I know I have been spending a lot of time writing about MyConstant but I wanted to add another update to my blog about another p2p platform that I have been using and I mentioned before that I was going to shift away from Groundfloor for a couple reasons. (Obviously I ended up keeping some funds rolling through the platform) If you want to sign up I would appreciate if you used my referral link.
So if you did not read my previous post about Groundfloor I will give you a quick rundown of what it is. Groundfloor is a p2p platform that connects borrowers to lenders and the loans are usually backed with real estate as collateral. Sometimes the loan is being used to rehab and resell the home used as collateral. Other times there is a home used as collateral to rehab a separate home. In both instances there is some real estate backing the loan in the event that the borrower defaults then the home could be foreclosed on and the proceeds of the home sale would be used to satisfy the loans.
What I really like about this is that Groundfloor allows very small investments (as small as $10) allowing someone to potentially diversify into many different loans. I think the general loan to value (LTV) is usually in a range that would allow for a fairly quick sale to satisfy the loans. The LTV also ensures that the borrower has some “skin in the game”
One of the many things I use as criteria for my loans is the option to only loan in states that have a non-judicial process for repossession. Basically these are states where the whole repo process does not need to go to court which can significantly increase the time line. Another thing I consider is how much skin in the game the borrower has. Generally the more equity the borrower has put in the more serious they are about not defaulting on the loan.
I think that Groundfloor has decent rates of return on the loans and you are able to find an array of different terms. I generally search out rates that are above 7% and have terms of less than six months. Groundfloor is open to non-accredited investors so pretty much anyone has the opportunity to invest in these deals. I think this is a great option for people who are just getting started and may not have a lot of extra money to get going.
There is a new option available on Groundfloor called Loan100 which I think benefits the borrower more than the lender. This particular loan allows for a 100% Loan To Cost (LTC) but is reserved for lenders with a long track record with Groundfloor. Basically Groundfloor is allowing borrowers to borrow the entire cost of the rehab.
This is great for borrowers and allows them to move quicker on deals and potentially reduce time between projects. Some investors might actually prefer these loans since they will undoubtedly be reserved for only those borrowers with impeccable track records, making them much more likely to repay and repay on time. This is an opportunity to invest in loans for borrowers with an excellent track record.
Would you loan money out at 100% LTV?
Thanks for reading and be sure to leave a comment below to let us know what you think about this 100% Loan To Cost opportunity.