Groundfloor Review 2026: Going-Concern Doubt in Every 1-K Since 2017, and 73% of the Legacy Loan Book Over 90 Days Late

What Is Groundfloor?

Groundfloor is a real estate lending platform, not a property ownership platform. That distinction matters.

When you invest through Groundfloor, you're lending money to real estate developers who need short-term funding for fix-and-flip projects — renovations, new construction, bridge financing. You pick the loans, the developers use the money, and when they repay (typically 6-12 months later), you get your principal plus interest.

You are the bank. Not the landlord.

Groundfloor underwrites each loan, assigns it a risk grade from A (safest) to G (highest risk), and then opens it up for individual investors to fund in increments as small as $10. Revenue comes from borrower origination fees (typically 2% to 6% of the loan, per its offering circular), not from charging you. That business model is one of their strongest selling points.

The SEC qualified their first Regulation A offering statement on September 7, 2015, and their LRO offering has been qualified under Tier 2 since January 2018; Groundfloor describes itself as the first platform of its kind to get that approval for non-accredited investors.

How Groundfloor Works: Loan Grades A Through G

Every loan on Groundfloor gets a risk grade that determines the interest rate you earn:

The grading system considers factors like loan-to-value ratio (LTV), borrower experience, property location, and project scope. In theory, higher grades mean lower risk and lower returns.

In practice, the grading isn't perfect. You can't blindly trust the letter grade.

Groundfloor's Products: Four Ways to Invest

Groundfloor has expanded well beyond individual loan picking. Here's what's available:

Individual Loans — The Original Product

You browse available loans, read the details (property location, borrower track record, LTV ratio, grade), and decide which ones to fund. This is the most hands-on option, and where both the highest returns and the highest risk live. $10 minimum per loan.

Notes — The Best Product on the Platform

I'll say it directly: Notes are Groundfloor's strongest offering. They're fixed-income products secured by the assets of the issuing Groundfloor subsidiary, with terms from 30 days to 12 months and yields between 5.0% and 8.5% as of September 12, 2026 (the accredited-only Preferred Note is listed at 7.0%; a 9.25% version ran in April 2026). Notes carry a put right before maturity, but GFY's offering circular says interest earned is forfeited if you remove funds early.

Groundfloor's February 2026 press release says 100% of Note investors have received positive returns, with every payment on time, since 2018, and that Notes paid out $8.4 million in interest in 2025. Those are company claims, not audited disclosures. If you want Groundfloor exposure without the headache of individual loan defaults, Notes are the answer.

Current Note rates (September 12, 2026): 1-Month Note: 5.0% | 3-Month Note: 6.0% | 12-Month Signature Note: 8.5% | Preferred Note (accredited only): 7.0%.

The tradeoff? $1,000 minimum for the Signature Note ($100 for 1- and 3-month Notes) and lower returns than picking high-grade individual loans.

Flywheel Portfolio — Automated Diversification

For $100, Flywheel spreads your money across hundreds of loans automatically. Think of it as Groundfloor's answer to "I don't want to pick loans but want higher returns than Notes." The catch: Flywheel carries a 0.25%-1.0% fee, making it the only Groundfloor product that charges investors.

Stairs Notes — What the App Sells

In Groundfloor's filings, "Stairs Notes" are the notes Groundfloor Yield LLC sells through its app: stated rates of 4% to 10% and terms of 5 days to 24 months in 2023-2024, principal and interest automatically reinvested at each maturity, and interest forfeited if you remove funds before a note matures (GFY's June 2025 offering circular). $88.4 million was outstanding at December 31, 2025. It is not a savings account.

The Default Problem: Let's Talk About It

This is where most Groundfloor reviews get dishonest. They'll mention defaults exist and move on. I won't do that, because the default data is the single most important thing you need to understand before investing.

Platform-reported numbers:

• Loans more than 90 days past due: 73.4% of the $88.4M legacy book at Dec 31 2025, 27.5% a year earlier; $50.8M on nonaccrual (FY2025 Form 1-K, accession 0001104659-26-038396). The widely repeated "4.71% uncured default rate (28 of 594 loans)" is a third-party figure that appears in no Groundfloor filing

The two bottom rows are the honest pair. The 73.4% is real and it describes the pre-2025 book, from which the performing loans have left and the stuck ones have stayed. Across everything Groundfloor holds, the share more than 90 days late is roughly where it was a year ago. Both belong in any sentence that quotes either.

• Platform-reported loss ratio: less than 1% since 2013
• Average return on defaulted loans: 6% (investors still earn something even on defaults)

Those numbers look manageable. Now here's the other side.

Real user experiences from Reddit and Trustpilot:

• One investor reported a 24% default rate across 93 investments
• Another had a 35% default/extended rate across 40 investments
• Multiple investors report loans stuck in default for 2-5 years — despite being marketed as 6-18 month terms
• Communication from Groundfloor on defaulted loans is consistently described as vague and unhelpful

The gap between platform stats and individual experiences exists because defaults aren't evenly distributed. If you invest in 10 loans and 3 of them happen to default, your personal default rate is 30% whatever the platform-wide figure is. Diversification across many loans (30+) brings your experience closer to the platform average, but most investors don't have enough capital to diversify that broadly.

Why defaults matter more than you think: When a loan defaults, your money isn't just losing returns — it's locked. A loan marketed as 6 months can tie up your capital for 2+ years while Groundfloor works through foreclosure. In some judicial foreclosure states, that process is slow and expensive. There's no secondary market. You can't sell a defaulted loan. You just wait.

Fees: A Genuine Advantage

Credit where it's due — Groundfloor's fee structure is one of the best in the industry:

Zero fees on individual loans and Notes is not a gimmick. Groundfloor makes money from borrower origination fees (typically 2% to 6% of the loan principal, per its offering circular), so they genuinely don't need to charge investors on most products. Compare that to Fundrise (1% annual), Arrived (0.6-1.2% AUM + 8% property management), or EquityMultiple (0.5-1.5% + carry), and Groundfloor wins on fees, period — in a taxable account. The IRA is now a different story.

Update — July 2026: the IRA custodial-fee waiver ended. For years, Groundfloor covered the custodian fees on its self-directed IRAs, which is why older reviews (including an earlier version of this one) called the IRA "effectively free." That ended. Per Groundfloor's own support center, Groundfloor covered IRA custodial fees only through June 30, 2026 — "after that, Groundfloor IRA account holders are responsible for paying their fees to Forge Trust."

Here's why that's a bigger deal for Groundfloor than for most platforms: Forge Trust bills a per-asset fee every quarter, and on Groundfloor every individual LRO you hold counts as a separate asset. The whole Groundfloor pitch is diversifying $10-$100 across dozens or hundreds of tiny loans — which is exactly the profile that gets crushed by a per-holding custodial fee. One investor holding 84 notes reported new annual custodial charges topping $8,500 (Trustpilot) — a fee load that can dwarf the interest a small IRA earns. And because these are illiquid Regulation A+ obligations with no secondary market, an IRA holder can't just sell to escape the fees; they wait for each loan to mature.

The takeaway isn't "avoid Groundfloor" — the taxable-account fee story is still genuinely excellent. It's: as of July 2026, think hard before holding many small Groundfloor loans inside a Forge Trust IRA. If you want Groundfloor exposure in a retirement account, favor a few larger positions (or the Notes/Flywheel products) over a long tail of $10 LROs, and price in the per-asset custodial fee before you assume the yield is yours.

Returns: What to Actually Expect

Let's cut through the marketing:

What Groundfloor says: ~10% annualized average returns since 2013. In 2024, monthly rates ranged from 9.85% to 10.33%.

What users report: Anywhere from 3% to 12%, depending heavily on loan selection and how many defaults hit your portfolio. The typical individual loan targets ~12% annually on 6-12 month terms, but defaults and delays drag down the real number.

My honest assessment: If you diversify across 30+ loans and pick mostly B-D grades, you can reasonably expect 7-10% returns. If you concentrate in fewer loans, you're rolling the dice. Some investors hit 12%. Some hit 3%. The range is wide because your personal default rate is the wild card.

The most predictable returns come from Notes: 5.0%-8.5% (Signature Note) as of September 12, 2026, with what Groundfloor describes as a perfect track record. Lower ceiling, much higher floor.

Groundfloor vs Fundrise

This is the comparison most people want to see:

Bottom line: Fundrise is the better choice for passive investors who want to set it and forget it. Groundfloor is better if you want short-term exposure, zero fees, and you're willing to actively manage your loan selections. They serve different needs, and many investors use both.

Who Should Use Groundfloor

Use Groundfloor if: You want short-term real estate debt exposure with zero fees, you're comfortable actively selecting loans, and you can diversify across 30+ loans to smooth out default risk. Or skip the complexity entirely and use Notes for predictable returns.

Don't use Groundfloor if: You're a passive investor, you can't tolerate the possibility of loans going dark for years, or you need guaranteed liquidity on a specific date. If you want truly hands-off real estate investing, Fundrise is a better fit.

My approach if I were starting today: I'd put $1,000 into a 90-day Note (6.0% as of September 12, 2026), see how the experience feels, and only move into individual loans after understanding the platform. If I did pick individual loans, I'd spread across 30+ loans in C-D grades and never put more than 3% of my portfolio in any single loan.

Related coverage

For more on this topic from CrowdfundedWealth:

• Groundfloor Notes Review 2026 — Forensic single-product review of the Signature Note (8.5% as of September 12, 2026), the first-priority security interest in GFY's assets, and the going-concern qualifications in the FY2024 and FY2025 1-K filings.
• Groundfloor Notes vs LROs 2026 — Which Groundfloor product actually wins.
• Groundfloor alternatives 2026 — When Groundfloor isn't the right fit.
• Concreit vs Groundfloor 2026 — $1 vs $10 minimum head-to-head.
• Groundfloor vs Arrived Homes 2026 — Debt vs equity comparison.
• Kiavi Review 2026 — Adjacent BPL lender — closed investor notes, $30B borrower book.

See how Groundfloor's returns compare to every other platform in our real estate crowdfunding returns guide, or read the head-to-head Fundrise vs Groundfloor comparison. For a forensic read of Groundfloor's FY2024 going-concern qualification — what "substantial doubt" means, the accumulated deficit ($54.4M at year-end 2024, $64.8M at year-end 2025), the LRO bankruptcy-remoteness question, and what to do if you hold Notes — see Groundfloor's Going Concern Warning Explained. For the structural Notes-vs-LROs decision (yields, lock-up, bankruptcy treatment), read Groundfloor Notes vs LROs (2026).

Critical liquidity update: the filings do not describe Stairs as a 1-day liquidity product: Stairs Notes carry terms of 5 days to 24 months, and funds can be removed before maturity only by forfeiting the interest earned. They did not stop at the end of 2024: Groundfloor Yield LLC recorded $330,428,702 of Stairs Note proceeds in 2025 (gross, including rollovers) (GFY FY2025 1-K). Treat any listicle that markets Stairs as "1-day liquidity" with that in mind. For the full timeline of 2025-2026 redemption events across the entire non-accredited bracket, read our Real Estate Crowdfunding Liquidity 2026 forensic. For sizing Groundfloor in a diversified $10K allocation alongside Fundrise, Roots, and a liquid sleeve, see our Best Real Estate Crowdfunding for $10,000 Investors framework. For Q1 2026 Groundfloor data (12-Month Signature Note 8.25%, DSCR lending +381.9% YoY in 2025, $2.2B+ lifetime), see our Performance Tracker Q1 2026. For Groundfloor's place in a capital-preservation sleeve (note that LROs are "unsecured special, limited obligations" of Groundfloor Finance, not bankruptcy-remote SPV interests), see Best for Capital Preservation 2026.

Last updated: April 2026. All data verified from Groundfloor's 2025 Momentum Report, official platform pages, SmartAsset, Benzinga, The College Investor, Trustpilot, and BBB. Returns are historical and not guaranteed. This article contains affiliate links — see our affiliate disclosure for details.