Thanks to new technology and startup platforms with the right education, trainer Bernice Ross writes, even novices with small budgets can jump into the investing game with ease.

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Getting started in investing can seem like an overwhelming thought for someone who is not familiar with how it works and the seemingly high cost of entry to get started. As interest rates and real estate prices have soared, the idea of investing in real estate seems like a distant pipe dream for most people, especially for those who are unable to purchase a home.

Thanks to new technology and startup platforms with the right education, even novices with small budgets can jump into the investing game with ease.

I recently interviewed Groundfloor CEO Brian Dally about how those new to real estate investing or who have limited funds can get started using their platform. For more experienced investors, Groundfloor is also a fantastic way to diversify your existing real estate investment portfolio.

Here I’ll introduce the platform, talk about easy ways to get started in real estate investing, and help illustrate how creative out-of-the-box thinking can help you and even your clients start building investments for the future.

An important alternative to public market securities

When I asked Dally about what motivated him to start Groundfloor, he said an increasing number of people are looking for alternatives for their future investing and saving needs. The younger you are, the more likely this is to be the case. offers an innovative approach to real estate investing where you can get started with as little as $10.00. Groundfloor’s focus on short-term loans (12-18 months), no annual fees, diversification and a 10 percent average rate of return over the last 10 years, make it a powerful way for almost anyone to begin building their income through passive real estate investing

“We believe that the best alternative out there is residential real estate, and specifically enabling people to build portfolios of loans on real estate investment,” Dally said. 

“In order to provide a product for everyone that works the way that it does, we realized we needed to not only be an investment platform, but also the capital provider for the opportunities that our base of investors would be investing in.”

In addition to providing a platform where people can invest in a portfolio of real estate loans, Groundfloor’s model lends money to active investors who are purchasing property, fixing it up, and selling it. 

Dally went on to explain how Groundfloor is responsible for controlling the quality of their product to make sure that when you invest, they are able to return both your capital plus the interest earned. 

Rehabilitating America’s aging housing stock  

Like Kurt Carlton of New Western, Dally believes there’s a tremendous amount of opportunity available for value-added construction. 

“This is rehabilitating America’s aging housing stock and expanding our housing supply where affordability is a major problem. The people we lend capital to are out there doing that work, taking the risk of executing on these projects, of going over budget or having something wrong in their business plan,” Dally said.

“So, we’re responsible for partnering with them to make sure that we adapt to changes and curveballs that come along their way, and ultimately, returning the capital back to the investors who backed the project.” 

Investing with Groundfloor — you get paid first because you are the ‘bank’ 

If you study finance, one of the most important things you learn is to ask, who gets paid first? 

“We all know that the bank gets paid first. The bank wins because the bank is the lender. The bank always has the security of being in the first payment position. Groundfloor puts you in that same position that also has the least amount of risk,” Dally said. 

“Holding all other variables constant there is a greater likelihood of returning capital if you’re holding debt as opposed to holding equity. It’s pretty rare to be in the same position as the bank. It’s also a great place to be for at least part of your portfolio.” 

Diversification across multiple loans

One of the strategies both banks and big institutional investors use is to diversify into thousands of products.

“The whole idea of the Groundfloor platform is to allow everybody to diversify their loan portfolio and to provide the technology, the service, and the confidence you need to invest, even with much smaller portfolios,” Dally said.  

A personal case study

In late March, my husband decided to move money from a previous investment into Groundfloor. We were both surprised when our account opened with 66 loans. The diversification of loans was much greater than either of us anticipated. 

What makes Groundfloor different from most other debt funds where your capital is returned 2-4 years later, during our first week, we had two Groundfloor loans pay off, returning both our principal and interest. That was all it took to get my husband hooked on the app, waiting for the next loan to close. 

Over the 10 weeks we have invested so far, 11 loans (averaging about $390 a piece) have closed, returning both our capital and interest. The average interest rate on the loans that paid off is currently 11.1 percent. Since Groundfloor makes short-term loans (often less than a year), the people borrowing now are acquiring loans at today’s higher interest rates.

“Almost every loan we originate on our platform is a 12-month loan,” Dally said. 

“These loans tend to pay off sooner because the house is done, and then it’s sold or refinanced. That typically takes nine to 10 months.”

Dally also explained that it may take some loans a lot longer to close, sometimes as much as 24 months. In the case where the loan and interest is not paid off as per the original contract, Groundfloor charges a higher interest rate to extend the length of the investment. 

“Loans that pay off after the maturity date, will normally experience a bump in the interest rate of 2 percent or 3 percent, and sometimes even 4 percent,” Dally said. 

“When you have all your eggs in one basket, and then that basket is delayed, then you’re disappointed. When you have your eggs in 1,000 baskets, and 10 of them are delayed, you probably don’t even notice.” 

When I asked if anybody currently has 1,000 loans out right now, he replied that his personal loan portfolio currently has about 1,200 loans since he invests in every loan they make. My husband is aware of another investor who has over 1,000 loans as well. 

Start capitalizing on compound interest from the beginning

Someone, though probably not Albert Einstein, once called compound interest the eighth wonder of the world. Compound interest means you earn interest on the principal plus the accrued interest.  

Groundfloor’s automatic investing program allows you to begin compounding when your very first loan pays off. 

“Some people have mixed feelings about it because on the one hand, [when you reinvest], your capital is not coming back to you as quickly,” Dally said.

“If you’re diversified, you don’t mind because you’re not depending on a single loan. Via the automatic investing program, you will shortly have about 150 to 200 loans, especially if you keep investing. One loan that pays off turns into 10 loans, so your portfolio rapidly diversifies.”

You determine your personal level of risk 

Groundfloor investors select the level of risk they’re willing to tolerate. That in turn determines the interest rate they will receive on their loan portfolio. Greater risk translates into much higher interest rates. 

Groundfloor has a very robust algorithm for determining a borrower’s level of risk. Here are some factors they evaluate when determine whether they will make a loan on a given project. In fact, anyone making personal real estate loans should investigate each of these factors prior to making the loan. 

  • What is the track record of the principal(s) who will be doing the work? 
  • Search the public records to verify the borrower’s level of experience. The more experienced they are, the better their rates will be and the more capital they can access.  
  • What is the actual collateral and how much is it worth now, in relation to what the borrower is planning to pay for it, or in some cases, has already paid for it? 
  • The best operators buy low. They find a way to buy for less than market value, and that creates both a cushion and a lot of opportunity. 
  • What is their plan? How much do they propose to invest in the property? What is going to be done? Is their budget realistic?
  • Does the borrower have the experience and the track record to do that amount of work, especially if it’s a major renovation? Have they been successful with major renovations in the past? 
  • The last thing Grounfloor looks at is the anticipated market conditions when the property is completed. This includes determining the pricing for newly improved housing stock. Does the anticipated selling price cover the loan and enough profit for the person doing the work to take the risk on the project? 

At this point, Groundfloor considers all these factors and then uses its proprietary algorithm to score each property on its key risk factors. As of this date, they have done over 6,000 projects nationwide, so as Dally noted, they’re pretty adept at it. 

“All of those risk factors and how we look at them are disclosed in our securities filings on file with the SEC and available for anyone to read. There’s regulatory oversight of this process and how the grade we assign is made,” Dally said. 

“There’s a range of risk people can take on the platform and we think it is important for everyone to make their own decisions around that.”

Low-risk vs. high-risk rates of return 

In terms of Groundfloor’s loans that have the lowest risk level, these typically generate a 7 percent to 10 percent return. 

“Our Grade A and Grade B loans are with experienced borrowers, those who have the most skin in the game, Dally said. “Things can certainly go wrong with any loan, but our philosophy is that if you are properly diversified, you can afford to take on a bit more risk and earn a higher return on your investment.” 

In terms of loans that pay a higher rate of return, these typically range between 16 percent to 18 percent. These are often situations where the borrower is inexperienced, where the collateral (property) is in a in a less liquid market, or maybe it has more leverage, i.e., more loans and less equity.

Groundfloor does offer loans with even higher interest rates, but usually, these loans are tied to being in second position. In other words, whoever is in the first position gets paid first, and then the rest of the investors get paid. If there’s any money left over, then the borrower who did all the work gets paid what’s left.  

Groundfloor competitors

The two business models closest to Groundfloor are and Streitwise. All three models are open to accredited and unaccredited investors. Unlike Groundfloor, which does not charge a management fee, however, Fundrise charges a 1 percent management fee and Streitwise charges 2 percent. 

According to, here are several other important differences. 

  • Fundrise offers a wider variety of investments including commercial, single-family, multi-family, and industrial properties with a minimum investment of $10. Investors have the option of receiving quarterly payouts and reinvesting their dividends. 
  • Fundrise is designed for a longer investment period (5+ years) but does provide opportunities to liquidate quarterly. Their average rate of return from 2014 to 2023, was 4.81 percent. In 2023, they had a loss of -7.45 percent, most likely driven by difficulties in the commercial market. 
  • Streitwise targets investors interested in commercial real estate through a private Real Estate Investment Trust (REIT). The minimum investment is $3,550 (approximately) 500 shares. According to the Streitwise website, the “average annualized dividend yield has been 8.3 percent since 2017.”

Dally’s final piece of advice is to “Start small and invest regularly.” 

With Groundfloor, becoming a real estate investor is no longer a pipe dream. It can be a reality for anyone and has the added advantage of allowing you to earn compound interest. It’s also a place where people who are doing flips and fix or rehabs can finance their next project, provided they meet Groundfloor’s exacting requirements. 

What Dally didn’t point out is how much fun you can have watching your loan portfolio pay off regularly, and then continuing to grow the number of loans and interest you’re earning by reinvesting. Why not check it out and see for yourself?

Bernice Ross, president and CEO of BrokerageUP and, and the founder of is a national speaker, author and trainer with over 1,500 published articles.

Bernice Ross
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