p2pfan
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Post by p2pfan on Sept 5, 2019 18:10:08 GMT
Almost all loans used to pay 8% on CrowdProperty. I note that two of the last three loans paid 7.5% and, of the next seven loans in the pipeline, three are paying 7, 7.25% and 7.5%.
These are substantive decreases percentagewise in returns and is very disappointing to see.
I've always been a big supporter of CP and praised them endlessly here and elsewhere, but these reductions in earnings don't show much value for lenders.
Unlike almost all other P2P platforms I lend through, these CP loans don't even pay lenders on an amortised or monthly interest basis, and so are much higher risk as the borrower only has to pay everything at the very end.
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Post by CrowdProperty Representative on Sept 5, 2019 19:02:42 GMT
Dear p2pfan Thank you for your post. We have communicated about this in the past (we like to keep this forum fully up to date with developments), especially in response to the criticism that we weren't providing enough of our exceptionally well due-diligenced lending opportunities. We only ever tighten our lending criteria and will never chase growth for the detriment of quality, so we must work relentlessly hard to originate the high quality that we are satisfied to list to satisfy demand. By way of explanation, below is our communication from March 26th: _____ Dear all Our business has evolved, and so have our rates. But only ever for the better. At CrowdProperty, we offer an outstanding service for quality property professionals to raise finance and provide attractive returns for lenders because we can match the capital very efficiently and effectively. With demand for our first-charge secured property projects higher than ever, we’ve worked tirelessly on our direct origination strategies to ensure we secure high quality projects, presenting quality opportunities for investors to lend to quality property professionals. To serve ever stronger demand from our valued lenders, we’ve made our borrower rates even more competitive for the highest quality projects with the highest levels of security cover. This means CrowdProperty can now secure even more projects which comfortably meet our meticulous due diligence criteria, in turn giving lenders more investment opportunities. As such, we’ve made some slight adjustments to our lender rates in line with borrower rate changes that now flex with the level of security cover. Interest rates offered on investments will reflect the increased security associated with lower Loan to Exit Gross Development Value (LTGDV) and lower initial purchase Loan to Value (LTV) of projects. Lenders will still achieve inflation-beating, first-charge secured returns on each and every project we launch with rates of return clearly shown for every project launch. On Wednesday we will be launching the first such project. The Land at Knoll Road, Godalming, Surrey is already owned unencumbered by the developer. CrowdProperty is initially releasing 38.5% of the RICS-assessed current value and will be lending a total of £650,000 over the course of the £1,700,000 GDV project. This represents 38.2% LTGDV (excluding rolled-up interest) and 41.9% LTGDV (including interest). Having secured the project with more competitive rates to the borrower, we are offering lenders 7.25% first-charge secured returns on this project. Information for this project is now available on the CrowdProperty website here: www.crowdproperty.com/projects/900-land-at-knoll-road-formerly-hedges-godalming-phase-1The second of the three projects launching next week is also one with very high security cover. The Leicestershire project is also already owned unencumbered by the developer and the project is well underway with the shell of the building already erected. CrowdProperty will be initially releasing 27.1% of the RICS-assessed current value and will be lending a total of £125,000 over the remaining stages of the £475,000 GDV project. This represents 26.3% LTGDV (excluding rolled-up interest) and 28.6% LTGDV (including interest). Lenders will be offered 7% first-charge secured returns and more information will follow next week. Maintaining a competitive proposition on the borrower side is very important for attracting and securing high quality lending opportunities and this change will ensure we can further increase the number of highly secured projects on the CrowdProperty platform. AutoInvestors please note your funds will continue to be invested in each and every loan, and you will still have the ability to cancel pledges within the 24-hour cooling off period – you will be notified of an AutoInvest pledge as soon as it is made. We appreciate your feedback, and please continue to get in touch. The CrowdProperty Team _____ The thread goes on with a few points of feedback that we further address in full here: p2pindependentforum.com/thread/14533/crowdproperty-adjustments-higher-quality-loansThe key thing is that we are a quality-first platform - a lender of first resort funding high quality projects. The lender of last resort positioning has proven itself to be a precarious place to play. This is risk-based pricing in a marketplace on the borrower-side - we need to remain competitive on the borrower side to win the best projects. It is directly reflective of the borrower rate and certainly not a lower rate to take more spread. Unlike most platforms, we are transparent about the spread on our statistics page (https://www.crowdproperty.com/statistics) and will always be - it's a key factor to understand about any platform you're investing in as that's often opaque and the best reflection of whether you're fairly rewarded for the risk that your capital is bearing. Indeed, 3 out of the 8 upcoming loans are less than 8% but for good risk-based reason. Otherwise only 5 loans would have been in that pipeline - we're bringing more choice. Self Select investors can clearly choose if they would like to participate in each and every loan and our AutoInvest functionality allows AutoInvest lenders to either 'skip next loan' or retract an AutoInvested pledge for 24 hours. This is core to us always acting in the lenders' best interests, maintaining the 100% capital and interest payback track record for over 5 years of lending and bringing more high quality lending opportunities to you, because that's what you've asked for. Best regards, Mike Bristow CEO & Co-founder PS - you can read more of our thinking and how we're approaching this market in the very best way in our series of 40 articles being released on our blog here: blog.crowdproperty.com/blog
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djay
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Post by djay on Sept 6, 2019 7:13:48 GMT
I've noted the other threads and previous discussions, however I'm with P2Plender on this one. At around 7% crowdproperty are in a whole different ball game where there are other options where, in my opinion, there are more appropriate risk reward opportunities. I would also need to be able to diversify over many loans quickly to spread the risk whilst also not having the confidence that 7% is the new norm and won't be further eroded in the future. The shield, from my point of view as a lender, is basically only crowdproperties word and I can't see it as a tangeable facet without long-term data or some form of tangeable guarantee. On that basis, I am out for the time being.
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easylender
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Post by easylender on Sept 6, 2019 8:41:52 GMT
Well p2pfan and djay I would be very interested to see your assessment of the risk of capital loss in loans with LTGDV of 70%, 40% and 25%.
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djay
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Post by djay on Sept 6, 2019 9:14:49 GMT
Much of my previous comments refer to platform level risk to some extent combined with the asset class/activities which crowdproperty in my opinion has too little history for me to be comfortable with especially when the rates are reduced too close to the ballpark of platforms and other investments that I am more comfortable with at platform level, I see my funds as various pots of different sizes adjusted for risk, this move has brought it into competition for MY funds with Assetz and lending works amongst others (including Ratesetter until i started withdrawing recently), direct property investing and various investment funds. The shield for this platform is in effect no more than a set of promises that the platform will intervene some way to make the development project good. I also worry that this promise by the very nature of its facets could be strained under any move for significant growth in lending which this reduction in rate is clearly part of. It's a shame because I did like the platform and concept.
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Post by Ace on Sept 6, 2019 9:23:31 GMT
Well p2pfan and djay I would be very interested to see your assessment of the risk of capital loss in loans with LTGDV of 70%, 40% and 25%. I would agree with your sentiment if lower rate loans were at much lower LTVs, but today's loan (7.5%) was an LTGDV of 53%, and much more importantly, an initial LTV of 63.3%. And it's a development loan. This puts it in the same bracket as lots of the other 8% loans for me. Obviously there are far more factors to consider, and I do tend to trust that CP have taken them all into account. However, despite CP's protestations, there must be pressure for them to lower rates while such loans are still flying of the shelves. Today's was snapped up in 2 minutes, so there are obviously lots of takers at the lower rates.
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zlb
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Post by zlb on Sept 6, 2019 9:42:10 GMT
The takers could be retail who are going by reputation; they like autoinvest; they like the sound of 'lender of first resort, not last resort'; and they can invest as little as £50 in each project. None of that accounts for the results of 'how many loans need to default before I make a loss?'.
I would have still thought this was a reasonable option for diversification across platforms. However, given that Lendy offered exactly the same explanation for reducing rates (it's what the market is doing, we want to attract the best borrowers, not the worst), I would have thought that CP would understand concern over this, and find other ways of expanding on this change.
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Post by CrowdProperty Representative on Sept 6, 2019 14:18:03 GMT
Hi all,
Many thanks for all your comments, it’s always valuable to hear what you’re thinking and we do appreciate that.
Further to our message above, we think it would be useful to listen to the recording of the Due Diligence, Security and Operational Best Practice webinar we held in July. You can find out how we have worked relentlessly hard for more than five and a half years to build a trusted, sustainable, market-leading platform that offers a seamless, robust and reliable investing experience to our lenders with the very highest operating and ethical standards, levels of transparency and quality of lending opportunities. We also cover in depth how our leading expertise, rigorous due diligence processes and first charge secured model all come together to deliver on our top priority - the protection of our lenders' funds and the continuation of our 100% capital and interest payback track record. We are building a lending business based on deep due diligence and practical expertise in the asset class that addresses pains that we personally felt on the borrower side, thereby attracting quality borrowers.
A link to this webinar replay was sent to all registered lenders on Sunday 8th August and again on Sunday 1st September. The 16 articles already published on our blog also go into good detail as to how we are approaching the market, with clear differences to other players.
Kind regards,
The CrowdProperty Team
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p2pfan
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Post by p2pfan on Sept 6, 2019 20:14:29 GMT
CP does, indeed, do many things fantastically well and I've been the very first in line to praise them.
At the same time, decreases in earnings for lenders are decreases, no matter how much one tries to obfuscate matters or spin one's way out of the change.
I respect it can't be easy for CP to always find borrowers that enable them to offer 8% potential interest to lenders and therefore we need to be understanding in exceptional cases, as I believe lenders have been with the occasional loan this year that has paid below 8%.
But the large ratio of current 7%-7.5% earning loans means lenders are been short-changed IMHO. CP, unlike other P2P platforms, doesn't have a provision fund, the owners don't invest their own money into each loan, there isn't monthly interest payments (apart from in rare loans), there isn't amortised monthly repayments, and that makes CP's loans objectively substantially higher risk than those elsewhere. Therefore slashing the potential return seems unfair.
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Post by multiaccountmanager on Sept 24, 2019 10:52:37 GMT
To CP Representative
With regard to the Water Tower Conversion Project in Stafford launching tomorrow - project details just made available.
I haven't seen the details about foundations and ground conditions.
There is an indication of foundations going down to 4.5 metres, but not to my mind indicating whether these exist, or need work.
I am not available to view the webinar tonight or tomorrow and am aware that ground conditions can be a concern.
In one sense the fact that the tower carried the load of the weight of the water is comforting.
Can CP provide provide further information or point me to it if it is there already?
Thank you
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Post by dan1 on Sept 24, 2019 10:59:42 GMT
To CP Representative With regard to the Water Tower Conversion Project in Stafford launching tomorrow - project details just made available. I haven't seen the details about foundations and ground conditions. There is an indication of foundations going down to 4.5 metres, but not to my mind indicating whether these exist, or need work. I am not available to view the webinar tonight or tomorrow and am aware that ground conditions can be a concern. In one sense the fact that the tower carried the load of the weight of the water is comforting. Can CP provide provide further information or point me to it if it is there already? Thank you Not too familiar with CP but this, on the face of it, would appear to be a refinance of FS 1239817178 (£42k loan for the purchase) + additional funds for development.
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hantsowl
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Post by hantsowl on Sept 24, 2019 11:46:19 GMT
To CP Representative With regard to the Water Tower Conversion Project in Stafford launching tomorrow - project details just made available. I haven't seen the details about foundations and ground conditions. There is an indication of foundations going down to 4.5 metres, but not to my mind indicating whether these exist, or need work. I am not available to view the webinar tonight or tomorrow and am aware that ground conditions can be a concern. In one sense the fact that the tower carried the load of the weight of the water is comforting. Can CP provide provide further information or point me to it if it is there already? Thank you Not too familiar with CP but this, on the face of it, would appear to be a refinance of FS 1239817178 (£42k loan for the purchase) + additional funds for development. Well spotted!! The loan on FS is £42000 and the Exit Strategy there is "The clients have a decision in principal from a well-known, large development finance company to proceed with developing the property, this includes the settlement of this loan.".
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Post by CrowdProperty Representative on Sept 24, 2019 13:01:34 GMT
Hi multiaccountmanager,
The water tower has been standing for 100 years. Its historic load bearing, given it held water for many years, is far greater than adding a few floors and converting to a residential property A structural survey has been carried out and has not flagged up any issues, the building has secured planning and before we complete the loan a pre start building control certificate will be necessary. This will ensure that any upper floors constructed in the tower will qualify with correct loading.
Hope this answers your question, if there is anything else we can help with please don't hesitate to get in touch.
Kind regards,
The CrowdProperty Team
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Nomad
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Post by Nomad on Sept 25, 2019 9:33:22 GMT
Hi multiaccountmanager, The water tower has been standing for 100 years. Its historic load bearing, given it held water for many years, is far greater than adding a few floors and converting to a residential property A structural survey has been carried out and has not flagged up any issues, the building has secured planning and before we complete the loan a pre start building control certificate will be necessary. This will ensure that any upper floors constructed in the tower will qualify with correct loading. Hope this answers your question, if there is anything else we can help with please don't hesitate to get in touch. Kind regards, The CrowdProperty Team I have tried to cancel my pledge for this, but the website is far from clear whether my cancellation has been actioned. There is a small red cross (error) on the right side of the listing - is this all the acknowledgment I get CrowdProperty Representative ?? And while I'm venting, the main dashboard still doesn't show me the total funds I have entrusted to CP. Is a further update pending CrowdProperty Representative ??
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Post by CrowdProperty Representative on Sept 25, 2019 10:06:17 GMT
Hi Nomad,
Many thanks for your message.
When you delete a pledge the project will no longer show on your loan portfolio.
There are a number of further improvements to come as we aim to deliver clearer information and a better user interface. The number for our Lender Relations Team is 020 301 20161 and can be found in the footer of our website.
Kind regards,
The CrowdProperty Team
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