Here is why I decided to cancel Groundfloor

At first, I was very excited to invest with GroundFloor. This seemed like the easiest way to add more real estate to my portfolio without getting some sort of loan or dropping large sums of money as a down payment (not to mention proving I'm "credit worthy". I was also excited for a 10% return on my investment.

Well, that excitement quickly went away when I invested. I quickly noticed that the estimated return for the properties that I invested in was 1% 😱

1% is a whole lot different than 10%. I called GroundFloor to get an explanation and you will not believe what they told me

I am not an affiliate.
This video is NOT sponsored by GroundFloor.
I am not an investment advisor
I am not a "professional investor"

#groundfloor #realestateinvesting #investmenttips

[jwuertley]

You’re confused on how apr works. Just keep rolling them into new loans after they are repaid and over a year you’ll get the same return as if it was in one loan over the same period of time. It’s better than a CD.

[WMichaelDeJonge]

You are receiving $3.06 because you are only holding the note for a couple of months (see the maturity date). If you held the note for one year, you would receive 10%, or $20, on a $200 investment. It would be nice if Groundfloor would explain this on their YouTube videos because I see so many people making the same error that you are making here with the math. Best to you always.

[thisguy]

This is definitely something that Groundfloor should make easier to understand on their website, but the rate is correct. You are getting 10% APY (A for "annual"). A 6-month loan and a 12-month loan may both be set at 10% APY, and will pay out at the same rate, but the 6-month loan will only earn half as much because it was covering half the time. The rate didn't change; the time period is different.

[RealEstateInvestorPro]

Sorry but this guy has no clue what he is doing or talking about.

[rrsafety]

You are 100% wrong. I just went back to your previous video and I could see clearly that, for instance, the time left on the Pyrus Street loan was 1.8 months. That means, Groundfloor will project your likely amount in interest based on how much time is left on the loan. If you invest $200 for a year, one would expect to receive $20 if the loan lasts a full 12 months ($200*.1=$20). That means, you would average about $1.66 dollars in interest per month ($20/12=$1.66). If the expected remaining loan length is 1.8 months, then you should expect to receive $3.00 if the loan is paid off after exactly 1.8 months ($1.66*1.8=$3.00). Go back to the video you made and see what the expected loan lengths remaining for each loan and do the math yourself. Groundfloor is right and you should make another video apologizing.

[coryryker]

This is embarrassing for you. You're upset because you don't understand APR/APY. This is basic investing knowledge.

[patriciodoig]

THE PROFIT YOU OWN IS IN A YEAR SO YOU HAVE TO EXAM THE FORMULA OF INTERST OR INCOME

[sackaveli]

APR is as straight forward as it gets and not complicated. User error here. You are not doing ANY work and you're getting a decent return. You acting like you're being inconvenenced or like you've been mislead is disengenuious at best.

I am not investing w Groundfloor but this is not their issue and is stated in multiple places on thei website and white papper.

[jeremybrummel]

Thank you for this, I was interested because some had less than a month or two less before maturity, and I was excited at the thought of a 8.5% investment for a one month loan.

Now I understand not only does get less interest for getting into a loan late, but even a 6 month loan is not making the rate, since the rate is annual. A 8.5% rate only means 4.25% for a 6 month loan if there from the beginning.

Thank you for your time and effort in this.

[bernardthomas]

Go for higher percentage rates.. 15% grade level F is for longer greater return.

[SingleParentSt]

I definitely agree with you because I am invested in ground for and I only invested like $10-$20 what is still not worth it when you do the math even with the thousand dollars the return a lot of money that you’re getting is like from $10-$20 it’s just not worth it

[smileycamel]

No 12 months today...equals quicker return, yes smaller, but roll it over, put it all back to work, . They have new loans all the time. If you set it up like auto pilot, you go right on those longer term, new loans... something else...you can invest in ground floor itself, buy in. ..which should yield better long term. Remember they get paid the full percentage when the loans are repaid. Its how the company makes money....

[donaldschultz]

I haven't invested in ground-floor so dismiss what I say if you like. However, the math works out better for you if you take the shorter terms. Take the first investment with a return of 3.06 in 1.8 months. You would have 203.06 to invest. If you continue to invest earnings and reinvest then a little after the 12 month mark you would have over the $220 that you thought you would have. The question you should have asked was how long after after the repayment date do you have access to your funds to reinvest them

[alixahimon]

That's how APR works. A little tricky if you did not know before, but usually all that's the way you get your interests. It is divided by the numbers of months. What i want to know however, is if they take longer, do u get more though ? That would be fairer.

[patriciodoig]

FOR THE FIRST EXAMPLE YOU SAY 3 DOLAR OF INCOME BUT HOW MUCH YOU INVEST

[fitzml]

Those were great questions. I just left a voice message asking those very things.

[peacefulyou]

Yeah. As a tax accountant myself, I definitely agree with you brother about the math on the expected returns though for sure. It definitely doesn’t add up anywhere near where it’s suppose to be even after factoring in what she said. What she said did make sense about the loan terms in relation to the APY but you still had loans that were literally almost a year old or close to a year that was still only getting you $3-5$ returns. Those are returns that are from loans that are only like 1-2 months old. One of your loans said like 9 months. That’s only 3 months short of a year with a 10% return. So the math wound expect you to make like $20 after 12 months. So, with only short of 3 months, you only get $5? Like as if the loan expected return is going to sky rocket $17 more dollars from $3 to $20 after only 3 months. I don’t think so!!

[doradograham]

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