• Mar. 22, 2017, 11:19 pm

GROUNDFLOOR fills void for real estate entrepreneurs

Two entrepreneurs at different stages of their real estate careers both found their way to GROUNDFLOOR, the only real estate lending marketplace open to non-accredited investors. They provide short-term, high-yield returns backed by real estate to entrepreneurs who are often ignored by traditional lenders.

C.J. Hardison, 27, graduated with a criminology degree two years ago with the aim of pursuing a career in law enforcement, but he changed his plans.

“I was attracted to the freedom of working for yourself,” Mr. Hardison said.

Once he made the decision, Mr. Hardison said the next step was to learn as much as he could about the field.

C.J. Hardison

C.J. Hardison

“My parents moved around a lot when I was a kid, so I learned to paint and fix things, but not to this extent.”

Then it was time to set goals.

“I made some long-term goals which correlated to buying property and flipping it,” Mr. Hardison explained. “They included owning multi-family developments in the future, flipping houses and having financial freedom. One of my biggest goals is financial freedom.”

His next steps were to search for financing, both in type and provider. The former was easier as Mr. Hardison decided on a hard money loan.

The latter became a problem as some offers came with prohibitively high interest rates. Other providers were not interested in working with rehabilitation projects.

“But GROUNDFLOOR was specifically into (them),” Mr. Hardison said.

At the time of our conversation Mr. Hardison was busy renovating a home on a quiet road in Tallahassee, FL. He’s working his way through a job list including knocking down walls to create a more open concept, new cabinet and flooring installation, painting, landscaping, a new driveway and more.

What advice would Mr. Hardison give to people wanting to get in the business?

“Do your homework and research. Be as thorough with every single step as possible.”

Chris Costanzo was working as a full-time wealth manager and working part-time in real estate when the housing crisis, and then its aftermath, hit.

“The prices (in Houston, where Mr. Costanzo is based) got ridiculous,” Mr. Costanzo recalled. “There were foreclosures everywhere. People were buying three-bedroom, 1,400-square-foot houses for $30-$40,000.

“There was plenty of opportunity.”

Mr. Costanzo said at the beginning he was making all-cash deals but when it came time to pursue financing he faced some challenges. Representatives from some institutions told him to come back when he had 10 houses.

“They’d give big loans to homebuilders, but little guys like us they weren’t interested in,” Mr. Costanzo said.

Some were mildly interested but they wanted to place liens on the properties, tax returns and even rent rolls.

“It was financial root canal,” Mr. Costanzo said. “The last straw was when a mortgage broker had all that information and farmed it out to different banks. Twenty-two days later they said they night be interested but they have to update the information and place liens on all properties.”

Mr. Costanzo said he found GROUNDFLOOR on the internet.

“I liked their story and what they’re doing. There was the possibility of creating a network of investors that know us if we perform.”

Chris Costanzo

Chris Costanzo

GROUNDFLOOR immediately understood his business model, which included borrowing less than the value of the land.

“There was no way you could lose money. (GROUNDFLOOR’s) came fast – a completely different experience than I had with the banks.”

Mr. Costanzo said he had to submit a budget to GROUNDFLOOR along with regular progress reports. He credited them with helping borrowers develop the kind of discipline required to succeed.

“They became like a partner and you don’t want to let a partner down. It’s nice to have a friendly partner looking over your shoulder.”

“I was really impressed with how lean and fast they moved in comparison with banks.”

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