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Post by fisherman on Sept 5, 2018 10:11:57 GMT
This is, perhaps, a question that has been answered previously in some form, but I was wondering if I had invested £25 in every new loan and renewal on FS during 2017, what would be my current position? Any ideas?
Thanks
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james21
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Post by james21 on Sept 5, 2018 11:11:33 GMT
Cant answer but its a certainty it will not be 13% over an extended period of time
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Post by fisherman on Sept 5, 2018 11:18:26 GMT
James21, I expect it to be far lower than that.
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jj
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Jolly Jammy
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Post by jj on Sept 5, 2018 12:33:32 GMT
I think the question is unrealistic. There is so much bad loans here you wouldn't want to invest in every loan.
However we are now 5 months in to the financial year so I have calculated I am heading towards 7.5% for the full year.
This is a gross amount and does not include defaults, which I have none at the moment.
Why then just 7.5% instead of 13% ? You might ask. The loans just go on & on & on. My accrued interest looks great by the way but my actual return is only 7.5% gross.
Not great when you consider the risk, time involved & tax if applicable even if you pick "good" loans.
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Post by fisherman on Sept 5, 2018 13:14:25 GMT
Hi jj,
I realise that the question is somewhat unrealistic but FS give the current estimated net return across all loans as 11.2% net. In my experience this is a gross exaggeration, but I have only my own experiences and comments on the forum to back this up.
If this figure is accurate and you are selective of the loans you invest in, I would expect the 11.2% figure to be exceeded but, as you say, that is not your experience.
I would still be interested to hear what the actual real return, across the board, would be.
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Post by dan1 on Sept 5, 2018 13:32:55 GMT
Hi jj, I realise that the question is somewhat unrealistic but FS give the current estimated net return across all loans as 11.2% net. In my experience this is a gross exaggeration, but I have only my own experiences and comments on the forum to back this up. If this figure is accurate and you are selective of the loans you invest in, I would expect the 11.2% figure to be exceeded but, as you say, that is not your experience. I would still be interested to hear what the actual real return, across the board, would be. The return figures stated on the FS statistics page are for completed loans only, i.e. they don't include the numerous zombie loans. The figures also include bonuses paid to the MHs and BHs and I suspect additional increases in interest rates for institutional investors, syndicates and the like. I posted about this previously p2pindependentforum.com/post/285516/thread where a 13% loan paid a return of 18.9%. The lack of transparency regarding these uplifts has led me to conclude those statistics do not fairly reflect the position of a "small" investor (say up to £1k per loan).
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Post by df on Sept 5, 2018 13:42:26 GMT
Hi jj, I realise that the question is somewhat unrealistic but FS give the current estimated net return across all loans as 11.2% net. In my experience this is a gross exaggeration, but I have only my own experiences and comments on the forum to back this up. If this figure is accurate and you are selective of the loans you invest in, I would expect the 11.2% figure to be exceeded but, as you say, that is not your experience. I would still be interested to hear what the actual real return, across the board, would be. It will depend on your personal circumstances, but I doubt anyone is getting 11.2%. Lat time I've checked, my return was at around 8%.
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technik
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Post by technik on Sept 5, 2018 13:53:19 GMT
It seems the limitation to this is knowing how the defaulted loans will play out, as many are still active from 2017 and further back. Am interested to know how FS have their 11.2%. If they are assuming capital losses at the current quoted rate for any loans in default, they may be underestimating that - p2pindependentforum.com/thread/13234/fs-all-active-past-loans might give more of an insight as haven't got time to look at the info and analyse it right now. Assumptions will also have to be made and there are going to be disagreements about each one. Which loans do you apply some kind of write-off of value to? Only those listed as defaulted on FS would seem to miss a lot that have been strung out over many months and years but not yet more than overdue. Perhaps go with writing off value of any non-performing loans (again, how do you determine that - 90 days overdue, 180?). And then by how much? Some % write-off that represents NPLs that both pay back in full, or where recovery takes place, losses are made. Someone might be able to give a more thorough take on that % value. So perhaps a range of returns is more helpful for what you are after. Someone to add up all the returns from 2017 on the £25 investments you suggested, perhaps then use 6 months as NPL and compare a write-off of 0%, 50% and 100% on all of those loans. Might give us a sense of the sensitivity to the loans going overdue at least (is the return swinging a percent or two dependent on write-off %, or is it jumping between a profit or loss). Would be interested to see that! (All of this doesn't factor in what I think is overlooked a lot about FS, in that a large number of their loans are renewals, so whether treating a renewal just like a new loan - like FS do in all their headline statistics - is legitimate in these calculations) |
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mjc
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Post by mjc on Sept 6, 2018 4:17:18 GMT
It seems the limitation to this is knowing how the defaulted loans will play out, as many are still active from 2017 and further back. Am interested to know how FS have their 11.2%. If they are assuming capital losses at the current quoted rate for any loans in default, they may be underestimating that - p2pindependentforum.com/thread/13234/fs-all-active-past-loans might give more of an insight as haven't got time to look at the info and analyse it right now. Assumptions will also have to be made and there are going to be disagreements about each one. Which loans do you apply some kind of write-off of value to? Only those listed as defaulted on FS would seem to miss a lot that have been strung out over many months and years but not yet more than overdue. Perhaps go with writing off value of any non-performing loans (again, how do you determine that - 90 days overdue, 180?). And then by how much? Some % write-off that represents NPLs that both pay back in full, or where recovery takes place, losses are made. Someone might be able to give a more thorough take on that % value. So perhaps a range of returns is more helpful for what you are after. Someone to add up all the returns from 2017 on the £25 investments you suggested, perhaps then use 6 months as NPL and compare a write-off of 0%, 50% and 100% on all of those loans. Might give us a sense of the sensitivity to the loans going overdue at least (is the return swinging a percent or two dependent on write-off %, or is it jumping between a profit or loss). Would be interested to see that! (All of this doesn't factor in what I think is overlooked a lot about FS, in that a large number of their loans are renewals, so whether treating a renewal just like a new loan - like FS do in all their headline statistics - is legitimate in these calculations) There is a specific date, that could calculated, for a ‘rule of thumb’ where a loan over X months over the “expected end date” can be considered to be a total loss, and everything less than that would be assumed a full recovery. Of course it don’t work just like that, but the hypothetical figure would allow a quick calculation of our effective likely rate of return. (Or a realistic probate figure!) Further the change year on year of that figure would highlight FSs improving or otherwise, collections performance. In my view any loan beyond the expected end date is a NPL ! FS massage the quoted stats to put them in the best possible light, every incentive not to default a loan on any whimsical excuse. As a guess, the value X above might be about 4 months, can anyone show me it is more than this, I do hope so! now if X can be calculated, it would then be fascinating to know what X is for New loans, for Renewals, for SM +1% and -1% loans, for pawn, for 10% v 14% loans, etc etc. Or if loans were routinely sold at -1% after say 4 months!
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Godanubis
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Post by Godanubis on Sept 6, 2018 21:53:42 GMT
Actively manage your loans buying an selling (you would need a little more than your £25 in each to do this) and >15%return is relatively easy with such a small overall sum<£10000 if there were 400 loans available. NEVER let a part go near 150 days and you have no risk of default.
LTV LTGV % or return % are meaningless if you don't keep your part in any loan for any length of time.
A lot of work but rewarding
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number5
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Post by number5 on Sept 6, 2018 22:07:45 GMT
Actively manage your loans buying an selling (you would need a little more than your £25 in each to do this) and >15%return is relatively easy with such a small overall sum<£10000 if there were 400 loans available. NEVER let a part go near 150 days and you have no risk of default.
LTV LTGV % or return % are meaningless if you don't keep your part in any loan for any length of time.
A lot of work but rewarding
But how can you gurantee to sell a part in that time frame, if there just isn't anyone buying them? I have one for example at around 110 and at -1% and hardly any of it has sold for a while now
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Godanubis
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Post by Godanubis on Sept 7, 2018 10:49:47 GMT
Actively manage your loans buying an selling (you would need a little more than your £25 in each to do this) and >15%return is relatively easy with such a small overall sum<£10000 if there were 400 loans available. NEVER let a part go near 150 days and you have no risk of default.
LTV LTGV % or return % are meaningless if you don't keep your part in any loan for any length of time.
A lot of work but rewarding
But how can you gurantee to sell a part in that time frame, if there just isn't anyone buying them? I have one for example at around 110 and at -1% and hardly any of it has sold for a while now Once it gets nearer and returns offer >20% the will go unless it’s gainsburgh which is massive. If you buy high discount on low LTV that small amount should sell. As I said before anyone with £25 in a -1% with LTV <50% let me know I’ll probably buy it if I don’t detect it on my daily trawls
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number5
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Post by number5 on Sept 7, 2018 10:58:32 GMT
But how can you gurantee to sell a part in that time frame, if there just isn't anyone buying them? I have one for example at around 110 and at -1% and hardly any of it has sold for a while now Once it gets nearer and returns offer >20% the will go unless it’s gainsburgh which is massive. If you buy high discount on low LTV that small amount should sell. As I said before anyone with £25 in a -1% with LTV <50% let me know I’ll probably buy it if I don’t detect it on my daily trawls I have some gainsburgh to shift if you would like to buy that 
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Godanubis
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Post by Godanubis on Sept 7, 2018 11:08:44 GMT
Once it gets nearer and returns offer >20% the will go unless it’s gainsburgh which is massive. If you buy high discount on low LTV that small amount should sell. As I said before anyone with £25 in a -1% with LTV <50% let me know I’ll probably buy it if I don’t detect it on my daily trawls I have some gainsburgh to shift if you would like to buy that As I said Gainsborough we are all stuck with Just checked and bought up the goodies. Only pagefield mill and it has too much for sale and Farnham that is second charge “knaresborough” should teach us all a lesson on second charge loans ie. Avoid
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Godanubis
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Post by Godanubis on Sept 7, 2018 11:21:01 GMT
Once it gets nearer and returns offer >20% the will go unless it’s gainsburgh which is massive. If you buy high discount on low LTV that small amount should sell. As I said before anyone with £25 in a -1% with LTV <50% let me know I’ll probably buy it if I don’t detect it on my daily trawls I have some gainsburgh to shift if you would like to buy that Well I hope you were the lucky one. I just bought 1K+ in Gainsborough. Hope it was your parts
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