In this review of Groundfloor vs. Fundrise, we’ll look at two popular real estate platforms and help you decide which fits your needs.
Groundfloor vs. Fundrise: At A Glance
Key Features |  |  |
Quick Summary | Real estate crowdfunding platform that makes short-term loans to investors who fix and flip properties. Interest rates range between 5% - 15% | Real estate investment platform that offers a wide variety of REITs and Funds with varying strategies and property types |
Minimum Investment | $100 | $10 |
Fees | None (Borrower pays) | 1%/yr |
Property Types |
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What Is Groundfloor?
Groundfloor is a real estate crowdfunding investment platform that allows individuals to invest in short-term real estate debt. The company makes short-term loans ranging from 6 – 12 months to real estate “flippers” who fix and flip individual investment properties.
Before opening a loan to investors on their platform, Groundfloor thoroughly vets a borrower’s experience, creditworthiness, and business plan. Then, they assess the property value on an as-is and as-improved basis.
Groundfloor is open to accredited and non-accredited investors with a minimum investment of just $100.
This real estate platform was founded in 2013 by Brian Dally and Nick Bhargava and is headquartered in Atlanta, Georgia.
Read our full Groundfloor review.
What Is Fundrise?
Established in 2010, Fundrise is one of the oldest real estate investing platforms. Fundrise offers people an alternative option to investing in real estate without the stress and costs of traditional real estate investing.
Accredited and non-accredited investors can invest in real estate through Fundrise’s wide variety of eREITs and eFunds with a minimum investment of $10.
The company boasts a wide variety of investment options and strategies, goal-planning features, and a user-friendly investment dashboard.
More than 300,000 people use Fundrise today and have invested over $ 7 billion in properties throughout the U.S.
Fundrise is based in Washington, DC, and was founded by Ben Miller, who has over 20 years of experience in the real estate industry.
Read our full Fundrise review.
How Does Groundfloor Work?
When you open an account with Groundfloor, you can invest in short-term, collateralized (backed by the properties themselves) real estate debt instruments with a minimum investment of just $100.
Investing with Groundfloor involves lending money to real estate developers who are seeking financing for their projects. Here’s how it works:
1. Identify Investment Opportunities
Groundfloor identifies potential real estate projects that need funding: Groundfloor works with real estate developers who are looking for funding for their projects. These projects can range from single-family homes to large-scale commercial developments.
Groundfloor presents new investment opportunities on its platform weekly, ensuring investors always have the option to diversify into new projects.
2. Open the Project to Investors
Once Groundfloor has identified a potential real estate project, it creates an investment offering for it. This offering includes details about the project, including the loan amount, interest rate, loan term, and other relevant information.
3. Browse Investments
Investors can review and invest in the projects: Investors can review the investment offering and decide whether they want to invest in the project. Investors can choose to invest any amount, starting at as little as $100.
With this in mind, you can also use Groundfloor’s Investment Wizard, a feature that automatically matches available loans with your investment criteria. You can select and customize your portfolio with just a few clicks.
Most loans offered on its platform have yields between 7.5 to 14%, with a duration between 6 and 12 months or as long as 21 months.
Once you open your account, you can browse available investments and view loan metrics such as rate, term, and ARV (after repair value).
Note: Groundfloor stands behind each loan on its platform. The company prefunds loans before they launch on their platform. Because Groundfloor fully funded the loan, it shows faith in its underwriting and due diligence. Otherwise, if a loan does not meet investors’ standards, they will be stuck with a possibly underperforming loan.
4. The project is funded
Once enough investors have invested in the project, the project is considered fully funded, and the loan is closed. The developer receives the funds and can begin work on the project.
5. Investors receive monthly interest payments
As an investor, you will receive monthly interest payments based on the terms of the investment offering. The interest rate is typically higher than what you would earn from a savings account or CD.
6. The loan is paid off
At the end of the loan term, the developer repays the loan, and investors receive their principal investment back, plus any accrued interest.
7. Investors reinvest or withdraw their funds
After the loan is paid off, investors can choose to reinvest their funds in another project or withdraw their funds from the Groundfloor platform.
Overall, investing with Groundfloor allows investors to earn attractive returns by lending money to real estate developers. However, it’s important to remember that all investments come with some level of risk, and investors should carefully evaluate each investment opportunity before investing their money.
How Does Fundrise Work?
With Fundrise, you are investing in either Fundrise eREITs or eFunds. eREITs and eFunds comprise a basket of non-traded real estate properties, from multifamily apartments to industrial complexes. The eREITs and eFunds aim to seek a combination of dividend distribution and capital appreciation, depending on the strategy.
When you open an account with Fundrise, they offer a wide range of account levels. Basic accounts require a minimum investment of $10, and its Advanced Portfolio requires a minimum investment of $10,000. The premium level is reserved for accredited investors only, with a minimum investment of $100,000.
However, Fundrise’s most popular account is its Core Portfolio, which has all the options and benefits most investors need. A Core account requires a minimum investment of $5,000.
You can create a customized investment strategy at the Core account level and above. Investors can customize their portfolio by diversifying across a wider variety of funds with specific objectives, such as income, growth, and balanced.
Groundfloor Key Features
$100 Minimum Investment. Groundfloor is truly democratizing real estate investing by removing barriers to entry. You can create a diversified portfolio by investing While Fundrise also has a $10 minimum investment, you need to invest at least $5,000 to access all of the platform’s features.
Investments Are Backed By Collateral. With Groundfloor, you are investing in real estate debt which has a much lower risk profile in the capital stack. Many other real estate platforms invest in equity or preferred equity, making them subject to a higher degree of risk.
Groundfloor Stands Behind Their Loans. Groundfloor prefunds most loans before they are sold on its platform. Doing this shows that Groundfloor has faith in its investment selection process. Because if the loan does not live up to investors’ standards, they could be stuck with the loan.
Note about fees: Many real estate investment platforms bury additional costs in their offering documents. So a word of caution when considering investing and are concerned about the fees a platform lists. The most transparent platform for fees for real estate investing is a company called Streitwise.
Which Platform Is Better?
Winner: Groundfloor
Groundfloor has a winning investment strategy.
Their low investment minimum of $100 grants you access to all of their features. While Fundrise has a $10 minimum, you must invest at least $5,000 and upgrade to a Core portfolio to use most of the platform’s features.
In addition, Groundfloor’s short-duration notes are backed by collateral, offering higher returns for varying degrees of risk. This is in contrast to Fundrise, which requires you to lock up your money for 5 years or pay a fee to withdraw your money.
Furthermore, all of Groundfloor’s investments are debt investments, which provide a higher degree of security when investing, while Fundrise’s investments span the entire capital stack.
That said, it is clear why Groundfloor is superior to Fundrise in the real estate investing platform space.
