With so many companies opening up new avenues to investing, it can be difficult to figure out which platform is the best for your risk appetite, financial acumen and investment goals. Among the more notable outfits is Groundfloor, which allows investors to help fund properties and hopefully net a return.
We’ll take a look at how Groundfloor works, its similarities and differences with addy and which one is the top choice for you. Perhaps addy is indeed Groundfloor for Canada. Let’s find out.
What is Groundfloor?
Groundfloor is a platform that allows for investors – both accredited and non-accredited – to participate in fractional real estate loans. It grants borrowers access to fast and cheap capital while affording investors short-term, high-yield investments with returns of 5.5% to 26%.
Borrowers take out loans with Groundfloor, and after a review process, investors can put forth as little as $10 in a property if they choose to invest in it.
How do you make money with Groundfloor?
In order for a project to move forward, the loan has to be fully funded. Once that happens, the renovation, rehab or other effort is set in place. Once complete, the property is to be listed, sold and closed. Upon closing, investors are paid back with interest.
Once a property goes live on Groundfloor, it has 45 days to be funded or else it is removed from the platform and any funds are returned plus interest. There is no guarantee that when you invest in a property, it will be fully funded.
Is Groundfloor a REIT?
Neither addy nor Groundfloor is a REIT. A real estate investment trust manages your portfolio for you; often, you won’t even know the exact property or properties you’re investing in. With Groundfloor, you can decide what properties you want to invest in.
Similarly, addy presents opportunities to members, and they decide how much, if any, they want to invest.
Who can invest?
While it operates in the United States, Groundfloor welcomes those within and without the U.S. to invest. addy currently operates in Canada, with residents in B.C., Ontario, Alberta and the recently unlocked province of Quebec to become members.
Like addy, Groundfloor also boasts a referral program. However, whereas a successful referral for Groundfloor nets both parties a $10 investment credit, addy gives away $25 to the wallet for both members.
addy focuses on institutional grade commercial real estate, which are properties that can cost anywhere from $3 million to $100 million. Such properties include apartment complexes, industrial parks and even hotels. With their high price tag, these investment opportunities have not historically been available to the average Canadian.
Groundfloor does not invest in commercial properties. Instead, they finance the acquisition, renovation and refinance of residential single-family homes, multi-family homes of 1 to 4 units, townhomes, condominiums and planned unit developments in 30 states across the U.S.
addy purposely avoids investing in single-family homes so as not to compete with individuals, couples and families looking to buy their home. Housing prices are rising across the country; low supply and high demand are pricing out younger generations from becoming homeowners.
Investing with addy
addy uses crowdfunding to allow average investors access to opportunities that were previously unavailable. Like Groundfloor, addy welcomes both accredited and non-accredited investors to participate in the platform. Signup is quick and easy, with a Charter Membership costing $25 for one year. You can fund your wallet upon signup and use our Instant Funds feature to start investing right away.
However, unlike Groundfloor, there is no risk of an addy property not being fully funded. That’s because addy, as a limited partner, works with the general partner to either allow some flexibility with the investment amount or to top up the amount should it not be fully funded. Either way, once an addy member invests in a property, that money goes to the property and the member’s work is done.
addy believes in real estate for everyone, opening up new, simple and potentially lucrative opportunities to Canadians. With no fees, a low minimum investment and a team of dedicated experts working to find the best deals, addy is working hard to create accessible crowdfunding real estate opportunities for all.