In April of 2016, I opened an account with Groundfloor, to begin my first real estate crowdfunding experiment, and deposited a modest amount of $250.
Groundfloor offers the opportunity to build a portfolio short term, high yield real estate investment loans with the smallest possible minimum investment of $10. As a real estate novice, I saw this as a great opportunity to get into this area, with minimal risk, as I learn more about the opportunities.
This is my Groundfloor experience.
I began investing ten dollars, occasionally twenty or thirty, and some of them began being repaid quite quickly (the first one in a mere three days!). by October 2016, I decided to add another $100, bringing my commitment to $350. I added another $150 in November, for a total investment of $500 for the year.
Things seemed to be going along splendidly, with some loans being repaid and many others on schedule with very few issues. A few loans went a little late, with extensions being worked out, but nothing alarming.
This was the peak of my happiness with the platform, and it was downhill from there.
In December, I tried to make another deposit, but the account I had used to fund previously disappeared from my profile. I re-added it but had to wait a few days to go through the verification process again. I sent an email to support on Dec. 12th to figure out what happened, and I received a response the next day:
It appears that there was an issue with your bank account in our system. In turn, this caused the provided information to be disrupted with our third-party payments provider.
I waited, and waited, and waited, and never received the small test deposits into my account, and thus was never able to add more funds. I followed up on Dec 19 and Jan 16, and each time I received a response saying they were working on the issue.
On Jan 24, 2017 I received an email, “It was a pleasure speaking with you this evening..” etc. etc. etc. This was interesting as I had never spoken with anyone. After going round and round for some time thereafter, I was finally able to add funds again on March 8th, nearly three months from my initial issue.
Maybe I should have bailed at that time, but I was willing to give them the benefit of the doubt and I stuck with the platform, depositing $100 in March, $50 in April, $100 in May and finally $250 in June to bring my total amount to $1,000.
In July, I began having difficulties investing in available loans. I was receiving the notifications that new loans were available, but I never had an option to invest. It appeared that the loans were not 100% funded, yet, I had no option to invest.
I contacted support on July 14th and never received much in the way of an answer or solution. I kept receiving notifications that new loans were available, but they did not seem available to me. I was told that nothing seemed to be wrong and that they were researching the problem. It turned out that there was a temporary issue with allowing investments from Virginia, which was eventually resolved a month later.
This was the final straw for me, as I was not happy with the communication either time there was a major issue. Why they weren’t able to contact all investors from Virginia when the issue arose is beyond me.
At this point, I began withdrawing my funds as they became available.
As of this writing, I have 33 active loans, totaling $380 and I’ve earned $49.74 in interest. Of these 33, 19 are classified by Groundfloor as current, 5 are currently late with extensions being discussed, 2 in default and 7 classified as “default late”.
With the increase in defaults on top of shaky communication and support, I have decided to look for other options for real estate crowdfunding.
2 Replies to “My first real estate crowdfunding experiment: Groundfloor”
Interesting to read about when these kind of platforms don’t work out so well. Good word of warning for other people considering this platform. Nice post.