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Atlanta-based Groundfloor, an open, online platform for investing in real estate for as little as $10, announced a public stock sale to provide current investors an opportunity to own shares at $15 each as part of its goal to reach 20 percent public ownership.
The fast-growing fintech recently raised $1 million through a limited share offering to existing customers. It has 60,000 registered users and 2,300 shareholders.
New investors will need to create an account to take advantage of the offering. Current customers can simply choose “Groundfloor 2019 Stock Offering” from their dashboards to buy.
The benchmark of 20 percent public ownership isn’t a random number, said CEO Brian Dally in a call with Inman. “Twenty percent is what our VC owns, and since we’re in the business of helping ordinary folks invest in real estate, we think they should own as much of our company as our VC does,” he said. “It’s a symbol of our commitment to our clients, reflecting our mission.”
Groundfloor’s transparent, retail investor model aims to reduce the barrier of entry to real estate investing, encouraging private citizens at all levels of financial status to participate in backing small residential real estate developments.
It also provides first-time real estate investors with a significant barrier between themselves and the many self-inflicted wounds that often occur when managing a flip or a rehab project without enough experience.
In essence, Groundfloor serves as private or hard-money lender for its projects. It can also be classified as “crowdsourcing,” but eschews the term in its marketing so potential loan recipients don’t think their project depends on a certain amount of funding or the will of random backers.
“Stockholders don’t crowdfund a public company, for example,” Dally said. “It’s an easy way to describe what we do, but it’s not really the case.”
It provided developers with more than $100 million in loans in 2018, and now it can provide loans in 30 states. They have 45 loans in their pipeline as of this writing, according to Dally.
The 50-employee company also caters to accredited investors and offers them “additional benefits,” according to its registration form.
Not unlike most CEOs of public companies who have to respond to shareholder concerns, Dally and his team know they have a lot other people’s money riding on the real estate projects they fund. The company has installed an asset management team led by a person with 30 years of experience across multiple forms of real estate.
“We have to be very proactive about it, anticipate delays and stay in touch with our investors,” Dally said. “But we have credit lines and partners through which we can access funds to keep projects on track.”
It also offers a streamlined hard-money lending process to home-flippers and builders.
Last year, Groundfloor investors earned a weighted average return of 10.37 percent, and the company experienced 79 percent revenue growth.
For more information or to become a Grooundfloor shareholder, click here.
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