Groundfloor Unveils The Flywheel Portfolio: The Next Evolution in Fractionalized Real Estate Investment

News provided by

Oct 03, 2024, 09:00 ET

Latest regulatory innovation empowers investors to take advantage of greater diversification and more consistent cash flows with a $100 minimum

ATLANTA, Oct. 3, 2024 /PRNewswire/ -- Groundfloor, the award-winning alternative real estate investment platform with over $1.6 billion in investment volume, is announcing the launch of the Flywheel Portfolio, a groundbreaking solution designed to amplify diversification and provide unmatched cash flow for everyday investors. This latest product breakthrough allows investors to access hundreds of loans across a single, automated investment—introducing unheard of levels of fractionalization down to even fractions of one cent, creating instant diversification and mitigating risk.

Through Flywheel, investors experience greater cash flow consistency while retaining Groundfloor's trademark accessibility. The minimum investment amount for Flywheel is only $100 — a far lower barrier to entry than private credit funds. Importantly, Groundfloor investors can access and invest in Flywheel through any of Groundfloor's account types–Auto Investor, Investor or IRA. Investors who prefer to invest in individual projects offered on the platform are still able to do so.

"The Flywheel Portfolio represents the next major innovation for fractionalized real estate investing," said Brian Dally, CEO and co-founder of Groundfloor. "With Flywheel, investors get access to more loans faster, earlier in the loan lifecycle, and with a guaranteed exit point. The underlying technical and regulatory evolution outclasses private credit funds on the attributes that matter most to individual investors."

As the new standard investment option for Groundfloor, key features of Flywheel include:

Unmatched Diversification: Investors gain exposure to hundreds of real estate loans, immediately reducing risk and creating more stable cash flow over time.
High Yield: With loans in the portfolio earning interest at rates ranging from 9.50% to 14.50%, customers have an opportunity to earn an outstanding risk-adjusted rate of return.
Fractional Investment Capabilities: With Flywheel, Groundfloor has pushed the limits of fractionalization, allowing investors to automatically fractionalize their investments down to fractions of one cent.
Reliable Liquidity Timeline: Unlike traditional REITs, Flywheel returns fractional principal and interest to investors as its underlying holdings repay. Based on historical experience, the average time to repayment of a Groundfloor loan is approximately 10 months, and 95% of loans repay within two years.¹ In addition, all Flywheel investments are repaid or resolved within 36 months. This feature provides investors with unparalleled liquidity and establishes a firm boundary on maturity default risk, a key improvement over illiquid REITs and private credit funds.
No Fund Manager Gating Redemption Policy: Investors in Flywheel are repaid when the loans in the portfolio repay, rather than at the discretion of a fund manager in response to a redemption request, which usually comes with substantial penalties.
Amortizing Principal: Investors receive monthly distributions of not just interest, but principal as well, resulting in unrivaled cash flow.
Regulatory Innovation: Groundfloor's continued leadership in applying securities regulations to create new value for investors means that Flywheel enables improved access to loans earlier in the life cycle, maximizing returns and reducing risk.
Automatic Reinvesting: Groundfloor makes it easy to reinvest distributions back into Flywheel for as long as investors choose to keep their money working, then pause reinvestment to begin reaping the distributions.
Low, Declining Fees: Flywheel charges a small asset management fee of 0.25% per quarter, significantly lower than traditional funds..

Flywheel brings together the best of Groundfloor's regulatory innovations while optimizing tax-effective yield within existing federal tax rules. Investors can rest assured they're not subject to unpredictable net asset value (NAV) calculations or redemption restrictions.

"Flywheel fixes the most frustrating issues people experience with traditional real estate investment trusts and private credit funds," added Dally. "With this latest innovation, we've created a transparent, tax-optimized, fee-efficient, and planned liquidity solution that leads the market in giving alternative real estate investors more control over their capital."

To learn more about Groundfloor and begin investing, visit Groundfloor.com or download the apps on the Apple App Store or Google Play.

About Groundfloor
Groundfloor is an award-winning fintech company that levels the playing field in financial markets for individual investors. Known for its regulatory prowess and developing completely new financial products for alternative investing, the company was the very first to be qualified to offer direct real estate debt investments for both accredited and non-accredited audiences alike. The company has won numerous awards for its product innovation and growth, including the Forbes Fintech 50 and five years in a row of being on the Inc. 5000 List. Since it launched in 2013, Groundfloor's investors have consistently seen 10% annualized returns across its short-term investment offerings. For more information or to get started investing fractionally in real estate, visit Groundfloor.com.

Media Contact:
Hela Sheth
[email protected]

¹Based on historical repayment data on loans originated between 2016 and 2022.

SOURCE Groundfloor Finance Inc.