Brian Dally: It's happening. Let's start with you telling us more about your background. Walk us through your journey before Groundfloor and some of the roles you've had here over the last 10 years as well.
Patrick Donoghue: I think my key role is [00:02:00] being a parent, but professionally, I was in the DC market for about 17 years. I started out in the credit union space and then went on to some larger mortgage lenders where I worked in production and origination operations. And really, it's where I got the basics for lending. And then I experienced my first private money, hard money loan in 2004. And that forever changed the trajectory of my career. I looked at that as, this is incredible. It's this localized, not back alley, but localized smaller component of lending, which I really felt like had a meaningful space in capital stacks for investors or even homeowners for that matter. So, I got very involved in that. I had my own little origination platform at times. I worked for one of the larger lenders in DC, very [00:03:00] much a private lender with their own portfolio. And, that was ACC Mortgage and that's essentially where I earned like a master's degree in how to look at private finance. And shout out to Robert Senko. He really helped me understand the nuances around this type of lending. And, lo and behold, I saw a PRWeb press release in 2015 about this small cool startup that time in Raleigh, Groundfloor, and I stalked you guys until you said, come on down. And so that's basically how it happened.
Brian Dally: What I love about that story and that I never take for granted is how long you've been in this market. And that's why during our conversation today it's going to be fun.
Patrick Donoghue: Absolutely.
Brian Dally: To talk with you about how it evolved. Because your career grew up with this industry. You were part of the wave of professionalization.
Patrick Donoghue: Right.
Brian Dally: And when you joined Groundfloor, we were just starting to lend outside the state of Georgia and really just starting to broaden things. So that's going to be a really fun part of the conversation. But just to orient people. We both know a lot of the business that people know us for is the ability to invest.
Patrick Donoghue: Right.
Brian Dally: And we've done a lot of marketing around the investor business. That business has been very successful. I think it's what intrigued you when you saw that press release about the business. But, we have separated Groundfloor Lending as its own business unit within the company. Can you help orient everybody around what that is? When we say Groundfloor Lending, what is it? And how does it work with the investor side of our platform? What is that business and how does it connect?
Patrick Donoghue: Yeah, so we are the manufacturer of the real estate fraction [00:05:00] loan investment, or reinvestment. And that product is a fix and flip loan or new construction loan. And, we originate that, we close that and we service that.
Brian Dally: So that word originate. Dive in on that.
Patrick Donoghue: We sell the loan, right? We attract borrowers. We have an in-depth borrowing base that's been developed over the past 10 years. We have new and repeat borrowers. We accept broker loans. And so we have a sales team that goes and originates loans. Then we curate them with our underwriting department. Then we close them, and then they become part of our servicing book, right? And so we service those until they repay. So we're taking that loan from inception through repayment, the whole loan life cycle. And we service 98% of our book, which I know is important for borrowers to understand because they have direct access to the [00:06:00] servicer to negotiate problems, to get questions answered, and have a direct pipeline with whoever's servicing. Most of the institutions in our space have subservicers and we primarily service on our own, which is fantastic.
Brian Dally: Can you talk about, we've really grown the company in terms of its ability to originate and manage credit for more. In your words, and I use the same word, we built this factory.
Patrick Donoghue: We did.
Brian Dally: And it was to supply the investor platform. Can you talk about where else these loans go now and how does that work?
Patrick Donoghue: So, a lot of loans go into the securitization market and we've participated in three of those bonds. We're looking to do more. And the interesting thing about that is how compelling it is to see institutional capital and [00:07:00] retail capital work side by side, in tandem. And that relationship is where Groundfloor really is unique. And being able to have investors sit side by side, institutional investors, right? And benefit from the rates of return that are attracting institutional investors as well, right? So, that is a unique development and notable amongst our peers, and notable in the securitization market itself. So, we can distribute loans if we choose. There's a forward flow channel, which is smaller aggregators building up this type of loan to go into securitization. We have that capacity. We really ramped that up, as you know, Brian, in '25 and early '26. We do look to continue that. So, as we talk about the development of the space, that is the exclamation point in the available capital that [00:08:00] has come into private lending, from when I started, is astounding.
Brian Dally: Well, in our space, within the RTL market, the residential transition loan market, every other lender that I know of was essentially 0% retail and 100% institutional.
Patrick Donoghue: Correct. Correct.
Brian Dally: We were 100% retail, and 0% institutional for a long time. And we dabbled with institutional arrangements starting in 2018, 2019, and then COVID. And then we did another thing. We went through these ebbs and flows. Today, we have a mix of the two. And I think what I've learned from that is that being at zero retail never makes sense. The retail capital can make the capital market work better, especially when you do the regulatory work that we've done. I think what's interesting about what you said there is we have these different outlets. And I think the business is stronger than ever because of that, and I'm sure over your 10 years here, you've seen quite the change.
Patrick Donoghue: I have. I remember calling you the first time we hit 20 loans in a month. Right? We do that regularly, on a daily basis now. And that just speaks to growth. But, I take a lot of pride in that.
Brian Dally: That was the big goal, by the way. 20 loans.
Patrick Donoghue: 20 loans, right?
Brian Dally: For a long time.
Patrick Donoghue: Do you remember the date? October 30th, 2016. What I'm proud of, Brian, is that we focused on the organic growth of the platform. Right? And when we were ready, we did attract the institutional component and that is our roadmap to growth. That tandem is the roadmap to growth.
Brian Dally: Yeah, I think that's right...
