1. I clicked "Invest" from the top menu. I sorted the LROs by "Rate." In the "Investment Amount" column, I entered the amount I wanted to invest in each loan. I made sure not to exceed my Investor Account balance.

  2. At the bottom, I clicked the "Invest" button. On the confirmation page, I checked both checkboxes and clicked the submit button.

Step 4. Setup Auto-Reinvesting

  1. I clicked "Investor Account" at the top right, then "Account Settings."

  2. On the left, I clicked "Auto Investing." This presented a page with a table with a schedule and max investment per loan column.

  3. I entered in $100 for each loan schedule.

  4. At the bottom I clicked, "Save and Start."

Conclusion

This investment stream is easy to setup and use. It has reliably returned good interest for me. It doesn't require accreditation.

On the downside, it requires money to invest. Once the money is invested, it's not available to withdraw until the loans are paid back, and the loans aren't guaranteed to be paid back.

My experience is that most of the time, the loans get paid back in full at the promised rates of return, and sometimes higher rates if the borrower defaulted during the term of the loan. I've found a large number of loans are repaid early and also a large number of loans are extended.

Investing larger amounts would amplify returns but also increase the money that's invested, subject to extended periods and subject to possible loss.

Support

Using this tutorial? Support this effort by using my referral link, https://app.groundfloor.us/r/y7628c, to open an account and invest in LROs on GroundFloor. Not interested in LROs but want to support? You can be a sponsor.

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