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Post by SophieThing on Aug 12, 2015 10:25:55 GMT
Fifth and final topic: Functionality
Main question: If you could build your own ‘dream’ platform what would it look like? (In terms of proposition, mechanics, functionality, features, etc.).
Is there anything that particularly annoys you or anything that you love about the functionality and features offered?
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webwiz
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Post by webwiz on Aug 12, 2015 10:27:10 GMT
It would look just like MT but with some high quality loans (not art).
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Post by SophieThing on Aug 12, 2015 10:29:31 GMT
It would look just like MT but with some high quality loans (not art). Would you mind elaborating on what you mean by high quality loans?
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bugs4me
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Post by bugs4me on Aug 12, 2015 10:30:45 GMT
Fifth and final topic: Functionality Main question: If you could build your own ‘dream’ platform what would it look like? (In terms of proposition, mechanics, functionality, features, etc.). Is there anything that particularly annoys you or anything that you love about the functionality and features offered? Simplicity every day. Not sure if you've already done this but my advice would be for you to join several platforms as a lender. Then have a look around at just how confusing some of them are. The buck stops with the platform owners but whoever designed the website should be taken out and shot at dawn.
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Post by SophieThing on Aug 12, 2015 10:33:02 GMT
You can find a lot of opinions on your questions on other boards on this forum. I realise that there's a lot to trawl through but many of us have done so, as the same user names cop up all over the place. Agreed- there is a wealth of information here and I'm working through it.
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SteveT
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Post by SteveT on Aug 12, 2015 10:35:07 GMT
Fifth and final topic: Functionality Main question: If you could build your own ‘dream’ platform what would it look like? (In terms of proposition, mechanics, functionality, features, etc.). Is there anything that particularly annoys you or anything that you love about the functionality and features offered? MT would be an excellent model to start from but with the additional benefits of: a) a wider range of asset security types (possibly linked to different rates of interest, or maybe 2 or 3 interest rate tiers that reflect the quality of the underlying assets) b) a Secondary Market that operates entirely at par with no selling costs (just as Savings Stream's does) so that lenders can reduce / diversify their existing holdings without penalty but also without reward c) a more consistent deal flow d) an iPhone App (that works and delivers the full PC functionality)
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Post by SophieThing on Aug 12, 2015 10:40:00 GMT
OK we have reached the end of the live focus group session.
Thank you very much for taking part and providing your feedback, it is much appreciated by Ed and myself.
If anyone would like to continue to comment on any of the topics raised, or anything else, that would be marvellous. Ed and I will check the feedback regularly.
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bugs4me
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Post by bugs4me on Aug 12, 2015 10:43:19 GMT
It would look just like MT but with some high quality loans (not art). Would you mind elaborating on what you mean by high quality loans? I'll hijack your question if I may. All loans tend to be offered with some form of security. The problem with the security is a moot point. Directors PG's - often proved worthless Plant and Machinery - often valued at book value - in reality it realises pennies in the pound at auction Debtors book - has a funny way of disappearing Commercial property - more riskier than traditional residential Art - trends come and go and all depends who is in the auction room at sale time The list is endless
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webwiz
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Post by webwiz on Aug 12, 2015 11:09:54 GMT
Would you mind elaborating on what you mean by high quality loans? I'll hijack your question if I may. All loans tend to be offered with some form of security. The problem with the security is a moot point. Directors PG's - often proved worthless Plant and Machinery - often valued at book value - in reality it realises pennies in the pound at auction Debtors book - has a funny way of disappearing Commercial property - more riskier than traditional residential Art - trends come and go and all depends who is in the auction room at sale time The list is endless I agree with bugs4me. Good quality security includes property (correctly valued), gold etc, anything that can with confidence be easily and quickly sold to cover the debt.
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Post by SophieThing on Aug 12, 2015 19:01:03 GMT
Just in case anyone wasn't able to join this discussion this morning, I'm still love to hear your views on any of the questions posted if you have a few moments to spare.
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ramblin rose
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“Some people grumble that roses have thorns; I am grateful that thorns have roses.” — Alphonse Karr
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Post by ramblin rose on Aug 12, 2015 19:21:48 GMT
Hi SophieThing - sorry I was not around today as I had intended, but happy to give a few thoughts now. As others have said, I've spent several years expounding my opinions on p2p platforms left right and centre ( ), both on this forum and over on the Zopa forum where I started out and where we used to discuss the various other platforms before we had this independent forum - Zopa didn't mind us dedicating some space to doing that. So I won't be going into much detail here, but do feel free to contact me with any particular information you might want elaborating . My sections sort of relate to your topics, I think, but not entirely. 1) For me, p2p is part of a much wider investment porfolio including stocks and shares, both quoted and unquoted (mainly via Crowdcube), bonds and various types of cash holdings. No property at all at the moment - not even a house. I am at the far end of the high risk tolerance scale and so, although I do believe that many p2p platforms are very risky, I am happy to have a much higher percentage of my net worth in p2p currently than most others would have. If I can quantify the risk, then I'm generally happy to take it. There are places where it's impossible to quantify the risk, and I won't go there no matter how tempting. I started, like many others a few years back, with Zopa and then RS. In the past couple of years I've been running down those and transferring into asset backed loans. FS was a particular favourite of mine for its first year, but as it has now moved into property, we have no way to tell how they will handle the defaulting ones and it has no secondary market, then I won't lend on them. I do still participate in their other loans if the interest rates are high enough to mitigate the risk of default, which is a given with FS loans - you do take losses there so I won't lend at less than 13%. I have a small amount of money with Wellesley and much larger amounts with AC and SS. My favourite by far has been SS because it's been easy to lend money both when I have large amounts to shift and equally when I just have interest to re-invest. It's mega-simple, I can instantly credit money, the SM is so liquid I can get money out as and when I choose. All in all, I get a good return for little effort. I'm in a minority, but I'm going to be much less happy when their new trust structure comes into force because any loan I happened to be left holding when a problem hits is likely to become unsaleable, so for me, it becomes more risky to hold, but there won't be an increase in interest rate to compensate as there is at AC. 2) I have found that there is little cross-over between p2p lenders and crowdfunders. There have been attempts to get threads going on equity investing, but they don't take off. You've already had the opinion earlier that is is akin to gambling and I think that reflects the typical retail p2p lender. My experience is that the majority of retail p2p lenders are towards the risk-averse end of the spectrum, although willing to take a little risk to improve what they can get from a bank. Typcially they are not active investors with experience of assessing companies and business propositions and come to p2p as a first step following on from cash investments and perhaps funds and investment trusts. There are some, but we are for the moment, the minority. I think as the p2p market expands this is changing. My advice to a newbie would be pretty much exactly what SteveT said earlier - spot on. Too many seem to be leaping in at the SS end, attracted by the rates, and to my mind not appreciating it could all end in tears. 3) My belief is that p2p is going to grow fast in a year or two's time. There are already a steady stream of new platforms appearing. As others have said, it will become more mainstream, especially with ISAs becoming available. Many of the new ones will go to the wall, just as many new companies of any sort go to the wall. It will be important to be able to understand which ones have the ability to stay the course through rough economic cycles before deciding where to leave our money. And although interest rates overall will rise, I think p2p rates will instead come down; my belief is that we are riding the crest of the wave right now. Once that happens, I'll probably go back to being mainly in stocks and shares, because the risk-reward ratio would not have the right balance for me. I've never been prone to hold large quantities of cash and only do now in the form of p2p loans because the return is proving advantageous at the moment. And who knows, I might even buy some property again 4) The interest rate is important to me, in that if the money's at risk it either needs a high rate to cover potential losses, or in the case of an equity investment it needs a high probability of succeeding or a high dividend payout - preferably both of course, but they don't crop up all that often! In newish platforms that haven't proven themselves over an economic cycle, that means I need a high interest rate to consider lending. The tendency is on some platforms that competition forces rates lower when there is more money available than loans; most people go along with it and still lend, but I don't. Another reason SS has been a winner for me - the rate hasn't dropped. Yet. Service is clearly part of the package. I personally feel that I need to trust the people running the platforms at the moment, particularly the smaller/newer ones. I have either met a fair number of the people running the platforms I use or I know somebody who has, and do place a fair amount of importance on that. It's similar to needing to know that the people running the companies I invest in are competent. To my mind, anybody can have a great idea for a business and start it up, but only a properly motivated and competent person can actually make it succeed. 5) Functionality. Very little is required. My ideal platform looks like SS or MT as they are right now. People shouldn't need to understand much to be able to use it. It should just do what it says on the tin. Nothing of any complexity at all. Secondary market with no discounts or markups - just straight forward selling/buying. But the lack of SM on MT is not a problem with there being a definite get-out after 6 months - if loans had a chance of dragging out indefinitely, I'd be calling out for it, but as things stand it's just an additional bell/whistle that might be nice occasionally, but generally shouldn't be necessary. SophieThing WAKE UP!!! I've finished now
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Post by Deleted on Aug 12, 2015 19:59:23 GMT
Sophie, sorry I'm 12 hours late but my aging computer has had some issues today.
Firstly, P2P is targeted to make up 5% of my money. It's a new concept and I like things I can understand for a couple of financial cycles so at least 10 years performance. Given P2P is so young and roughly only pays say 10% net of costs and defaults I have other investments that are able to achieve more than 10% and of course some that hit less than 10%. In reality the ongoing challenge is to stay ahead of inflation, make "real growth", then make best use of tax mechanisms and P2P uses up my low tax rate income tax allowances nicely.
Other investments, Funds in Oz and Sweden, Shares in USA, Shares in UK, Funds in UK, PIBS
Secondly the market; so you have the big players who are bringing in Institutions and racing ahead, some are like big clumsy kids and some are well organised growth monsters, there are yet more starters coming into the market. There will be a shake out and probably some sort of messy absorption by the bigger players to ensure that the "market" does get a bad rep..
What is interesting is how some companies start with a simple model and then start to make it more complicated, as the software gets more complicated the thinking gets harder to understand and you start seeing what looks like stupid actions. Basically the guys who lead their companies think that software solves everything, it doesn't, keeping it simple is the clever trick. Three big players are already making it more and more complicated as we speak. You can see the complexity when you look at their customer service and communication, it starts getting messy. So stupidity is a real threat. I also think bringing the Institutions into the pot a real risk, it will allow the growers to grow and when the fan is hit by the brown stuff they will run and leave a mess. Just as a question have you done a Porter analysis of the Industry yet?
Third, comparison. I have a list of stuff I don't like to invest in medium to long term with or without assets and an earning expectation. Those portals that exclude me from those criteria and yet have enough business to take my money get my business. So I deselect. I use RS, FC, AC, FS and MT. I shift the cash around to achieve net 10% (why, no idea but it's a round number).
Fourth, if assets are involved I'll take lower interest rates. If I get a financial reports I'll deselect businesses that are bad payers, or are borrowing too much. The odd balls in my portals are MT and FS, as only 6 months loans which I like, saves you needing a SMarket.
Fifth, Great communications are core, so FC just dumps out loans, but you know that is what they do and most are after 2pm. MT puts up the loan to the second, FS runs them out 2 minutes late, AC sometime in the next month. Weird deals really p**s me off and even more when they are not achieved. (no names). I like simple models and simple screens, three of my portals have errors in their software and they don't really care.
Bobo BA MA MBA
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Post by SophieThing on Aug 12, 2015 20:29:24 GMT
Thank you very much for taking the time to respond to me. I really appreciate it, especially as my questions have been similar to lots of previous discussions and have caused you to repeat what you've said elsewhere at times. I will take the advice given to me today and read more on the forums to build up a better picture. I can't thank you all enough for helping me to get to grips with the sector.
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Post by mrclondon on Aug 13, 2015 10:09:12 GMT
I agree with much of what has been said by others, so won't repeat it.
Picking up on the quality of security point, the basis on which LTV's are calculated varies, and is horribly misleading for newbies who can end up trying to compare apples and pears, or worst case apples and potatoes !
A typical RICS red book property valuation will contain an open market valuation (OMV) and a restricted marketing period valuation (typically 90 or 180 days). The latter should (in an ideal world) be somewhere close to auction guide price and reserve respectively. The OMV is waiting for the 1 buyer to come along who will pay close to full value. In far too many cases the LTV on the loan listing is based on OMV not restricted marketing, and yet if a LPA receiver is ultimately appointed the objective is to dispose of the security in a "reasonable" time frame and hence the realisation will generally be closer to restricted marketing valuation than OMV. (PM me if you want a specific example of a loan that is 101% LTV restricted marketing but is listed as 70% LTV )
Valuation reports can be further confused by the inclusion of planning hope value, or gross development valuation (GDV).
And one nasty that is often overlooked on some development projects - the destruction of value. A project might take a building that contains a load of grotty appartments and gut the internals prior to re-creating "contemporary" appartments. If the borrower was to fold after the gutting of the building, the security could well be worth less than at the start of the project.
This issue is I believe the cause of most of the angst on AC with the distressed bridging loans, lenders have simply not appreciated that OMV is unlikely to be achievable if the security needs to be realised, and that the restricted marketing valuation is often around 100% LTV leaving little or no margin for fees and accrued intrest to be recovered on top of the original capital.
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JamesFrance
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Port Grimaud 1974
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Post by JamesFrance on Aug 24, 2015 8:36:18 GMT
The first topic for discussion is: P2P VS other forms of saving/investment
Main Question: What are your thoughts on investing on a peer-to-peer platform compared to other types of investment? I managed to miss this topic at the time and have only just come across it, so sorry for the late reply. What seems to be missing from the discussion is the thing that attracted me to P2P lending when I started 2 years ago. That is that there is not a small army of financial advisors, fund managers, Investment Trust directors and high bonus bank employees all making more from the use of my money than I am. Something I see in the euro investing area is new platforms being launched which seem to be far more attractive than a long established one which has managed to upset it's more involved investors, by ceasing to interact with them and making continual changes which are unpopular, presumably expecting that as P2P becomes better known they will continue to attract funds from new customers who believe some of the carefully selected statistics shown on the website. I think some of the older platforms will need to raise their game to continue to attract investment as newer better offers are made to investors, otherwise they will fade away as the market develops.
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