bernard
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Post by bernard on Jan 31, 2017 19:37:40 GMT
Another FS loan with only minimal and blue sky information. As the previous posts point out it looks like the owner looks to pursue a sale with planning, rather than fund the entire development. That would imply that the value with the planning is greater than that without, regardless of one's opinions about how likely this is (otherwise someone would pay full planning value now). That implies the valuation now is less than the development value assuming full planning. Anyone want to hazard a guess what the value of the land is without planning - obviously no information provided by FS to asecertain what this is. I am not saying the LTV would turn out bad or anything, just that we have no information to assess the value of the site now as opposed to post planning. As for the bid of 3.6mm, that could be the owner's brother for all we know. Again, not saying that this bid wasn't real, just that we have no information provided in the 'valuation' to make our own assessment. Come on fundingsecure, you can do better.
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Post by d_saver on Jan 31, 2017 20:34:54 GMT
lobster did you see the interest rate included in that calculation?
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lobster
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Post by lobster on Jan 31, 2017 22:40:31 GMT
Yes I saw the rate of 4.5-5.0 % . I'm not sure what this means. Obviously there will be a very high interest of about 18% on the 1 million that they borrow from FS. If the total development costs are 15.4 million , and they only borrow 1 million from FS, then where is the rest of the cash (ie 14.4 million) coming from ? Do they have that much cash themselves ? Or are they borrowing it cheap from elsewhere ? Or what ?
Getting a bit out of my depth here - any thoughts ?? Are you saying that they just want 1 million to get the planning permission (hopefully !?) and then sell out ?
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mikes1531
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Post by mikes1531 on Jan 31, 2017 23:22:09 GMT
lobster did you see the interest rate included in that calculation? Yes I saw the rate of 4.5-5.0 % . I'm not sure what this means. Obviously there will be a very high interest of about 18% on the 1 million that they borrow from FS. If the total development costs are 15.4 million , and they only borrow 1 million from FS, then where is the rest of the cash (ie 14.4 million) coming from ? Do they have that much cash themselves ? Or are they borrowing it cheap from elsewhere ? Or what ? Getting a bit out of my depth here - any thoughts ?? Are you saying that they just want 1 million to get the planning permission (hopefully !?) and then sell out ? The interest rate affects the development cost. The value attributed to the land is the difference between the GDV and the development cost. If a development loan can't be obtained at 5%, then the development cost would rise by some amount and the 'value' of the land would decrease by a similar amount. So the question is whether the 5% is a reasonable assumption. I would have thought that's rather optimistic, but that's JMHO and based on no research at all. The other critical question is what would the value be if PP is refused? The figures on page 8 of the valuation report suggest that the value of the developed site will be approx 21m. Also on page 8 it says the total cost of the development is approx 15.4m , so there is a profit there of 21 - 15.4 = 5.6m approx , and this is basically the quoted valuation. That is the valuation, not the 'profit'. It will cost something to buy the land in the first place and, with a big project like this, the cost of all the work needed to obtain the PP will be significant.
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ozboy
Member of DD Central
Mine's a Large One! (Snigger, snigger .......)
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Post by ozboy on Jan 31, 2017 23:52:33 GMT
I'm gonna have ta stop visiting this site, 'cos otherwise I'll never invest ........................ ( <- not sure wot this one means but thought I'd use it) I was mildly optimistic on this Loan after my feeble "DD", but now I'm not so sure!
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lobster
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Post by lobster on Feb 1, 2017 6:33:24 GMT
I'm gonna have ta stop visiting this site, 'cos otherwise I'll never invest ........................ ( <- not sure wot this one means but thought I'd use it) I was mildly optimistic on this Loan after my feeble "DD", but now I'm not so sure! Fair point - I know how you feel. You will always find reasons NOT to invest, especially if your DD is thorough. It's just a question of weighing up those negative points against the positives, and often that's far from obvious. I guess the bottom line is that you simply HAVE to acccept some risk in the P2P world, especially if you want a high 12-13% return
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Post by d_saver on Feb 1, 2017 8:25:39 GMT
Getting a bit out of my depth here - any thoughts ?? Are you saying that they just want 1 million to get the planning permission (hopefully !?) and then sell out ? That's my guess. Loan details seem a bit vague to me.
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micdic
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Post by micdic on Feb 2, 2017 22:55:34 GMT
Another FS loan with only minimal and blue sky information. As the previous posts point out it looks like the owner looks to pursue a sale with planning, rather than fund the entire development. That would imply that the value with the planning is greater than that without, regardless of one's opinions about how likely this is (otherwise someone would pay full planning value now). That implies the valuation now is less than the development value assuming full planning. Anyone want to hazard a guess what the value of the land is without planning - obviously no information provided by FS to asecertain what this is. I am not saying the LTV would turn out bad or anything, just that we have no information to assess the value of the site now as opposed to post planning. As for the bid of 3.6mm, that could be the owner's brother for all we know. Again, not saying that this bid wasn't real, just that we have no information provided in the 'valuation' to make our own assessment. Come on fundingsecure , you can do better. Hi all, I just registered on FS - good luck to all investors. This is my first post here, so I might as well show my ignorance from the start :-). If I invest in this, what is the time frame? Is it 2 years? 5 years? 10 years? This seems to be an open-ended loan, or am I missing an obvious end date? FS state, "Loan will be repaid through sale". To state that fact is fair enough, but there are two likely ways this asset will be sold. The first is as a piece of land-with-planning-permission; which is a common and acceptable way for some businesses to earn their living - buy a cheap thing, do some work (legal, application process, planning refusal risk, paperwork, got their money tied up, employing architect for drawings, etc etc), add value, then sell to bag the profit. The second method requires considerably deeper pockets and resourcefulness; developing the land and selling off apartments asap (initially off the plans, but certainly while the diggers are still there). The time line for the two is, I suspect considerably different. The only reason I can think of for the borrowing entity or FS not to inform potential investors of which timeline is in play is that it may harm the interests of the borrower/land owner (are they both the same right now?). In other words, he may attract better quality interest in from buyers if they don't think he is gonna be forced to sell asap. However, the investors are being kept very much in the dark as far as I can see. Also, FS state, "The first charge holder has £400k. LTV is therefore 25%" I do not understand what that means. Also, the method of valuation looks so nuts to me (as a layman) that I am going to ask an estate agent whether that is how dev. property is valued. In my world, property is valued more like, "Hey, what's the going rate per acre for residential development land in this city?" Ans: "Oh, between £1.2 -1.6 million depending on... x, y. z". This plot of 1.3 acres is being valued at 4.3 million per acre; any Lytham estate agent should be able to give an opinion on whether that is in the right ballpark. And of course there is a third potential sale method... after planning permission has been refused. I don't know enough to go there, but there are all kinds of reasons why that could happen (the planning dept may demand fewer apartments/more parking/more green space etc. and that all affects the economics of the situation).
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mikes1531
Member of DD Central
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Post by mikes1531 on Feb 2, 2017 23:47:22 GMT
Hi all, I just registered on FS - good luck to all investors. This is my first post here, so I might as well show my ignorance from the start :-). If I invest in this, what is the time frame? Is it 2 years? 5 years? 10 years? This seems to be an open-ended loan, or am I missing an obvious end date? micdic: Welcome to the forum! I'm going answer the easy question, and leave the more difficult ones to others. Loan length: Your bafflement is understandable, and it's the result of fundingsecure failing to do on this loan what they do on most of their loans, and that's to put in the General Info for the loan something like "A 6 month loan secured by...". No doubt an oversight on their part. Take a look at the 'How it works' section of the FS 'Investing with us' info. It says there "The loan period is always 6 months. However, ..."HTH
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Post by sannytwist on Feb 2, 2017 23:51:50 GMT
Welcome micdic, l'm new here too and started investing into the p2p platform around november time.
My advice, do your research and then some more before investing your hard earned money. I got burned a few times on the way too, learning everyday and slipping up on the way. The p2p world is full of traps and inadequacies so if it doesn't smell right don't put ure money in it.
In saying that , there is money to be earned if u are careful.
Happy investing!
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ashtondav
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Post by ashtondav on Feb 3, 2017 2:01:29 GMT
Why do people have to type L*****************
when the full name is given on the new loans page on this site?
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SteveT
Member of DD Central
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Post by SteveT on Feb 3, 2017 7:49:31 GMT
Why do people have to type L***************** when the full name is given on the new loans page on this site? {mod hat on} Because that information is only available to registered FS lenders once they have logged in. Please, no identification of borrowers or their secured assets on this forum (widely discussed in other threads on myriad occasions).
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ashtondav
Member of DD Central
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Post by ashtondav on Feb 3, 2017 11:35:29 GMT
But how does "Porsche 911" identify anyone?
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SteveT
Member of DD Central
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Post by SteveT on Feb 3, 2017 15:24:04 GMT
But how does "Porsche 911" identify anyone? It doesn't, but I applaud the poster's caution if they opted to redact it!
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micdic
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Post by micdic on Feb 3, 2017 15:55:23 GMT
The description of this loan has now been updated on the FS website, addressing some of the points I raised yesterday. For what it’s worth, this asset in not worth £5.6m. That is an end-game scenario, of which we have little part. It is currently a brown field site, worth (at a guess) £0.8 - 1.5m. The site does not have planning permission – it is important to state that baldly. Investors are taking on part of the risk that it will get that permission, and I think it will get it. How much value will be added at the point of sale (as a brown field + pp) depends on many factors, including the permitted density of properties per acre. This is really only important because we might want to consider the saleability of the asset – which could easily take a year+ to sell. One estate agent, local to the site, guesstimated the value of a 2-bed apt in this end of town at £140,000. If you take that as accurate, and further assume that the planning dept will knock down the density of permitted housing to say 100 properties (still a verrrry high number in my opinion) you will see that the project figures are not as appealing to a developer (GDV 14,000,000) as they appeared. This is 50% guesswork, but it shows how a seemingly stunning asset could become a pig-in-a-poke very quickly, with developers (purchasers) shying away. I am also not chuffed that I have had to find out most of this for myself, and will treat future FS information very cautiously and invest less, generally, than I might have done. Here is a link to Fylde Council Interim Housing Policies …( a hectare is 2.47 acres, so this site is 0.53 hectares) www.fylde.gov.uk/business/planning/advice/supplementary-planning-guidance-supplementary-plan/The policy includes the following: Policy H2: Density and Mix of New Residential Development Density: Developments will be expected to make efficient use of land, whilst avoiding detrimental impact on the amenity, character, appearance, distinctiveness and environmental quality of the surrounding area. It is expected that this will result in a minimum net residential density of 30 homes per hectare. When considering a proposal for a significantly higher density development, in addition to the above considerations, particular attention will be paid to ensuring that there is no unacceptable impact on highway safety and that sufficient car parking is provided on-site. High density development should be very carefully designed to relate well to its surroundings, be orientated towards and have principal entrances facing towards the street, and should include sufficient usable amenity space to provide for the needs of residents. Mix A broad mix of types and sizes of home, suitable for a broad range of age groups, will be required on all sites to reflect the demographics and housing requirements of the Borough as set out in the Fylde Coast Strategic Housing Market Assessment (2014). The mix required will be adjusted according to updated future Housing Needs Assessments over the plan period. All developments of 10 or more dwellings will therefore be required to include at least 50% ofdwellings that are 1-, 2- or 3-bedroom homes. Developments within or in close proximity to the Tier 1 Larger Rural Settlements or Tier 2 Smaller Rural Settlements should include at least 33% 1- or 2-bedroom homes.
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