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Post by ladywhitenap on Oct 25, 2018 15:29:32 GMT
New loan available to view today on the website - Launches Monday 29th Oct.
9 month, 12% 70% LTV £800 bid limit. Seems OK at first sight......
LW
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sj
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Post by sj on Oct 25, 2018 15:49:13 GMT
The property has been listed on a popular house selling website for around 6 months now - it was reduced in price 3 months ago to 298k (which conveniently enough is the current RICS valuation of the property - bit lazy!). Very easy to find for yourself, no need for me to suggest links (it's easy to spot from the listing photos). The RICS valuation notes "fair" condition of pretty much everything, rather than "good", maybe there is something the photos don't show up that well - the renovation itself is not particularly appealing to me personally, it does lack charm and character. I'm not sure that the building would really appeal to buyers in this area - if you're buying in a Cumbria village you might want something with more kerb appeal than a converted lower-end-of-market public house with a flat roof out back. I'm skeptical that it will sell at the current price, the 90-day sale price seems rather high to me as well. There are several comparable properties in the nearby area that are either priced significantly lower, or are priced the same but are far more appealing properties. This leads me to think that the property is quite over-valued at present, and if it defaulted and a prompt sale was pursued then there might not be enough to cover the loan cost, especially after admin and sales fees are deducted.
As a comparison, the nearby barn conversion looks far superior, virtually the same price, but has gone unsold for 2 years now. Maybe the market in this part of the world is rather slow, but it does not inspire confidence. With a looming Brexit deadline, many people are putting off buying a house for now, and I don't think the 9 month loan term will be long enough to realise a sale at the asking price, or even the 90-day valuation if i'm honest.
Still, at least it's not a development project!
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snowmobile
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Post by snowmobile on Oct 25, 2018 15:59:58 GMT
What I don't get is why this borrower is taking out loans with so many lenders/platforms The other house next door, developed by the same borrower, is currently security for the FS loan 1168548924. This property is currently listed as security for a loan which only just started in August. From the docs at CH rate is 0.95% per month but the term isn't clear. I wonder why the borrower can't just extend that if necessary, as it must be cheaper than the MT loan?
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sj
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Post by sj on Oct 25, 2018 16:03:29 GMT
I'm not on FS and was not aware of that - thanks for the info! I was thinking of putting in a token amount but now my mind is made up.
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Post by bobthebuilder on Oct 25, 2018 16:56:09 GMT
MoneyThing What evidence do you have that the borrower can service the interest after the initial six months? I don't wish to add to my list of non-performing loans, and your statement on this subject within the loan particulars doesn't exactly inspire confidence.
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Post by mrclondon on Oct 25, 2018 17:20:54 GMT
What I don't get is why this borrower is taking out loans with so many lenders/platforms The other house next door, developed by the same borrower, is currently security for the FS loan 1168548924. This property is currently listed as security for a loan which only just started in August. From the docs at CH rate is 0.95% per month but the term isn't clear. I wonder why the borrower can't just extend that if necessary, as it must be cheaper than the MT loan? Agreed it is bizarre.
para 1.12 defines the redemption date as 6 months after the date of the agreement (10th Aug 18 so c. 10th Feb 19 )
para 2.3 states six months interest is being retained from the advance (so loan shouldn't be in default)
para 2.6 declares the minimum loan term (and hence interest payable) is 3 months (which takes us to c. 10th Nov)
para 1.3 declares the loan principal as £182k para 1.4 states the rate as 0.95% pm with no daily rate (so fixed fee for month or part of month) para 1.6 declares the arrangement fee as £3.6k to be retained from the advance
The MT loan is c. £209k incl six months retained interest which is paying lenders 1% pm (ontop of which is presumably MT's margin)
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Post by Badly Drawn Stickman on Oct 25, 2018 17:49:02 GMT
What I don't get is why this borrower is taking out loans with so many lenders/platforms The other house next door, developed by the same borrower, is currently security for the FS loan 1168548924. This property is currently listed as security for a loan which only just started in August. From the docs at CH rate is 0.95% per month but the term isn't clear. I wonder why the borrower can't just extend that if necessary, as it must be cheaper than the MT loan? Agreed it is bizarre.
para 1.12 defines the redemption date as 6 months after the date of the agreement (10th Aug 18 so c. 10th Feb 19 )
para 2.3 states six months interest is being retained from the advance (so loan shouldn't be in default)
para 2.6 declares the minimum loan term (and hence interest payable) is 3 months (which takes us to c. 10th Nov)
para 1.3 declares the loan principal as £182k para 1.4 states the rate as 0.95% pm with no daily rate (so fixed fee for month or part of month) para 1.6 declares the arrangement fee as £3.6k to be retained from the advance
The MT loan is c. £209k incl six months retained interest which is paying lenders 1% pm (ontop of which is presumably MT's margin)
The FS loan technically ends on the 16th November, so there could be a bit of shuffling taking place? Then again the update on FS suggests 'Curtain measuring' is well advanced.
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Post by mrclondon on Oct 25, 2018 18:01:18 GMT
I'm struggling to reconcile the borrowing company's accounts against the known debt.
Y/e Dec 2016 - Creditors £137,790 (with FS loan 2009494909 for £185k drawing down in Nov 2016)
Y/e Dec 2017 - Creditors £141,980 (with FS loan 3026147732 for reduced amount of £60k drawing down in Aug 2017 plus funding against this asset drawing down in Oct 17 which was then refinanced in Aug 18 by the £182k loan).
Probably only an issue if mainstream finance is sought.
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Post by mrclondon on Oct 25, 2018 18:09:59 GMT
The FS loan technically ends on the 16th November, so there could be a bit of shuffling taking place? Then again the update on FS suggests 'Curtain measuring' is well advanced. I did wonder about that, but the new loan will release very little (if any) capital once the existing loan on this property is repaid. When I saw Carlisle in MT's pipeline, I assumed it was the FS loan that was being refinanced, so am a bit surprised at where we are today.
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puddleduck
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Post by puddleduck on Oct 25, 2018 18:23:16 GMT
As a comparison, the nearby barn conversion looks far superior, virtually the same price, but has gone unsold for 2 years now. Maybe the market in this part of the world is rather slow, but it does not inspire confidence. With a looming Brexit deadline, many people are putting off buying a house for now, and I don't think the 9 month loan term will be long enough to realise a sale at the asking price, or even the 90-day valuation if i'm honest.
Still, at least it's not a development project!
I'm up in this neck of the woods, and am involved in property development myself. Yes, the property market up here is slow, meaning you can get some amazing bargains here at auction. Brexit isn't a factor, as Cumbria - like many parts of the UK except London, voted heavily in favour of leaving the EU. I've seen no impact on prices, either positive or negative. Carlisle offers fantastic opportunities, or rather did. You could pick up some amazing post Storm Desmond flood properties in Carlisle (check Auction House Cumbria's prior listings), I personally know many people who have done very well out of Carlisle in the last year or two. I'm not familiar with this pub or the area, but I agree that a refurb'd pub is going to have limited appeal. You could do a lot better with 295k that that. I'd expect to turn 295k into 600k+ within 6 months, but that would would be over multiple properties. It's very hard to beat a 2 up two down in Cumbria for either 'flipping' or BTL value due to the Sellafield demographic, although Carlisle is on the longer end of the commuting range.
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Post by Badly Drawn Stickman on Oct 25, 2018 19:08:14 GMT
The FS loan technically ends on the 16th November, so there could be a bit of shuffling taking place? Then again the update on FS suggests 'Curtain measuring' is well advanced. I did wonder about that, but the new loan will release very little (if any) capital once the existing loan on this property is repaid. When I saw Carlisle in MT's pipeline, I assumed it was the FS loan that was being refinanced, so am a bit surprised at where we are today. A cynic would suggest the shuffle would be to generate enough funds to pay the FS interest and renew that loan again, if you are right and not enough funds are 'generated' with this move, then it is very odd. Presumably the more simple option of moving the FS loan to MT with a suitable increase in value to cover the interest would have been a bit too obvious, even for us.
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cedarcourtcapital
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Listening is not the same as understanding
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Post by cedarcourtcapital on Oct 25, 2018 19:32:22 GMT
I apologise in advance to Moneything as this post is critical of their business, which probably is influenced by factors I can only guess at. I write as a supporter of the platform.
Now that written, the fact that, for me, Moneything seen to have learnt nothing from the malaise their platform is currently in. By malaise I mean a constipated secondary market for anything property related, and an inability to fill any new loan which is property related. In again floating a loan, with a valuation which requires a 70% LTV, seems to me to be asking lenders to take the same risk of a haircut as previously.
I have read post after post rightly decrying the accuracy of valuations when they come to be tested, I believe optimistic would be one description, fanciful or borrower friendly might be another. Yet even in this atmosphere Moneything try to float another 70% LTV. Disguising the risk by retaining 6 months interest does not, for me at least, mitigate the significant risk of capital loss. I am sure this loan would not work for the borrower at 50% LTV, but that is what it appears to me to be what Moneything lenders want/need to consider property related loans on Moneything.
Just one further point, I have seen suggestions that smaller property loans may be what is needed if they are to fill, the logic of this reasoning escapes me. I would rather have a piece of a large loan at a low LTV, than a smaller loan with a high LTV. I know which one gives the better default position for a lender.
I started off by apologising for being critical of Moneything, I would like to end by being critical of all P2P platforms for continuing to try to sell property loans at high LTVs, and to SPVs or circumstances where if things do not go to plan the borrower can just walk away and leave the lenders holding the baby. 'Skin in the game' used to be a prerequisite.
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Post by mrclondon on Oct 25, 2018 20:26:02 GMT
This post is somewhat off-topic but was prompted in part by the post that cedarcourtcapital has made, whilst not directly responding to his comments regarding acceptable LTV's.
I've spent sometime this week researching platforms I'm not currently involved with, in the quest for a home for a raft of repayments I've had recently / expect imminently from several platforms, and have settled on PropLend.
So what has attracted me to Proplend ? Partly the most comprehensive provision of unredacted due dilligence material regarding the borrower and the security I've yet seen in the industry, beating even AC in some aspects. (The downside BTW is low deal flow, but probably no worse than MT/TC over the last 12 months). However, the point I wanted to make is that Proplend structure all their loans with A, B & C tranches (think MT Birkenhead)
Tranche / Risk |
| 2017 Av Rate |
| LTV Range
| C (High)
| 11.86% | 65-75% | B (Medium)
| 9.68% | 50-65% | A (Low)
| 7.4%
| 0-50%
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Source (and more detailed explanation) is here.
Despite the calamity which befell Birkenhead (and my decision to go 100% B in that case ) I was and remain a supporter of such structures which have worked well for quite a number of TC loans, allowing the borrower a blended rate, and the participation of a core of slightly more risk averse lenders. Whilst I suspect MT will be reluctant to repeat the Birkenhead experiment any time soon, I think the average rates that Proplend funded their loans at last year vs LTV provides some useful food for thought.
12%/13% headline yields at MT/FS/L/ABL etc have always represented a premium to go towards covering future capital losses, and I have consistently maintained a long run return of 6-7% after capital losses is the best that can be expected. That said, I think those who find themselves in a significant number of the more spectacular failures that recover less than say 60% of capital will have a long run return well below 6%.
(Apologies to MT for referencing a competitor platform quite so blatantly )
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dh1
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Post by dh1 on Oct 25, 2018 21:56:07 GMT
Great description of Proplend, mrclondon - thanks for it.
A couple of points to bear in mind - not all Proplend's loans are structured into 3 tranches; of the 4 currently pending, 2 have just one tranche, 1 has two tranches and the other has 3. Also, fairly tight initial investment limits apply as the loans seem to fill very quickly (much less than 24 hours); these seem to vary from £1k to £3k. Loan offerings also seem to be a couple a month although that may be an inaccurate guess.
Apologies to MT as well!
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snowmobile
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Post by snowmobile on Oct 25, 2018 22:41:20 GMT
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