carolus
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Post by carolus on Jan 15, 2018 15:43:31 GMT
damar here's the issues I see with the platform: - Communication with lenders - Decisions are made (e.g. one month free rent, revaluing with seeming intent to sell) and events occur (e.g. surprise loans to the SPV) without investors being informed beforehand or sometimes even afterwards.
- Careless and opaque accountancy - frequently things are incorrectly deducted from our income and seemingly only spotted when queried by investors. Additionally it's often unclear what we're being charged for, what is covered by various charges etc built into the funding, provision funds etc.
- Poor quality of listings and valuations - I don't mean that the properties themselves are necessarily poor, but that the quality of the descriptions, investment cases and valuations is often bad.
- PM's fee structure - The platform's incentives don't always seem to align with ours.
Happy to provide further details if wanted, and I'll add more points if I think of any.
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carolus
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Post by carolus on Jan 11, 2018 16:40:38 GMT
Last one for now. SPV41 has a net rent of -£1430 for this month with a note to see the messages for why - I see no reason for a negative... any ideas? I'm completely baffled by this, too. I imagine the message we were supposed to get got lost in the copy paste update extravaganza. Did you enquire with PM? TBH I have so little in this one and December has seen a real loss of faith in PM for me that I haven't bothered doing so myself. I've enquired about this and received a response that an error was made inputting the data on the website and that it should read "£0" instead of -£1430. The field has now been updated on SPV, and a followup communication has pointed out that this is just the delayed accounting mentioned in the 22 Dec message.
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carolus
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Post by carolus on Jan 3, 2018 11:41:13 GMT
I'm still quite committed to my investment on PM myself, I can still see potential if the company continues to strive to improve. It shouldn't matter if a members holding is £10 or £100,000, if PM want to keep developing and expanding, they need to take comments on board and be held accountable on decisions or issues that are not so great. Any members who get involved might decide they want to collectively applaud some things, it may not be 100% negative haha I agree, important to take notice when they do things correctly - I'm quite happy with the return on the two buy to sell properties that have exited so far (although I may be less happy with the way some of the ones in Durham are looking!)
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carolus
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Post by carolus on Jan 3, 2018 2:41:30 GMT
I'd be interested in being involved, although my current holdings amount to a few of the Buy-to-sells and the "revalued" buy to lets. However, as mentioned previously, I do like the idea of PM and if we can get them to take action to improve their service I might be lured back in in future. Similarly to jnm21 though, I doubt losing my (historic!) investment will bother PM too much, given it's (lack of) size.
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carolus
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Post by carolus on Dec 29, 2017 11:20:33 GMT
In their defence hmo's are likely more difficult to value than a normal house, and the valuers have more than one to do and the festive period likely isn't helping matters, though it is dragging on a bit isn't it?! I agree the festive period will slow them down, but that only started a week ago, two at the most, so that means they have had two months, more than long enough to revalue a HMO or 10. My suspicion (which I have put to PM, but about which I have received no response) is that "revaluation" is being used in a fairly generous sense and potentially includes refurbishments etc to prepare the properties for sale. The idea that a straight revaluation is taking several months is not something I can believe. These two are the last buy to let properties that I hold now.
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carolus
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Property Moose
SPV 84
Dec 14, 2017 19:48:46 GMT
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Post by carolus on Dec 14, 2017 19:48:46 GMT
I find this encouraging as I'm still heavily weighted towards the BTL's.. 2 Swallows don't make a summer tho! Agreed, and I'm still concerned about the other buy to sells I'm in, one of which hasn't gone anywhere since it started and the other which seems to have been in the process of something happening for months.
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carolus
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Property Moose
SPV 84
Dec 14, 2017 18:56:49 GMT
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Post by carolus on Dec 14, 2017 18:56:49 GMT
Good news! Email they've sent out confirms the error and that an additional payment will be made. The key section is:
"The additional payment of £2,520 will be shared amongst shareholders in relation to shares held. This will take your annual return up to 11.31%, which exceeds our original estimation of 10.15%."
The fact that both the Buy-to-sells that have been sold have exited with decent returns is a definite positive, and I think were a new such opportunity to come along I would look seriously at it, despite having now sold my buy to let portfolio.
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carolus
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Property Moose
SPV 84
Dec 8, 2017 15:15:17 GMT
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Post by carolus on Dec 8, 2017 15:15:17 GMT
what process it was that caught it. Your query perhaps?!! That was rather my concern! I'd like to think they noticed it whilst producing a nice final summary of the SPV for us, but I fear not.
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carolus
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Property Moose
SPV 84
Dec 7, 2017 17:35:56 GMT
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Post by carolus on Dec 7, 2017 17:35:56 GMT
I've just had a response to a query of mine from when this paid out. I'd asked which aspect of their original budget had been incorrect leading to the reduced return on increased sale price. PM confirm that there was a fee charged during the sale that was erroneously passed on to the SPV, and that they will be reimbursing this amount to lenders as soon as possible.
It will be interesting to see how this changes the overall return - if it takes it up to more respectable levels (and above the predicted return) then I might be tempted to continue dipping my toe into buy to sell opportunities that come up in future, despite withdrawing from the BTLs.
This does of course raise the question of how this got past PM in the first place and what process it was that caught it.
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carolus
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Post by carolus on Nov 30, 2017 0:12:40 GMT
I would agree that the info provided to vote on is usually lacking,to the point where the vote feels like a formality rather than informed democratic decision. But I will say that as someone who's spread out reasonably well over pm's properties, that problem tenants are a minority rather than par for the course. I was originally sceptical of the one month free but it appears to have got some longish term empty properties tenanted, so I'm not complaining. Agreed on both points. With the votes on tenants, I'm not sure what further information could realistically be provided to make votes meaningful. I'm also struggling to think of a situation in which a vote might conceivably not pass other than when the potential tenant is so completely unsuitable that I'd like to think PM would not be considering them. It does seem to me that this is rather more for the benefit of people who want to feel like they're making decisions and are involved with the property than for much tangible benefit. As for the month of free rent, I agree it seems to be working out despite my initial scepticism. However, I remain unhappy about the fact that it seemingly wasn't communicated to us in advance. I think letting us know in advance would have given an actual possibilty of useful engagement and potentially reassurance for us. We could even have had a vote!
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carolus
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Post by carolus on Nov 29, 2017 14:04:12 GMT
Surely this is wrong as it is also based on supply and demand as with Ratesetter. If borrower demand is greater than lender supply on GS then rates would increase. I don't use GS but it doesn't sound like a broken model but merely a lack of borrowers? No. That's not how the Growth Street model works. It's not based on supply and demand in the way you suggest. You have two options, lend at the priority rate or the market rate. The market rate is the rolling average of the last thirty (I think) days lending rates. The priority rate is 0.1% below the market rate. Since you can only lend at or below the market rate, that means that the 30 day rolling average will always be equal to or less than the current market rate. Therefore if even one person is lending at priority, over time the rate would decrease. As it is, there is so much oversupply that it is impossible to lend at the market rate - no money has been matched since June. This means that the 30 day rolling average drops even faster, and so lender rates inexorably decline. There is no mechanic here for rates to increase. jackpease: I'm not making a claim about whether lenders are pulling out of growth street, merely about what would happen in a model in which rates fluctuate with demand. If there is too much lender demand, rates fall until they are no longer as attractive, at which point some lenders cease lending and the rate would stabilise. My point is that that isn't what appears to have happened here.
As to your point about the existence of a mechanic that prevents rates from rising, see above. It's been discussed in multiple threads on this forum as well.
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carolus
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Post by carolus on Nov 29, 2017 12:21:43 GMT
>downward only ratchet mechanism I hadn't twigged that it is a downward only model - only that any p2p platform that bursts onto the scene with a good rate offer is going to be swamped leaving only a choice of rationing (loosely the market rate) or rate cuts (loosely the priority rate). I think the 'lowest common denominator' is rates you see on Ratesetter/Assetz 30 day etc etc - and Growth Street is pretty well at that level and not about to rise anytime soon. Indeed has *any* p2p platform raised rates? I think you have to go to a new platform for raised rates - as loads of us did by joining GS so pushing the rates down. Jack P There is a fundamental difference here between models whereby the rates are free to move depending on demand (ratesetter), fixed at one value (AC) and driven downwards at an ever faster rate, with no possibility of a rise. The fact that demand is so much higher than supply on GS may well mean that rates would continue to go down, but in this scenario you would expect the speed with which the rates fall to be decreasing as more lenders pull out. That isn't happening here - the rates are falling faster and faster as documented on another thread. This appears to be down to a fundamental problem with the way the current rate is calculated. Again, I'm not saying that GS should necessarily intervene to artificially prop up interest rates, but it seems bizarre that you have this model that means rates are dropping every two weeks or so on average and that there is mechanically no way rates could ever rise. Finally, I'd just point out that the comparison to the Ratesetter rolling market seems very apt - they're fairly comparable products. Had this model been applied to Ratesetter then since June 2016 we'd be looking at rates of below ~2.1%. This isn't what's happened, and the rolling rate is currently above 4%. That's a pretty clear example of rates increasing in this part of the P2P market.
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carolus
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Post by carolus on Nov 28, 2017 18:00:21 GMT
>something to allow rates to increase What - in a free market - can a platform do to increase rates (beyond chasing poor quality loans)? Is it not just a fact of life that any platform offering good rates will get swamped and unworkable? I'm not sure there's a magic button to press! Jack P Apologies if I'm missing something in your comment, but the issue on Growth Street isn't just that rates have decreased due to lender oversupply, it's that the mechanics of the investment product on Growth Street mean that once the interest has reduced (for whatever reason), there is no way for it to increase again. On most platforms rates might decrease because of an increased investor demand, but should demand subside the interest rates might subsequently increase. This is presumably the "free market" model you mention, but that isn't what we have here. Because of the "ratchet" like system on Growth Street, once rates go down, they're locked to the new level and below. I'm not saying that Growth street should artificially inflate interest rates, but they should have a mechanism that allows the possibility for rates to increase, rather than the current system that forces rates down at an ever increasing rate.
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carolus
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Post by carolus on Nov 28, 2017 11:56:07 GMT
I asked on LC whether they were intending to do something to allow rates to increase and got the response:
"We will be implementing a significant change to the lender product in December to combat the declining rates."
and told that they'll be making further announcements in the next couple of weeks.
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carolus
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Property Moose
SPV 84
Nov 25, 2017 12:08:51 GMT
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Post by carolus on Nov 25, 2017 12:08:51 GMT
Yes, @jnm21, that's more or less my assumption. I've been on LC to try and find out where the difference has come from, but got the standard "investment team will be in touch", which I presume won't be until some time next week. I expect that you're right though and it's that the renovation costs exceeded the amount raised and so they've generously taken it out of our profits.
I also notice that the line about the purchaser paying more than the bank valued it at suggests that the true value was less than PM's estimated price.
Finally I'd note that PM's incentives for this sort of deal don't actually seem to be aligned with ours - the majority of their take seems to come from the "PM fee" on purchasing the property, rather than the profit share at the end. Unless I've significantly misunderstood, then for them the optimal strategy is really to buy the most expensive property they can crowdfund and then sell it for whatever price they can (do they take any of the hit if the property were to sell for a loss?).
EDIT: Have they really still not fixed the "furniture" field on the website as they promised >6 months ago?
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