This report is available exclusively to subscribers of Inman Intel, a data and research arm of Inman offering deep insights and market intelligence on the business of residential real estate and proptech. Subscribe today.
A company that has been using proprietary technology to make investing in real estate accessible to more people has developed a new mobile app, Inman learned in an Oct. 16 press release.
Groundfloor 3.0 came out today, ten years after the company’s launch, promising a “next-generation” mobile experience for its 230,000+ users, who have already been responsible for more than $1 billion in investment volume and received back more than $500 million, according to the release.
Groundfloor, which facilitates retail investing in commercial real estate debt, was the first such solution to be qualified to do so by the SEC, and co-founder Nick Bhargava helped author the JOBS Act of 2012.
“The alternative investments industry has scaled to the point where it’s now possible to offer automatic diversification,” said CEO and Bhargva’s co-founder Brian Dally in the release. “Fractional real estate investing is coming to the masses, offering a consistency of returns that isn’t available in public markets, in an asset class that people know and trust. People want to adopt alternative investments, and the combination of our scale and technology makes it easier than ever before.”
Dally is partially right in saying that fractional investing is making its way to consumers. It’s actually already here, and his company was far ahead of the curve in terms of creating a system for non-accredited investors to put money into property rehabilitation and new development.
The new application “provides a seamless interface to create cash flows that beat REIT dividends by 10X in as little as three months,” Groudfloor said, allowing investors at any level to build real estate into their investment portfolio. The company compares its new product to index-fund investing, but without ancillary fees, minimum hold times or restrictions on redemption.
Features and benefits accessible to adopters of Groundfloor 3.0 include the ability for new investors to start with as little as $100, an expected yield of 10 percent based on historical figures, a five-day average repayment schedule, automatic diversification into between 50-100 projects and easy-to-control reinvestment preferences through the software’s “Cash Target” functionality.
Dally alluded to his refreshed technology and investment offering being an elbow to the ribs of legacy REITs, or real estate investment trusts, which are securitized bundles of equity in commercial property portfolios. His timing may be spot-on for such a statement, given the historic beat-down office landlords are taking.
“REITs are overdue for a big disruption,” he said, while describing his app with the “easy button” cliché.
“Our technology enables everyone to escape the REIT fund trap and reap the rewards of being their own fund manager.”
Current Groundfloor investors are able to access the new edition’s benefits, which emphasize ease of use and a flattening of the investing process.