BORROWERS and INVESTORS BEWARE!! Groundfloor Finance, Inc. is a wannabe real estate crowdfunding lending platform but instead runs a huge FinTech scam of a company that operates as a middle-man between a real estate borrower and non-sophisticated investors. They are registered with the Securities Exchange Commission (SEC), while they violate several of the SEC’s rules under Regulation A of the Securities Act of 1933. Below is my experience dealing with their fraudulent behavior:
As an experienced real estate investor that understands how the financing process works, it was clear from the beginning when dealing with these folks at Groundfloor Finance Inc, that they do not have a single clue about how to underwrite a property. That should have been the first red flag for me to run for the hills and to this day I have regrets for even giving this scam of a company a chance. Historically, I have financed my real estate deals with EXPERIENCED hard money lenders (“HMLs”). There is one hard money lender in particular that I have an excellent relationship with over the years and he has even come down on the interest rate and origination points as a result of our relationship, however still at 13.5%. The HML process is simple, seamless and headache free.
I find a property, perform the scope of work budget with my contractor, pull the comps of the ARV (after-repair value), have my lender independently check it out, he provides me with the term sheet (no appraisals are required as the numbers don’t lie if done correctly and market comps are readily available), I sign the term sheet, we are good to close in 7-10 days. No hiccups, no problems, no BS stupid questions, no last minute fires to put out because lender isn’t on top of their underwriting, none of that. When it comes to draws, I text/email my HML I need a draw, he comes with check in hand as he trusts I will have what I say is done complete, we do a walkthrough and I have check in hand same day as inspection. No issues, no hassles. Now let’s talk about Groundfloor Finance, Inc…
The only reason why I explored crowdfunding was to see if I can save on interest. That was the only reason. In hindsight, the drama, the unreal incompetence of these idiots at Groundfloor makes trying to save on interest absolutely NOT worth it. I ended up actually NOT saving any money as I had to spend loan origination points TWICE by being FORCED by this company to refinance out of my loan nightmare plus interest charged on funds Groundfloor illegally did not make available to me (I can’t make this up if I tried, and I’ll get into that later). Groundfloor owes me about $25,000 and refuses to answer any calls or respond to emails after every attempt to contact them for my reimbursement.
So while trying to chase a lower rate, I sought out Groundfloor Finance Inc, for a commercial C1 property in Atlanta, GA as my next rehab project. Here is Groundfloor Finance, Inc’s underwriting boo-boo #1: As one of the rules by the SEC, when running a residential crowdfunding platform, you are not allowed to underwrite a commercial loan. Groundfloor Inc even ordered an independent appraisal during due diligence that states on the appraisal report that the rehab was for a commercial property. Groundfloor Finance, Inc. caught this error several months later after the fact and tried to illegally foreclose on my house in order to save their a*s (I will get into that later). When I first submitted my application, I was promised a 10.5% interest rate on the loan. Days before closing, all of a sudden the underwriter told me my loan was at 14%. WTF?
I told him if that was the case I would have just stuck with my HML I work with all of the time, but since we were days away before closing it was too late to try and close with them. The next day he said he could do 11%. Shady and unorganized. Should have been a red flag. Unfortunately, it was too close to closing, and I would have lost my earnest money and my trust with my wholesaler if I was unable to close (which would be the first time ever) all because of this incompetent FinTech scam of a company. After jumping through hoops with them for last minute requests for things they should have asked for weeks ago (a good 14-18 days ago when I first brought the deal to the table), after sleepless nights leading up to closing, we finally closed on time. Closing was on August 25, 2017.
Time to start the rehab! Plans were approved by the city in early December 2017 and we were ripping and rolling on the rehab in order to make up for 3 months of waiting on Dekalb County to approve the plans (they were experiencing a backlog during that time of year). Since we had time to schedule out all of our sub-contractors back to back, we completed 1/3 of the rehab budget within the first 2 weeks of obtaining approved plans from the city. I requested the first draw on December 14th, 2017. I explained that the city did not approve the original addition, but approved alternative plans that still achieved the same number of beds and baths. The substance of the rehab project was the same.
Groundfloor ordered another appraisal that supported a resale value that still enabled us to earn a profit and return investor funds plus interest at the conclusion of the project. Groundfloor also sent out an independent inspector to approve the draw request. We were conservative with the amount we requested as Groundfloor’s inspector approved funds for $20k more than what I asked for. A week passed and I followed up about the status of my draw. Radio silence. The holidays passed and I followed up again in early January of 2018 regarding status. I received BS excuses from Glenn Gilbert as to why I was not receiving my funds. After a month passed I could tell they were scrambling to find the funds for my draw request as it was clear none of the investors’ funds were held in escrow.
Groundfloor NEVER disbursed the funds associated with my draw request. Each monthly update, Groundfloor would then LIE to their investors via the investor portal by saying we were struggling to get plans approved from the city each month through March of 2018 when plans were approved back in December of 2017. The investors were lied to month after month and were never told the truth that Groundfloor was deliberately withholding funds from me as the borrower in order to complete the project. Lying to investors is against SEC broker-dealer rules. I used my own money to continue the rehab and ended up completing the rehab completely on my own. The rehab progressed with all required city inspections being passed, all the while Groundfloor was telling the investors that we were struggling to get plans approved by the city.
Since Groundfloor never wanted to tell investors the truth, they proceeded to bully me into a refinance otherwise they threatened to foreclose on my property! A property that they were not even funding in the first place! I was not in financial distress, I was in fact funding the project on my own since Groundfloor refused to grant me access to the investors’ funds ALLEGEDLY held in escrow. They slandered my name publicly by issuing public notices of default and foreclosure on my loan and disclosed this completely false information to the unknowing investors. To add insult to injury, Groundfloor accrued interest on the entire $150,000 rehab funds that they deliberately withheld from me.
I asked several times for an audit of the funds in escrow and they never provided me with proof that funds were ever segregated in an escrow account. When I had no choice but to refinance, the payoff was several thousands of dollars more than the amount owed, not even including the unjustly charged interest on the non-existent $150,000 funds. This scheming company needs to be fined and shut down. I talked to several lenders in Atlanta who know specifically of other borrowers who were a victim of Groundfloor’s fraudulent behavior like I was and they came running to them to get out of the nightmare that is Groundfloor.
BORROWERS especially: Save yourself the headaches, the bullying and the threats from Groundfloor Finance, Inc. that are nothing more than a fraudulent FinTech company whose employees clearly have zero real estate experience (talk to any real estate attorney or hard money lender in Atlanta, they have all heard of Groundfloor Finance, Inc and will tell you the exact same thing). Their loan docs are written so that you have ZERO rights and basically state that they have the right to take possession of your property at any time without cause. This is what they do to borrowers REGULARLY so that they can maximize the amount of money they extort out of each borrower. That is how they make their money. Trust when I say that you will have better peace of mind sticking with the competent, well-seasoned professional hard money lenders who actually understand this business. Groundfloor Finance Inc. promises you a lower interest rate to lure you in, but in the end you end up spending way more in all of the extortion they do. It is not worth the hassle working with them. No need to even take my word for it, talk to any seasoned real estate attorney or Hard Money Lender in the game.
As to the unsophisticated investors who also get duped by this Company by the lies they publish on their investor platform (that IS NOT WRITTEN BY THE BORROWERS), and also duped out of their money because Groundfloor seldom pays you back your money or makes you wait unnecessarily for it: proceed with CAUTION if you decide to invest through this scam of a company. It is a wonder how Brian Dally, Nick Bhargava, Rich Pulido and team sleep at night knowing how they missile borrowers into bad loans and perform so much illegal activity specifically prohibited by the SEC. Their bad business will eventually catch up to them. To the public: You have been warned!
GroundFloor Finance, Inc. Reviews
BORROWERS and INVESTORS BEWARE!! Groundfloor Finance, Inc. is a wannabe real estate crowdfunding lending platform but instead runs a huge FinTech scam of a company that operates as a middle-man between a real estate borrower and non-sophisticated investors. They are registered with the Securities Exchange Commission (SEC), while they violate several of the SEC’s rules under Regulation A of the Securities Act of 1933. Below is my experience dealing with their fraudulent behavior:
As an experienced real estate investor that understands how the financing process works, it was clear from the beginning when dealing with these folks at Groundfloor Finance Inc, that they do not have a single clue about how to underwrite a property. That should have been the first red flag for me to run for the hills and to this day I have regrets for even giving this scam of a company a chance. Historically, I have financed my real estate deals with EXPERIENCED hard money lenders (“HMLs”). There is one hard money lender in particular that I have an excellent relationship with over the years and he has even come down on the interest rate and origination points as a result of our relationship, however still at 13.5%. The HML process is simple, seamless and headache free.
I find a property, perform the scope of work budget with my contractor, pull the comps of the ARV (after-repair value), have my lender independently check it out, he provides me with the term sheet (no appraisals are required as the numbers don’t lie if done correctly and market comps are readily available), I sign the term sheet, we are good to close in 7-10 days. No hiccups, no problems, no BS stupid questions, no last minute fires to put out because lender isn’t on top of their underwriting, none of that. When it comes to draws, I text/email my HML I need a draw, he comes with check in hand as he trusts I will have what I say is done complete, we do a walkthrough and I have check in hand same day as inspection. No issues, no hassles. Now let’s talk about Groundfloor Finance, Inc…
The only reason why I explored crowdfunding was to see if I can save on interest. That was the only reason. In hindsight, the drama, the unreal incompetence of these idiots at Groundfloor makes trying to save on interest absolutely NOT worth it. I ended up actually NOT saving any money as I had to spend loan origination points TWICE by being FORCED by this company to refinance out of my loan nightmare plus interest charged on funds Groundfloor illegally did not make available to me (I can’t make this up if I tried, and I’ll get into that later). Groundfloor owes me about $25,000 and refuses to answer any calls or respond to emails after every attempt to contact them for my reimbursement.
So while trying to chase a lower rate, I sought out Groundfloor Finance Inc, for a commercial C1 property in Atlanta, GA as my next rehab project. Here is Groundfloor Finance, Inc’s underwriting boo-boo #1: As one of the rules by the SEC, when running a residential crowdfunding platform, you are not allowed to underwrite a commercial loan. Groundfloor Inc even ordered an independent appraisal during due diligence that states on the appraisal report that the rehab was for a commercial property. Groundfloor Finance, Inc. caught this error several months later after the fact and tried to illegally foreclose on my house in order to save their a*s (I will get into that later). When I first submitted my application, I was promised a 10.5% interest rate on the loan. Days before closing, all of a sudden the underwriter told me my loan was at 14%. WTF?
I told him if that was the case I would have just stuck with my HML I work with all of the time, but since we were days away before closing it was too late to try and close with them. The next day he said he could do 11%. Shady and unorganized. Should have been a red flag. Unfortunately, it was too close to closing, and I would have lost my earnest money and my trust with my wholesaler if I was unable to close (which would be the first time ever) all because of this incompetent FinTech scam of a company. After jumping through hoops with them for last minute requests for things they should have asked for weeks ago (a good 14-18 days ago when I first brought the deal to the table), after sleepless nights leading up to closing, we finally closed on time. Closing was on August 25, 2017.
Time to start the rehab! Plans were approved by the city in early December 2017 and we were ripping and rolling on the rehab in order to make up for 3 months of waiting on Dekalb County to approve the plans (they were experiencing a backlog during that time of year). Since we had time to schedule out all of our sub-contractors back to back, we completed 1/3 of the rehab budget within the first 2 weeks of obtaining approved plans from the city. I requested the first draw on December 14th, 2017. I explained that the city did not approve the original addition, but approved alternative plans that still achieved the same number of beds and baths. The substance of the rehab project was the same.
Groundfloor ordered another appraisal that supported a resale value that still enabled us to earn a profit and return investor funds plus interest at the conclusion of the project. Groundfloor also sent out an independent inspector to approve the draw request. We were conservative with the amount we requested as Groundfloor’s inspector approved funds for $20k more than what I asked for. A week passed and I followed up about the status of my draw. Radio silence. The holidays passed and I followed up again in early January of 2018 regarding status. I received BS excuses from Glenn Gilbert as to why I was not receiving my funds. After a month passed I could tell they were scrambling to find the funds for my draw request as it was clear none of the investors’ funds were held in escrow.
Groundfloor NEVER disbursed the funds associated with my draw request. Each monthly update, Groundfloor would then LIE to their investors via the investor portal by saying we were struggling to get plans approved from the city each month through March of 2018 when plans were approved back in December of 2017. The investors were lied to month after month and were never told the truth that Groundfloor was deliberately withholding funds from me as the borrower in order to complete the project. Lying to investors is against SEC broker-dealer rules. I used my own money to continue the rehab and ended up completing the rehab completely on my own. The rehab progressed with all required city inspections being passed, all the while Groundfloor was telling the investors that we were struggling to get plans approved by the city.
Since Groundfloor never wanted to tell investors the truth, they proceeded to bully me into a refinance otherwise they threatened to foreclose on my property! A property that they were not even funding in the first place! I was not in financial distress, I was in fact funding the project on my own since Groundfloor refused to grant me access to the investors’ funds ALLEGEDLY held in escrow. They slandered my name publicly by issuing public notices of default and foreclosure on my loan and disclosed this completely false information to the unknowing investors. To add insult to injury, Groundfloor accrued interest on the entire $150,000 rehab funds that they deliberately withheld from me.
I asked several times for an audit of the funds in escrow and they never provided me with proof that funds were ever segregated in an escrow account. When I had no choice but to refinance, the payoff was several thousands of dollars more than the amount owed, not even including the unjustly charged interest on the non-existent $150,000 funds. This scheming company needs to be fined and shut down. I talked to several lenders in Atlanta who know specifically of other borrowers who were a victim of Groundfloor’s fraudulent behavior like I was and they came running to them to get out of the nightmare that is Groundfloor.
BORROWERS especially: Save yourself the headaches, the bullying and the threats from Groundfloor Finance, Inc. that are nothing more than a fraudulent FinTech company whose employees clearly have zero real estate experience (talk to any real estate attorney or hard money lender in Atlanta, they have all heard of Groundfloor Finance, Inc and will tell you the exact same thing). Their loan docs are written so that you have ZERO rights and basically state that they have the right to take possession of your property at any time without cause. This is what they do to borrowers REGULARLY so that they can maximize the amount of money they extort out of each borrower. That is how they make their money. Trust when I say that you will have better peace of mind sticking with the competent, well-seasoned professional hard money lenders who actually understand this business. Groundfloor Finance Inc. promises you a lower interest rate to lure you in, but in the end you end up spending way more in all of the extortion they do. It is not worth the hassle working with them. No need to even take my word for it, talk to any seasoned real estate attorney or Hard Money Lender in the game.
As to the unsophisticated investors who also get duped by this Company by the lies they publish on their investor platform (that IS NOT WRITTEN BY THE BORROWERS), and also duped out of their money because Groundfloor seldom pays you back your money or makes you wait unnecessarily for it: proceed with CAUTION if you decide to invest through this scam of a company. It is a wonder how Brian Dally, Nick Bhargava, Rich Pulido and team sleep at night knowing how they missile borrowers into bad loans and perform so much illegal activity specifically prohibited by the SEC. Their bad business will eventually catch up to them. To the public: You have been warned!