GROUNDFLOOR has two customers: real estate investors looking for funding (who we refer to as borrowers) and retail investors looking to invest passively on our platform. Borrowers come to us looking for money to fund their real estate projects. Investors are looking to earn returns based on those same projects. In a perfect world, we would always have balance between borrowers and investors. Lately, however, this has not been the case. We've been overwhelmed by investor demand.
We are as committed as ever to our mission to open up high yield investments on a level playing field to non-accredited and accredited investors alike. Transparency and authenticity are two of our core values. That’s why we’re excited to start sharing more information with investors throughout our loan production and release processes.
To meet surging investor demand, we are investing heavily to grow our loan sales team as fast as possible. GROUNDFLOOR originates its own loans rather than buying them from other originators. This is a marked difference between us and some of the accredited investor portals out there. Self-origination ensures consistency of credit quality across our portfolio. That's a big part of the reason why we've lost principal on just two loans in our history (across 173 total repaid to date) and on none of the 100 we've originated and repaid since our current origination team took over on July 1, 2016.
Maintaining credit quality as we grow means training new people to do things the right way, and that takes time. There will naturally be a lag between hiring to meet demand and restocking the shelves.
Our Offering Process
In addition to assuring quality over time, self-origination also ensures the standardization in pricing, terms, underwriting inputs and disclosures that makes offering our loans as a publicly-available security possible in the first place. After passing underwriting and being pre-funded at closing, we batch loans for submission to our regulators in order to be amended into our offering.
After a review of our disclosures, we receive qualification to offer our investments typically 7 days after submission. However, being an administrative process with many moving parts, this can take longer. Ensuring consistency, like maintaining quality, takes time. We usually release investments within 48 hours of qualification.
As Yogi Berra said, "The main thing is to keep the main thing the main thing." While we're doing that (originating more loans!), we also want to ensure our investors can plan ahead and know what to expect. To that end, we're announcing some changes in how we communicate loan releases and availability, effective immediately and for the foreseeable future.
Beginning this week, we will notify investors when new loans are put in process for release (typically within 7 to 10 days). So you can plan ahead, we will also notifying you when the batches are qualified, and provide a set schedule for when the loans in the batch will be going live.
Over time, we’ve tried different release days and times based on factors such as internal operations needs, anecdotal customer feedback and analysis of investor behavior. Now, you get a vote. Are you a weekend person or a weekday person? Would you rather invest at night after work or during the day? Let us know! Click the link here to cast your vote. We’ll share the results soon. In the meantime, let us know what you think of these changes and how we’re doing anytime at email@example.com or in the comments below.