New Real Estate Debt Investment Offering: $10 Minimum, 6.5% To 10% Returns

The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

Groundfloor, an alternative real estate crowdfunding platform that allows non-accredited investors to invest in high-yield, short-term real estate loans, just released a new batch of loans to investors on Wednesday. These loans have a minimum investment of only $10 and have returns that range from 6.5% to 10%. 

The Investment Platform 

Groundfloor provides short-term, hard money loans to real estate investors and builders for the renovation or construction of residential properties. The loans are then paid back once the project is complete and the properties are either sold or refinanced. 

Once the loans are originated, they are added to Groundfloor’s platform, where investors can contribute any amount in $10 increments to any number of properties they wish.

Goundfloor currently has 63 loans available on the platform with returns ranging from 6.5% to 10% and terms ranging from six to 12 months. 

View current Groundfloor offerings. 

To date, the actual returns on the platform average 10.5%, with over $12.6 million in interest paid to investors.

Due Diligence 

Groundfloor has a proprietary system for vetting and grading each deal before it's offered on the platform, and investors can review details on each loan before making any investment decisions. This includes information on the property as well as the borrower’s track record. 

The investments are offered through a limited recourse obligation, which is a debt security created for each loan. Groundfloor holds a first lien position on each loan. The loans are backed by the underlying real estate asset. 

How To Invest In Groundfloor’s Current Offerings 

You can review available loans and decide if this type of investment is right for you by signing up for Groundfloor’s investment platform here. The company also provides an automated investing feature that allows you to simply choose your criteria and the tool spreads your investment out across the loans that are the best match.

Other Real Estate Debt Investment Options

While Groundfloor is one of the few platforms available to directly invest in real estate backed loans, another popular option is mortgage REITs. 

Mortgage REITs invest in a variety of loans secured by real property. Some of these companies primarily focus on low-risk debt like agency mortgage backed securities while others take on more unconventional debt like mezzanine loans on commercial properties. 

Mortgage REITs are popular among some investors because of the high dividends many of them pay out. Some of the highest dividend mortgage REITs include:

Orchid Island Capital ORC: This company invests in residential agency mortgage backed securities and has a dividend yield of 15.85%.

Ready Capital RC: This company invests in small balance commercial loans and has a dividend yield of 11.27%.

Annaly Capital Management NLY: This company primarily invests in agency mortgage backed securities and has a dividend yield of 10.43%

It’s important to note mortgage REITs are among the riskier investment options available. While these companies often pay high dividends, the average long-term total return on mortgage REITs tends to be low due to the volatility of share prices.

Image by Capri23auto from Pixabay. 

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.