Groundfloor, a new crowdfunding site for real estate based in Georgia, has announced their second project following their successful private pilot launch which occurred this past November. The first project which is raising $300,000 for a residential development is being followed by a refinancing of five rental town homes in Woodstock, Georgia. These investments will offer direct investment opportunities to unaccredited investors in the state of Georgia.
Capitalizing on provisions set forth in the Invest Georgia Exemption, Groundfloor cuts out the bank to open up direct real estate lending as a new wealth-generating asset class for the mass market.
“Today at the CrowdFinance 2013 conference in Manhattan, there will be a lot of talk about the promise of opening new investment possibilities for all,” says Brian Dally, co-founder and CEO of Groundfloor, “Meanwhile in Georgia, we’re not talking—we’re doing. Only Groundfloor is actually delivering a piece of the secured real estate lending pie for the non-accredited 98%.”
For its newest property, Groundfloor plans to raise $275,000 to fund the refinancing the rental properties working with developer is Rick Tuley, an Atlanta native with more than 25 years of experience as principal investor, home builder, real estate developer and residential broker. The loan will be secured by the property until repaid after a five-year term. Investors will receive interest payments throughout the term, plus a share of the appreciation of the property value.
“Economically optimal financing structures don’t always fit with the requirements of traditional bank lending and on occasion banks stop lending on asset classes that offer exceptional risk adjusted return potential,” says Tuley. “Groundfloor is addressing unmet needs for underserved markets. I look forward to adding to the early proof that crowdlending works for independent developers and unaccredited investors alike.”
With investments starting at $100, Groundfloor connects independent developers seeking alternative funding outside the traditional banking structure with mass-market investors who want the superior risk-adjusted returns unique to secured real estate lending. Interest rates offered to Groundfloor investors are determined by an innovative algorithm that benefits the earliest who pledge to invest. For example, more than 69 investors are currently set to earn 8.75% interest or more on the inaugural Groundfloor project. The offered rate decreases incrementally as projects near full funding.
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