GROUNDFLOOR REAL ESTATE 1, LLC

Cascade · Distributions

Where each dollar goes

$875K

LP $875K · Fees $0 · GP $0

Standard scenario · $500K equity · 5y hold · 1.75× exitRun your own cascade →

Deal diligence17 findings · worst high

Automated checks across the fund's extracted PPM. Every finding is shown with the evidence it's based on — proven numbers or a verbatim quote and page.

Document quality

Drafting defects found in the PPM prose — numeric inconsistencies, broken cross-references, unfilled placeholders, and defined-term problems. Each is shown with the offending quote and its page.

Numeric inconsistency — Annual aggregate LRO cap from the January 2018 Tier 2 qualification ($75 million vs $50 million)

High

The same January 2018 Tier 2 Reg A qualification is described as raising the annual aggregate amount Groundfloor may offer and sell to '$75 million' in two places but to '$50 million' in the MD&A Plan of Operation, conflicting figures for the same cap.

“raising the annual aggregate amount of LROs which Groundfloor may offer and sell to $75 million, less any other securities sold by Groundfloor under Regulation A. ... In January 2018, Groundfloor's offering statement relating to the offer and sale of limited recourse obligations (the 'LRO Offering Circular') was qualified by the SEC under Tier 2 of Regulation A, raising the annual aggregate amount of LROs which Groundfloor may offer and sell to $50 million, less any other securities sold by Groundfloor under Regulation A.”

PPM p.1592% confidence

Numeric inconsistency — Grading Algorithm per-grade interest rates (two conflicting tables on the same page)

High

Two grade-by-grade interest-rate tables on the same page give different rates: the 'in general' minimum table lists A 5.5% / B 7.0% / C 8.5% / D 10% / E 13% / F 14.5% / G 17%, while the 'standard annual fixed interest rates' table lists A 5.0% / B 6.0% / C 8.0% / D 9.0% / E 12.0% / F 14.0% / G 15.0% — the 'standard' rates sit below the stated minimum floors.

“In general: A B C D E F G 5.5 % 7.0 % 8.5 % 10 % 13 % 14.5 % 17 % ... At this time, the standard annual fixed interest rates for each letter grade are as follows: A 5.0 % B 6.0 % C 8.0 % D 9.0 % E 12.0 % F 14.0 % G 15.0 %”

PPM p.7885% confidence

Unfilled placeholder text — Exhibit [__]

Medium

Unfilled bracketed template token where the exhibit letter for the Management and Services Agreement should appear, indicating the document was not finalized.

“the 'Management and Services Agreement'), attached as Exhibit [__] hereto.”

PPM p.785% confidence

Broken cross-reference — Risk Factors page pointer (page 10 vs Table of Contents page 11)

Low

The cover/summary directs readers to the 'Risk Factors' section 'on page 10', but the Table of Contents lists Risk Factors beginning on page 11 — the in-text page cross-reference does not match the TOC.

“See the 'Risk Factors' section on page 10 of this”

PPM p.170% confidence

Document-quality defect — SEC File No. 024-024-10753

Low

The SEC file number for the LRO Offering Circular is written with a duplicated '024-' prefix ('024-024-10753') in both occurrences; Reg A file numbers take the form 024-NNNNN, so the prefix is doubled in error.

“Groundfloor Finance's offering circular (File No. 024-024-10753) was qualified by the SEC under Tier 2 of Regulation A”

PPM p.1560% confidence

Spelling / typo — dqys

Info

Misspelling of 'days' as 'dqys' in the grade-B average-duration cell of the lifetime repayment performance table.

“518 dqys”

PPM p.12195% confidence

Spelling / typo — Mary 2014 / Mary 2015

Info

The month 'May' is misspelled as 'Mary' twice in Mr. Donoghue's biography ('from Mary 2014 until Mary 2015').

“Previously serving as Vice President of Wholesale Operations for ACC Mortgage from Mary 2014 until Mary 2015, Mr. Donoghue”

PPM p.10890% confidence

Spelling / typo — processional

Info

Misspelling of 'professional' as 'processional' in the LRO Agreement investor representations.

“you consult with your own attorneys, accountants and other processional advisors as to the”

PPM p.14385% confidence

Spelling / typo — theses

Info

Misspelling of 'these' as 'theses' in the underwriting/background-check discussion.

“one Principal, theses assessments are undertaken with respect to each individual to confirm there are not present any factors that would”

PPM p.7285% confidence

Diligence gaps

Questions a standard diligence questionnaire would ask that the PPM leaves unanswered.

DDQ gap: Does the fund engage an independent auditor?

High

The offering documents don't answer a standard institutional DDQ question (Governance). An allocator will ask this directly — the GP should be ready with an answer.

90% confidence

DDQ gap: Does the fund have a GP clawback provision?

High

The offering documents don't answer a standard institutional DDQ question (Economics). An allocator will ask this directly — the GP should be ready with an answer.

90% confidence

DDQ gap: What is the LP/GP carried-interest split above the preferred return?

High

The offering documents don't answer a standard institutional DDQ question (Economics). An allocator will ask this directly — the GP should be ready with an answer.

90% confidence

DDQ gap: What is the preferred return (hurdle) rate offered to LPs?

High

The offering documents don't answer a standard institutional DDQ question (Economics). An allocator will ask this directly — the GP should be ready with an answer.

90% confidence

DDQ gap: Does the fund use a third-party fund administrator?

Medium

The offering documents don't answer a standard institutional DDQ question (Governance). An allocator will ask this directly — the GP should be ready with an answer.

90% confidence

DDQ gap: Is there a GP catch-up, and at what rate?

Medium

The offering documents don't answer a standard institutional DDQ question (Economics). An allocator will ask this directly — the GP should be ready with an answer.

90% confidence

DDQ gap: What distribution-waterfall structure does the fund use?

Medium

The offering documents don't answer a standard institutional DDQ question (Structure). An allocator will ask this directly — the GP should be ready with an answer.

90% confidence

DDQ gap: What is the GP's capital commitment (skin in the game)?

Medium

The offering documents don't answer a standard institutional DDQ question (Economics). An allocator will ask this directly — the GP should be ready with an answer.

90% confidence

DDQ readiness

How much of a standard institutional due-diligence questionnaire this fund's offering documents answer out of the box. Gaps are questions an allocator will ask directly.

38%

Coverage

5 answered0 partial8 gaps13 questions

Economics

What is the preferred return (hurdle) rate offered to LPs?Gap
What is the LP/GP carried-interest split above the preferred return?Gap
Is there a GP catch-up, and at what rate?Gap
Does the fund have a GP clawback provision?Gap
What is the GP's capital commitment (skin in the game)?Gap

Structure

What distribution-waterfall structure does the fund use?Gap
What is the fund's investment strategy / asset class?Debt · UnknownAnswered
What is the fund's vintage year?Vintage 2015.Answered
What is the target offering size?Target offering of $152,460.Answered
What is the minimum LP investment?Minimum investment of $175.Answered

Fees & Expenses

Is the fund's fee schedule disclosed (management fee, etc.)?9 fee line item(s) extracted from the offering documents.Answered

Governance

Does the fund engage an independent auditor?Gap
Does the fund use a third-party fund administrator?Gap

Generate IC memo →

Fee scheduletaken before LP distributions

Total load 0.00%

Fee

Trigger

Basis

Rate

Non-Sufficient Funds Fee

NSF / returned payment by Borrower

Flat $15 to $35 per NSF event. Paid by Borrower; retained by GRE 1 (subject to Management and Services Agreement).

0.00%

Origination Fee

Loan origination/closing

Typically ranging from 2% to 6% of the principal loan amount. Charged to Borrower; retained by GRE 1 (subject to Management and Services Agreement pass-through to Groundfloor Finance). Typically included in total Loan amount or paid by Borrower at closing. Deducted before LRO Payments to investors.

0.00%

Servicing Fee

Each draw or full repayment of Loan Principal

Typically ranging from 0.5% to 5% of the principal loan amount. Charged to Borrower; retained by Groundfloor Finance as servicer. Levied with each draw or upon repayment of full Loan Principal.

0.00%

Closing Expenses

Loan closing

Flat $500 to $3,500 per loan. Charged to Borrower; typically included in total Loan amount or paid directly by Borrower at closing.

0.00%

Check Processing Fee

Check payment by Borrower

Up to $15 per check. Paid by Borrower; retained by GRE 1 (subject to Management and Services Agreement).

0.00%

Loan Modification Fee

Loan modification or maturity extension

Variable amount. Paid by Borrower; retained by GRE 1 (subject to Management and Services Agreement).

0.00%

Penalty Interest Rate

Loan delinquency / default

Variable; typically up to an additional 2%, subject to applicable law. Additional interest paid by Borrower. Corresponding amounts, less Collection Costs, are passed through to LRO holders (included in LRO Payments).

0.00%

Late Charge

Late payment by Borrower

The lesser of 4% or the maximum amount permitted under applicable law. Paid by Borrower. Corresponding amounts, less Collection Costs, passed through to LRO holders.

0.00%

Default Rate

Borrower default

The lesser of 20% or the maximum rate permitted, less Collection Costs. Additional interest paid by Borrower. Corresponding amounts, less Collection Costs, passed through to LRO holders.

0.00%

Service providers3 gaps

Provider network →

Legal Counsel

Gap

Not disclosed

No independent counsel named for investors. Common in small syndications where Manager and Fund share counsel — reduces independence. Verify during diligence.

Auditor

Gap

Not disclosed

Audit intent not stated in PPM. Ask the sponsor: will the fund be audited, by whom, and on what frequency?

Fund Administrator

Gap

Not disclosed

No third-party fund administrator referenced. Manager likely handles admin internally — common for <$10M raises but reduces independence.

Placement Agent

No placement agent engaged

No placement agent engaged. Direct placement by Manager — no placement fees eat your invested capital.

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Waterfalls Composite Score

11.7.

LP-favorability score · 5 weighted dimensions

Benchmark · Real Estate Equity

Diversified Real Estate

See where this fund sits across 189 indexed diversified real estate funds — median pref, hurdle, splits, GP commit.

Compare to bucket →

Score breakdown5 dimensions

Absolute LP Takeⓘunscored—

GP Timing Riskⓘ20

Pref Qualityⓘ0

Fee Dragⓘunscored—

Alignmentⓘ15

LP take × exit multiple

at 5y hold · 100% at 1.75×

LP take Fee drag· sim at $500k equity

Exit	LP IRR	LP MoC	LP Take	Fees
1.00×	0.0%	1.00×	100.0%	0.0%
1.50×	8.4%	1.50×	100.0%	0.0%
1.75×	11.8%	1.75×	100.0%	0.0%
2.00×	14.9%	2.00×	100.0%	0.0%
2.50×	20.1%	2.50×	100.0%	0.0%
3.00×	24.6%	3.00×	100.0%	0.0%

Jump to an exit

1.0× downside 1.5× base 2.0× upside 3.0× home run