Real estate has long been a cornerstone of wealth-building, known for its long-term appreciation potential and reliability in generating passive income. However, traditional real estate investing often requires significant upfront capital, market knowledge, and property management responsibilities, which can make it an inaccessible investing option for everyday investors.
Fortunately, the emergence of online platforms has changed the real estate investing game through fractional real estate investing — a more accessible alternative that allows everyone to invest in real estate at a fraction of the cost and without the usual barriers. Two such platforms, Groundfloor and Arrived, have gained popularity for their unique approaches to real estate investing.
We’ll dive into the differences between the two, exploring features, investment opportunities, and overall user experiences. Before we get into the specifics, here’s a brief overview of each:
Groundfloor: Transform Your Investing with the Flywheel Portfolio
The Flywheel Portfolio is Groundfloor’s most advanced, dynamic offering yet. It’s powered by industry-leading technology that outperforms traditional REITs and other investments. With this Arrived alternative, investors can relax knowing the hard work is being done for them. Funds are instantly diversified into 200 – 400 short-term, first-lien loans with a broad range of rates, and investors enjoy monthly disbursements, automatic reinvesting, regular liquidity, and more.
Arrived: A New Opportunity with the Arrived Private Credit Fund
The Private Credit Fund is a new real estate investing opportunity on the platform. Historically, Arrived has offered investments through fractional ownership in homes and vacation rentals. This real estate fund offers investments into individual, short-term loans. It features monthly disbursements, quarterly liquidity, and more.
Groundfloor vs Arrived: How They Compare
Project Type & Expected Yields
- All of Groundfloor’s offerings allow everyday investors to invest with flexibility in individual short-term, secured loans for real estate development (fix-and-flips and new construction). The new Flywheel Portfolio has 36-month terms and a 9% – 14% target return rate based on historical returns. Investors can access this Arrived Private Credit Fund alternative and other Groundfloor offerings on mobile and desktop.
- Arrived’s Private Credit Fund allows investors to invest in short-term loans for real estate development (renovation, rehab, and new construction). The Private Credit Fund has 6 to 36-month terms and a 7% to 9% annualized dividends target rate. Investors can access the Private Credit Fund and other Arrived offerings on desktop and iOS.
Investment Minimums & Fees
- Groundfloor allows both accredited and non-accredited investors to invest with as little as $100. Investors are projected to make a rate of 10.5% to 11% that's inclusive of an annual 1% management fee charged quarterly (i.e. 0.25% per calendar quarter).
- Arrived also allows both accredited and non-accredited investors to invest with as little as $100. The Private Credit Fund has a flat 0.10% monthly asset management fee that equals $1 per every $1,000 invested.
Cash Flow & Cancellation Period
- Get more cash in your pocket with monthly disbursements on the first business day of each month. These payouts will include the interest and returned principal. Should an investor want to cancel their investment, they have up to 48 hours from their initial investment to do so.
- The Private Credit Fund features monthly disbursements based on interest-income only. Investors can cancel up to 24 hours after their initial investment.
Investment Structure
- The Flywheel Portfolio instantly invests and diversifies funds into 200 – 400 individual, short-term loans. Investors get automatic reinvesting to empower their investments and see compounding returns. It offers more liquidity than its other offerings as investors will get repaid as loans repay within the portfolio.
- Arrived’s Private Credit Fund automatically invests transferred funds into a diverse portfolio of available individual short-term, secured loans. Currently, it does not offer automatic reinvesting. Investors will get monthly disbursements of interest. To receive their principal, they can request a redemption once a quarter and after a six-month lockup period, which must be approved at the fund manager’s discretion. Those shares will be redeemed at the manager-determined net asset value (NAV) per share.
Fractional real estate investing is a great way to earn passive income, often offering better stability and less risk compared to traditional REITs. When it comes to choosing the right platform, investors should compare Groundfloor’s Flywheel Portfolio versus Arrived’s Private Credit Fund to see what works best for them.