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Post by oatibiscuit on Aug 31, 2019 21:03:41 GMT
Most of the discussion about PP recently has been about the race to exit the platform, following their new fee structure. Given the scale of the blowback, it now seems more likely than ever that PP will fail. However, does this present an interesting opportunity for investors?
Properties can currently be snatched up for >20% discount, this may increase further. If PP fails then this would trigger a mass liquidation of the portfolio, but I don't see any reason why this would necessarily be a fire sale. Surely they could just transfer management to a vendor who would happily take a modest fee to undertake the sale and achieve normal market returns?
If so, then there is a big incentive to hoover up the secondary market at the point when things look most dire. Am I missing something?
And does anybody know whether PP has insurance in place to fund the necessary windup arrangements to avoid big chunks being charged to investors?
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Post by scepticalinvestor on Sept 4, 2019 9:47:52 GMT
Most of the discussion about PP recently has been about the race to exit the platform, following their new fee structure. Given the scale of the blowback, it now seems more likely than ever that PP will fail. However, does this present an interesting opportunity for investors?
Properties can currently be snatched up for >20% discount, this may increase further. If PP fails then this would trigger a mass liquidation of the portfolio, but I don't see any reason why this would necessarily be a fire sale. Surely they could just transfer management to a vendor who would happily take a modest fee to undertake the sale and achieve normal market returns?
If so, then there is a big incentive to hoover up the secondary market at the point when things look most dire. Am I missing something?
And does anybody know whether PP has insurance in place to fund the necessary windup arrangements to avoid big chunks being charged to investors?
- if you trust the valuations and the assumptions in the dividend yield calculations, hoovering up at a 20%+ discount is a no-brainer. But do you? It's a genuine question. - if you go by what PP management are saying in response to complaints and on their emails, the blowback is tiny. The proof of the pudding will be in the next offering that comes on the primary market. No doubt they are going to make it extremely hard to resist. - I doubt there is any insurance in place (or even possible) to cover potential haircuts that investors might have to take in case of PP failing.
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hazellend
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Post by hazellend on Sept 4, 2019 12:25:35 GMT
I think the valuations are probably reliable.
It’s PP that are the problem, not the properties. I won’t be investing another penny.
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p2ploser
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Post by p2ploser on Sept 4, 2019 17:49:21 GMT
I wonder how healthy this platform really is. These changes were (allegedly) made because effectively it wasn’t financially viable with its previous model. I see they have now stopped deposits via debit card. I don’t know why unless it’s a cost save which would indicate bigger problems given that the cost of that is very small.
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invester
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Post by invester on Sept 5, 2019 7:51:20 GMT
I'm stuck in a few properties now because the discounts are too large.
Platform risk is the biggest one out of them all IMO..... supposedly each property is its own SPV and in theory quite easy to sell on but also would probably have to be at similar haircut levels.
With the type of losses they are showing I do think eventually this will be another Lendy situation....... losses such as these are tolerable if you are building scale, but it is hard to see where that may be coming from, as many current investors will be scared off now, and many new ones not sold if a property downturn is around the corner.
I am sure there are already better similar products available for institutions to invest in. Some REITs I have seen offer a hugely better balance of scale to fees.
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Post by scepticalinvestor on Sept 5, 2019 10:50:48 GMT
I see they have now stopped deposits via debit card. I don’t know why unless it’s a cost save which would indicate bigger problems given that the cost of that is very small. That IS interesting! Isn't the charge something like 0.2-0.3% per transaction?
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bigfoot12
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Post by bigfoot12 on Sept 5, 2019 13:53:15 GMT
I see they have now stopped deposits via debit card. I don’t know why unless it’s a cost save which would indicate bigger problems given that the cost of that is very small. That IS interesting! Isn't the charge something like 0.2-0.3% per transaction? There might be other problems depending upon how they interpret client money rules from the FCA. From memory several P2P platforms have dropped debit card deposits, or they use their own capital to underwrite the deposit until it actually clears which isn't as quick as you might think. If you are thinking of buying in thinking that PP might fail, read the full Lendy forum, then read the full Collateral forum, then read every detail of the PP site and also for each SPV. It seems likely that there is a tendency to overvalue rather than undervalue (not large but maybe 5% to 10%). If you are investing large amounts there is cashback of up to 6% (if you buy more than £50k in a month). This might make a difference. Where is this money coming from?
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Post by oatibiscuit on Sept 27, 2019 19:21:37 GMT
I think the valuations are probably reliable. It’s PP that are the problem, not the properties. I won’t be investing another penny. If you're confident about the properties, and you're not happy with PP, then all the more reason to buy big if/when PP is on the brink!
Maybe I'm being naive here, but from my perspective, what we're talking about is buying £100 of assets for £75. And people are being put off because there's going to be some awkward admin, and a chance that the £100 was actually worth £95? Please educate me if I'm wrong.
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starfished
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Post by starfished on Sept 30, 2019 9:53:59 GMT
The P2P I have made the most out of is Bondora but I have stilled pulled my money out with no exposure left. It is not just about the expected risk adjusted return, it is also about the manner in which a firm is run. Once trust is gone, that is an alarm bell, pull your money irrespective of what you think you might make...
Edited to add expected to risk adjusted return
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sd2
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Post by sd2 on Jan 15, 2020 22:55:26 GMT
I am not really overly worried about platform failure. I think this could be run down quite successfully although a big fall in property prices would make it unpleasant! The earlier sale of a property suggest they aren't asking/paying the valuers to overvalue the properties. When it comes to buying into these huge discounts I am looking at two things. If I buy properties which will be sold off individually then I will be quids in as long as no downturn. Brexit could of course create a short term housing recession and the best properties to buy are those with the shortest times to selling relative to the discount. Good timing is called good luck. On the other hand property which has to be sold on as a large rent only block....I am not sure what will happen. People will still rent, maybe even a greater demand but more likely a continued fall in rent which appears to be already happening. My decision is to put a small amount into lots of property that are being sold off individually. I am not rich maybe £50 in each one. Possibly even holding back from the one year ones and going for the shortest dates and holding back on the very good one year ones. There are few 19% ones with just over year to go......post brexit will be in full swing!! I wasn't going to invest anything more in pp but sod it risk reward doesn't look excessive. The AUM fees look to be a product of insufficient scale and lack backers with deep pockets. More of the Opportunistic Fund method would be the only way I would buy into something new.
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sd2
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Post by sd2 on Jan 28, 2020 10:57:29 GMT
Also I would assume another property equity site might step in. As it would give them scale. No need to have any of the fees for running down the company. Assertz exchange?
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