Groundfloor, a real estate investment platform for the general public, announced it had doubled its year-over-year revenue in 2019 and is targeting a staff-up of more than 30 people in the coming year.
Calling itself a “wealthtech” company, Groundfloor seeks small investments from non-institutional real estate investors, meaning anyone can participate in the company’s fundraising efforts for as little as $10.
In a press release on the announcement, the company stated it raised $6.7 million from a total of 3,200 stock holders, leading to its goal of being 20 percent publicly owned.
The Atlanta-based company invests in residential rehab projects, allowing people to invest nominal amounts to fund loans that investors use to buy and rehab properties. The company positions itself as an alternative to hard-money lending.
Investors earn returns on the sale of the property. Groundfloor account holders can reinvest via their online account or choose to withdraw their payout.
It was the first company approved by the SEC to offer investments of this kind in this environment, made possible via Regulation A, for non-accredited (not meeting SEC standards for net worth or income) and accredited investors.
When asked about the value in working with non-accredited investors, Groundfloor co-founder and CEO Brian Dally said that the everyday investor is why the company was founded and that individual investors aren’t being invited to participate.
“Data over the past 20-30 years shows that the best returns for the least risk are being earned in private markets that have previously been accessible only to institutions and accredited investors,” Dally said in an email to Inman. “We realized the problem isn’t that individual investors aren’t getting their fair share of the pie — it’s that they’re not even being served the same thing. We’re changing that and filling a huge and important gap in people’s portfolios.”
In addition to its recent growth, the company has surpassed $100 million in annual investment volume and reached 75,000 registered users.
In total, Groundfloor has backed more than 1,200 real estate projects around the country.
Since its inception, participants in Groundfloor real estate loans have earned annualized returns averaging 10-12 percent in a six to 12 month timeframe, according to the release.
Dally also sees his company’s growth as a reflection of overall market confidence.
“Since the Great Recession of 2008-2010, the U.S. has been and continues to remain undersupplied in housing. That really bolsters residential real estate asset prices,” he said.
And unlike the commercial sector, according to Dally, residential isn’t as prone to macroeconomic disruptions, like what’s happening with the coronavirus. “Because rents and market liquidity are closely tied to the health of capital markets and corporate earnings,” he said.
The company’s hiring will span a number of business operations, ranging from software engineering to loan origination.
There are plans to also launch self-directed IRAs, split loans, and the QC Maxx pre-qualification program, a form of pre-funding for approved borrowers.
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