Groundfloor vs Arrived Homes 2026: Debt vs Equity, $0 Fees vs Tax Perks

Corrected October 15, 2026. An earlier version of this page gave Groundfloor Notes as 5.0-8.5% (September 12, 2026) and its Trustpilot score as 2.3/5; Trustpilot now shows 1.8 from 410 reviews (October 15, 2026). Groundfloor's own Notes page (groundfloor.com/notes, read October 15, 2026) lists the 12-month Signature Note at 8.0%, open to all from $1,000; the 8.5% on that page is the 12-month Preferred Note, which is for accredited investors only (Preferred Notes run 7.0% to 9.0%). The latest annual report is the FY2025 Form 1-K filed April 1, 2026 (SEC accession 0001104659-26-038396): the auditor repeated its going-concern doubt, as it has in each of Groundfloor's nine annual reports since fiscal 2017.

Corrected October 16, 2026 — Arrived's fees. An earlier version of this page said Arrived charges "1% AUM + 3.5-6% sourcing + 8-25% management". That does not match Arrived's filings. For Arrived Homes, LLC (single-family rentals), the offering circular dated January 30, 2025 (supplemented through July 28, 2026) and the FY2025 Form 1-K (filed April 30, 2026) set an annual asset management fee of “six tenths of a percent (0.6%) of the purchase price of the series property”, not 1% of assets. On top of that come one-time fees: a 3.5% sourcing fee, a 1.0% brokerage fee and offering expenses of up to 2% of gross offering proceeds, plus a disposition fee at sale that Arrived expects to run 6% to 7% of the sale price. Property management is a separate cost of each house: 6% of rents (Mynd), 7% (Blue Canopy) or 8% (Streetlane), or a flat $70 a month (Marketplace Homes), according to the circular. Arrived's vacation-rental companies (Arrived STR and Arrived STR 2) have different terms, described in the Fees section below. We did not re-read the circulars of Arrived Homes II and Arrived Homes 5.

For Arrived on its own, see our Arrived Homes review: fees, dividends and liquidity as Arrived filed them with the SEC.

The Quick Comparison

Investment Model: The Fundamental Difference

These two platforms are solving different problems.

Groundfloor makes you the lender. Real estate developers borrow money for fix-and-flip renovations. You fund pieces of those loans ($10 minimum per loan), earn interest while the developer works, and get your principal back when they repay — typically in 6-12 months. You never own property. Your risk is borrower default, not property value.

Arrived Homes makes you a fractional property owner. You buy shares in individual rental homes and vacation rentals. Arrived manages everything — tenant placement, maintenance, bookkeeping. You earn quarterly dividends from rent and eventually share in appreciation when Arrived sells the property (typically 5-7 years). Your risk is property-level performance.

Returns: When the Numbers Get Complicated

Groundfloor Returns

Groundfloor reported approximately 9.8% average returns in 2024. Individual loan returns vary by grade:

The catch: Those are target returns. The 4.71% "uncured default rate (28 of 594 loans)" quoted around the web is a third-party figure absent from Groundfloor's filings; its FY2025 Form 1-K (accession 0001104659-26-038396, filed April 1, 2026) shows 73.4% of the $88.4 million legacy loan book more than 90 days past due at December 31, 2025 ($64.9 million of $88.4 million), up from 27.5% a year earlier, with $50.8 million of loans on nonaccrual and a going-concern doubt from the auditor, as in every Groundfloor 1-K since fiscal 2017. Some Reddit investors report personal default rates of 24-35%, which now looks consistent with the filing. Defaults don't just cut your yield — they can lock your money for 2-5 years while Groundfloor works through foreclosure.

Groundfloor Notes are the exception: fixed returns of 5.0-8.0% for investors who are not accredited (1-month 5.0%, 3-month 6.0%, 12-month Signature Note 8.0%) as of October 7, 2026, and a 100% on-time payment record since 2018, per Groundfloor. Safer, lower ceiling.

Arrived Returns

Arrived's returns split across products:

• Single-Family Residential (SFR): ~4.0% average dividend yield in Q3 2025. Wide range — individual properties run from 0.4% to 10.4% annually. Appreciation adds to this but is only realized at sale (5-7 years out).
• Vacation Rentals: Higher gross income potential, but a heavier fee load eats into net yield: Arrived STR's circular sets an asset management fee of 5% of gross revenues plus a 15% property management fee on rents and fees (see Fees below).
• Private Credit Fund (PCF): 7.44% annualized on the August 2026 declaration, down from an 8.88% peak in June 2026. This is Arrived's debt product — shorter term (~12 months), fixed yield, simpler structure. This is where Arrived now competes head-to-head with Groundfloor.

The honest return picture: If you're comparing Groundfloor Notes (5.0-8.0% as of October 7, 2026) to Arrived's PCF (7.44% on its August 2026 declaration), the 12-month Signature Note is now ahead of Arrived on yield, and the gap has opened since June 2026. If you're comparing Groundfloor individual loans (~9.8% average) to Arrived SFR dividends (~4.0%), Groundfloor wins. The comparison depends heavily on which products you're evaluating.

Fees: Groundfloor Is Cheaper, but Arrived's Annual Fee Is Small

Groundfloor: Zero fees on individual loans and Notes. They charge borrowers 2.75-4.25% origination fees instead. The Flywheel Portfolio (automated diversification across loans) charges 0.25-1.0%.

Arrived: Correction, October 16, 2026: earlier versions of this page said Arrived charges "1% AUM + 3.5-6% sourcing + 8-25% management". Arrived Homes, LLC's offering circular (dated January 30, 2025, supplemented through July 28, 2026) and its FY2025 Form 1-K (filed April 30, 2026) set an annual asset management fee of 0.6% of the purchase price of the house, paid out of the series' net operating rental income. These figures are for Arrived Homes, LLC (SEC CIK 1821720, single-family rentals); Arrived Homes 3 and Arrived Homes 4 state the same 0.6% and 3.5% in their January 2025 circulars. The cost sits mostly in one-time fees at purchase and at sale:

The one-time fees are paid by the series to Arrived's manager, so they come out of the offering proceeds (the circular lists the sourcing fee in each offering's use-of-proceeds table), and they reduce your effective return from day one. On a house bought for $300,000, a 3.5% sourcing fee is $10,500 (our arithmetic) before the property generated a single dollar. Over a five-to-seven-year hold the one-time fees, not the 0.6% annual fee, are what make Arrived cost more than it looks. The circular itself says the 6% to 7% disposition fee “will cover property sale expenses such as brokerage commissions, and title escrow and closing costs”, so part of it replaces costs a seller would pay anyway.

Arrived's other products: Arrived's Private Credit Fund is a different vehicle with its own offering documents, which we did not re-read for this correction; see our Private Credit Fund review for its fee structure.

Liquidity: More Nuanced Than It Looks

Groundfloor: Individual loans mature in 6-12 months. No redemption process needed — you wait for the borrower to repay. But if a loan defaults, your money can be stuck for 2-5 years. There's no secondary market to exit a position. Notes have fixed terms (30-day to 12-month) that you can't exit early (standard Notes) or can cancel within 30 days (Rollover Notes).

Arrived: Three paths out:

1. Secondary market (launched November 2025) — list your shares, matched with other investors monthly. First 3 weeks saw 57,000 orders processed. But the market is thin — some early users report selling only 2 of 6 property positions over 3 months. Price discovery is limited.
2. Quarterly redemptions — similar structure to Fundrise, with 6-month minimum hold.
3. Property sale — Arrived's standard exit. 5-7 year target hold.

Winner on paper: Arrived, because the secondary market exists. Winner in practice: Groundfloor for the Notes product — fixed term, known return date, no secondary-market price risk.

Tax Treatment: The Arrived Advantage

This is the most underappreciated difference between the platforms.

Groundfloor: Interest income is reported on 1099-INT. Taxed as ordinary income at your marginal rate — which can be 22-37% for most investing households. No preferential treatment.

Arrived: Dividends from rental property shares qualify for the Section 199A deduction — a 20% deduction on qualified business income that real estate investors have access to. If you're in the 22% tax bracket, you effectively pay 17.6% on Arrived dividends vs 22% on Groundfloor interest. At higher brackets, the difference is more significant. Arrived sends 1099-DIV only — no K-1 complexity.

For investors in higher tax brackets, this can meaningfully change the after-tax yield comparison. A 7% gross yield taxed at 37% = 4.41% after-tax. The same 7% yield with Section 199A = effectively 29.6% tax rate = 4.93% after-tax.

Default Risk: Different Flavors

Groundfloor default risk: Individual loan defaults. The headline number is the audited one: 73.4% of the legacy loan book more than 90 days past due at December 31, 2025 (FY2025 Form 1-K). Groundfloor says defaulted loans have historically averaged about 6% through collateral recovery, which is a claim about eventual outcomes, not about how long capital stays locked. The real risk is illiquidity — a defaulted loan locks your capital indefinitely. Groundfloor has a 0.84% lifetime loss rate since 2013, suggesting most defaults eventually recover some value.

Arrived risk: Property-level underperformance. If you pick a vacation rental in a market that oversupplies, your dividend could drop to 0.4% (their actual floor). Geographic concentration matters. No individual property "defaults" in the Groundfloor sense, but you can be in a dud property for 5-7 years with minimal returns.

PCF risk: Arrived's Private Credit Fund is backed by a pool of loans rather than individual properties, providing more diversification. This is structurally similar to Groundfloor's Notes product, but with Arrived's underwriting standards rather than Groundfloor's.

Platform Trust and Track Record

Groundfloor:

• Founded 2013
• SEC-qualified under Regulation A+ since 2015 (first to achieve this for non-accredited investors)
• Trustpilot: 1.8/5 (410 reviews, October 15, 2026) — defaults and communication are the dominant complaints
• 100% on-time Notes payment record since 2018

Arrived Homes:

• Founded 2019 (7 years, shorter track record)
• Backed by Jeff Bezos, Marc Benioff, and Salesforce CEO — strong institutional backing
• No prominent Trustpilot problems — fewer complaints publicly visible
• 550+ funded properties across 33+ markets

The backing matters as a stability signal, not a returns signal. Bezos investing doesn't make your rental property perform better, but it suggests Arrived has a longer operational runway.

Who Should Use Which

My Recommendation

Use Groundfloor for short-term, fee-efficient exposure. If you have $1,000 to put to work for 12 months and want to maximize returns without paying a platform fee, Groundfloor Notes (5.0-8.0% as of October 7, 2026, with the 12-month Signature Note at 8.0%; 100% track record per Groundfloor) or a diversified spread of B-D grade loans is the play.

Use Arrived for long-term equity exposure with tax efficiency. If you want to own fractional rental properties, benefit from Section 199A deductions, and are comfortable with a 5-7 year horizon, Arrived's SFR product is legitimate. The Private Credit Fund is the sleeper option — 7.44% on its August 2026 declaration, with a simpler structure and no multi-year hold requirement.

Use both for complementary exposure. Groundfloor gives you short-term debt recycling with no fees. Arrived gives you long-term equity with tax advantages. Different time horizons, different tax treatment, different risk profiles. They don't cannibalize each other.

Last updated: October 16, 2026 for Arrived's fees (offering circulars dated January 2025, supplemented through July 28, 2026, and the FY2025 Form 1-K); October 15, 2026 for Groundfloor Notes rates, the FY2025 Form 1-K and Trustpilot; other data as of April 2026. Data sourced from Groundfloor's 2025 Momentum Report, Arrived's official Q3 2025 performance data, SEC filings, Trustpilot, and investor forums. Returns are historical and not guaranteed.