How Investors Can Start Building A Real Estate Portfolio With $10 Minimum

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.

Investing in real estate may seem like a major commitment considering the amount of capital required to purchase a property and the responsibilities that come along with managing it. 

Fortunately, loosened regulations under the JOBS Act and the rise of fintech have opened up numerous ways for investors to add real estate assets to their portfolios with nearly any budget. In fact, virtually anyone can get into real estate investing with as little as $10.

Real Estate Debt Investments: Groundfloor is an alternative real estate investment platform that allows accredited and non-accredited investors to invest in high-yield, short-term real estate loans. 

The company provides loans to real estate investors and homebuilders for the renovation or construction of residential properties, then allows investors to purchase shares of those loans through its online platform.

Loans are graded based on the level of risk and offer returns to investors of between 6.5% to 15%, depending on the grade. Loan terms typically range from six to 12 months. 

The borrowers pay back the loans once the project is complete and the properties are either sold or refinanced. Investors then receive their original investment back plus accrued interest on the loan. At this point, the funds can either be reinvested into new loans or cashed out.

Latest Investment Offering: Groundfloor releases a new batch of loans for investment on its platform each Wednesday afternoon. The most recent batch includes 14 loans with returns ranging from 8% to 12% and all but one loan carrying a term of 12 months.

Including the new batch of loans, Groundfloor has 71 loans available for investment on its platform.

Groundfloor Historical Returns: To date, the actual average returns earned by investors through Groundfloor is 10.5%, with a total of nearly $12.7 million earned in interest.

As of the end of July 2021, Groundfloor reported a total of 249 loans repaid year-to-date with an average actual return of 9.5% with a total of nearly $3.5 million paid in interest.

Groundfloor Risks: All investments carry some degree of risk, and investing in real estate debt through Groundfloor is no different.

The most obvious risk with this type of investment is from the borrower defaulting on the loan. In most cases, the defaults are cured and the loans are paid back in full. This may result in a delay for investors realizing their returns, but often actually results in a higher total return in the end.

If a default can’t be cured, Groundfloor holds the legal right to foreclose on the underlying property. Groundfloor returns the net proceeds of the amount recovered through foreclosure to the investors. About 1% of Groundfloor’s loans have ended up in foreclosure, resulting in a minimal loss ratio of only 0.62% of the total invested principal.

Investors can minimize the risk by diversifying their investments across multiple loans. Each loan has a minimum investment of only $10, so it’s easy to invest across multiple properties.

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.

See also: 2021 Groundfloor Review

Photo: CHUTTERSNAP on Unsplash. 

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.