ding
Member of DD Central
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Post by ding on Dec 7, 2017 11:51:23 GMT
90K, 75% LTV at 6%.
I'm out on those numbers alone.
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copacetic
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Post by copacetic on Dec 7, 2017 12:37:56 GMT
I agree, I don't understand why people would invest in a 75% LTV property loan with the provision fund protected GBBA at 7% or even the property one at 5.5%. I'd be looking for at least 2% higher to even consider it worth doing the DD on the asset. I'm wondering if the target interest rate on the auto accounts is heading for a dip soon to reflect the low-ball rates being offered recently.
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Post by slumberingaccountant on Dec 7, 2017 16:33:48 GMT
look at it another way. I like to be fairly diversified. If i ignore everything below 8% i would have very few new loans. If you invest in the auto accounts you can end up with very large holdings in loans that you might not want much of at all, my 30 day account has 25% of its entire holding in 9 loans. I dont know know the size of the PF; but while i am sure it can cope with the odd 100k debt, the 30 day account has 9 loan holdings that are over £1m. Not sure how well the PF can cope with a couple of hits on those.
So I am trying to invest all mine in MLIA over a few months. I take a small chunk of most loans ( but not all- i am wary of too many nursing home developments at any interest rate ) and i am currently earning 7.7% overall. I will take a few losses, but i am still hopeful of a net return of over 7%.
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Post by crabbyoldgit on Dec 7, 2017 17:55:37 GMT
hi slumbering accountant , why worried about nursing home developments in particular, no critism here just a desire to learn and understand risks I at present may not fully understand.
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Post by jevans4949 on Dec 7, 2017 18:04:15 GMT
I suppose the up-side is that the security is a property in a usable condition and already let, and no "improvements" are planned with it. The risk is in the property he plans to develop, which, if it goes pear-shapeed, won't trouble us.
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happy
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Post by happy on Dec 7, 2017 21:26:37 GMT
look at it another way. I like to be fairly diversified. If i ignore everything below 8% i would have very few new loans. If you invest in the auto accounts you can end up with very large holdings in loans that you might not want much of at all, my 30 day account has 25% of its entire holding in 9 loans. I dont know know the size of the PF; but while i am sure it can cope with the odd 100k debt, the 30 day account has 9 loan holdings that are over £1m. Not sure how well the PF can cope with a couple of hits on those. So I am trying to invest all mine in MLIA over a few months. I take a small chunk of most loans ( but not all- i am wary of too many nursing home developments at any interest rate ) and i am currently earning 7.7% overall. I will take a few losses, but i am still hopeful of a net return of over 7%. Totally agree with you here and my strategy is similar to yours with a similar headline return. My portfolio diversification is based on investing in any loan where I am comfortable with the underlyings security and exit plan. Investment amount for each loan isscored based on security type (i.e. an industrial unit gets a lower investment score than a residential property, a development project less than a fit-for-use property. I also factor in the LTV and underlying business type so a pub is treated as higher risk than an established services business for instance. I feed the data into my spreadsheet and it tells me howmuch to invest. I adjust weightings as things change to increase or reduce exposure to specific loan profiles. So far after 2.5 years I am invested in about 250 loans and returning around 8% with likely losses around £200 on a mid 5 figures investment. I see the portfolio as geared towards minimising capital loss and loans like this play an Important part in it, admittedly probably only around £100 for a loan like this with a 75% LTV.
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gibmike
Member of DD Central
What is a cynic? A man who knows the price of everything and the value of nothing.
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Post by gibmike on Dec 7, 2017 22:56:59 GMT
"11 Aug 2017 at 5:33pm Post by stuartassetzcapital on 11 Aug 2017 at 5:33pm We are at a stage in the credit cycle where high coupon loans are likely to be very risky if they aren't being wanted and funded for less by the rest of the market and will not be ideal portfolio holds if the economy turns. AC is focussing upon high quality credits where possible for now and this necessitates a competitive interest coupon. Nothing is perfect of course but our average rate is down somewhat and average credit quality up which is the right place to be at this time. So 10% + loans will still be seen from time to time from us but this isn't time to be throwing money out of the door to otherwise unfundable property developers or businesses with very high LTVs in our view. " stuartassetzcapital "but this isn't time to be throwing money out of the door to otherwise unfundable property developers or businesses with very high LTVs in our view." Can you shed some light on this loan? The loan is tiny admittedly, but what is the reason for 6% at 75% LTV? It is a five year loan which after inflation is circa 4% and after tax about 3%. I would honestly have expected 6% on a 2 year loan or 8%+ on a 5 year loan? Mike |
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Post by slumberingaccountant on Dec 8, 2017 16:57:14 GMT
hi slumbering accountant , why worried about nursing home developments in particular, no critism here just a desire to learn and understand risks I at present may not fully understand. Just reading press reports about - -local authorities paying rock bottom prices - local authorities going for 'at home' care until it completely fails, and only then reluctantly paying for homes. -wage inflation, and the effect of brexit- less people around to take low wage jobs- so forcing up costs in this sector. - lack of market for empty homes, so they seem to come on the market at very low prices. - press discussion around the corporate nursing homes sector - four seasons debt issues are often in the financial pages of the papers. so i am invested in a couple, but prefer investments where the alternative uses are a bit clearer.
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copacetic
Member of DD Central
Posts: 305
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Post by copacetic on Dec 16, 2017 18:51:37 GMT
I'm wondering if the target interest rate on the auto accounts is heading for a dip soon to reflect the low-ball rates being offered recently. Called it 
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Post by notascooby on Dec 16, 2017 19:08:04 GMT
look at it another way. I like to be fairly diversified. If i ignore everything below 8% i would have very few new loans. If you invest in the auto accounts you can end up with very large holdings in loans that you might not want much of at all, my 30 day account has 25% of its entire holding in 9 loans. I dont know know the size of the PF; but while i am sure it can cope with the odd 100k debt, the 30 day account has 9 loan holdings that are over £1m. Not sure how well the PF can cope with a couple of hits on those. So I am trying to invest all mine in MLIA over a few months. I take a small chunk of most loans ( but not all- i am wary of too many nursing home developments at any interest rate ) and i am currently earning 7.7% overall. I will take a few losses, but i am still hopeful of a net return of over 7%. Looks like you called it right
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