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Post by am on Oct 9, 2017 14:42:19 GMT
I believe that in order for DD-Central to succeed it has to be open to the entire P2PIF membership while remaining closed to general view (non forum members). Any closed group of specially selected members would be pretty much the same as this SPF that has been described and therefore somewhat hypocritical. To make DD-Central equitable (as seems to be the prime requirement) then everyone must, by default, start with access to DD-Central and if members then abuse those privileges, they must be warned and persistent offenders banned. I, like many others, cannot understand what all the fuss is about a small number of investors having their own private discussion forum with whatever rules it likes. Does the existence of this SPF detract from this forum? I think not. I totally agree, but I am just one 1 person/bot. I do like the idea of a democratic forum without mods. Why not run a poll and ask the community what they want? Moderation is at worst a necessary evil.
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am
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Post by am on Oct 9, 2017 12:49:37 GMT
HNWI is a relatively low bar (£250,000 of investable assets), and sophisticated investor even lower (IIRC, one P2P loan gets you in) and we do want to protect the naive, the vulnerable, and the desperate, so that a not utterly unreasonable position. Personally my worry would be that the effect would be to eliminate self-selection for HNWIs who aren't in the multi-millionaire category - by eliminating self-selection on platforms which don't have prohibitively high minimum investments. More generally, I fear that most P2P offerings would end up as the equivalent of minibonds, which are not generally considered suitable for unsophisticated investors, and which tend to be relatively inflexible. On first thoughts an OEIC model might be preferable, but like property funds would need to be closed to outflows on occasion. Closed ended companies don't have the latter problem, but have discount risk. But the same argument would imply that only HNWIs shouldn't be allowed to invest in individual shares and bonds. (I may not have been a HNWI when I started in the market - certainly not by current criteria, but the line may have been moved upwards in the intervening period - but if I hadn't been allowed entry I would be considerably poorer now. Probably I should have entered the market 5 or 10 years earlier than I did; between being naturally conservative with money, and not wanting to enter at the top of a bull market I delayed entry longer than I should have.) [FC's latest revision strikes me as the worse of both worlds; the lenders still have concentration risk, but don't have any control over investments.] What I would advocate for is stronger risk warnings, and stronger regulation of platform marketing. Stronger regulation of platform marketing is exactly what HNWI/SSI etc is isnt it? It determines who is allowed to see a financial promotion. Currently retail platforms offering P2P 36H loans are avaliable to all but any offering any form of bond or investment product are restricted to HNWI, SSI or in some case restricted retail investment (max 10% portfolio). Im not sure P2P lending would count for SSI but a £10 investment via Crowdcube would What I meant was stronger regulation of what the platforms say, rather than who they can say it to. Some platforms boast of their lack of losses (when this is due to them not having been in business long enough for any chickens to come home to roost); another has been strongly criticised here for their downplaying of the potential cost of withdrawing money early. This is the sort of thing that I think is fair game for a regulator (even if it's the ASA rather than the FCA). I'm pretty sure that P2P does count for SSI; I also think that it makes a mockery of the concept. (From my reading elsewhere it also seems that according to the formal definition being the victim of an investment scam makes you a sophisticated investor.)
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am
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Post by am on Oct 9, 2017 12:40:01 GMT
As someone once said, “There’s no such thing as bad publicity” Unless you're Dove Or Ratner Group.
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am
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Post by am on Oct 9, 2017 12:25:18 GMT
" I've been lobbying hard for individual loan selection to be banned from retail offerings" made my heart sink. Yes I have picked a few duds over the years (usually with hindsight I realize I shouldn't have gone into the loan in the first place, not enough DD) but by lobbying for black box investments you are suggesting a sanitized P2P market that includes no 'fun'. My days with zopa and Ratesetter I would characterize as being dull spreadsheet filling exercises. Now that may suit some but not me and I presume others. HNWI is a relatively low bar (£250,000 of investable assets), and sophisticated investor even lower (IIRC, one P2P loan gets you in) and we do want to protect the naive, the vulnerable, and the desperate, so that a not utterly unreasonable position. Personally my worry would be that the effect would be to eliminate self-selection for HNWIs who aren't in the multi-millionaire category - by eliminating self-selection on platforms which don't have prohibitively high minimum investments. More generally, I fear that most P2P offerings would end up as the equivalent of minibonds, which are not generally considered suitable for unsophisticated investors, and which tend to be relatively inflexible. On first thoughts an OEIC model might be preferable, but like property funds would need to be closed to outflows on occasion. Closed ended companies don't have the latter problem, but have discount risk. But the same argument would imply that only HNWIs shouldn't be allowed to invest in individual shares and bonds. (I may not have been a HNWI when I started in the market - certainly not by current criteria, but the line may have been moved upwards in the intervening period - but if I hadn't been allowed entry I would be considerably poorer now. Probably I should have entered the market 5 or 10 years earlier than I did; between being naturally conservative with money, and not wanting to enter at the top of a bull market I delayed entry longer than I should have.) [FC's latest revision strikes me as the worse of both worlds; the lenders still have concentration risk, but don't have any control over investments.] What I would advocate for is stronger risk warnings, and stronger regulation of platform marketing.
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am
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Post by am on Oct 8, 2017 17:37:03 GMT
This is about control? You may be right there cooling_dude , but certainly not on the part of the staff of the P2PIF. Why? Because the P2PIF is a public, anonymous and free internet forum where the volunteers who staff it accrue nothing. What is there to control? What benefit comes of controlling anything? My hope is that this discussion turns into one about the evolution and maturation of these facilities such that they can continue to benefit lenders and platforms. My fear is that if we are not successful the P2PIF will close as a result. This fear is real by the way. agent69 asked above why this might be the case. Well, the P2PIF depends on volunteer staff. The set of people we naturally look at are those that are a) prolific posters and b) add value. Much the same set as is likely to be recruited by this "separate private forum" (SPF from here on out). And the SPF bans its members from becoming staff on the P2PIF (not to mention banning P2PIF staff from becoming members of the SPF). No staff no P2PIF. If this "separate private forum" is just about being able to conduct due diligence under a different regime then there are ways that could be looked at to enable this as part of the P2PIF. Similarly there are ways that the P2PIF and the SPF could co-exist, under different regimes. Is there any willingness to explore this? Because the status quo (the SPF being born of the P2PIF which remains public, established in secret, secret membership, secret charter, prohibitions on membership, no published protocol for engaging with the parent community) is not tenable. Staff being "pocket Hitlers"* aside, there would seem to be three possible areas of contention when it comes to moderation:- 1. The ban on swearing / bad language. 2. The prohibition on identifying borrowers. 3. Personal attacks. With regard to 1. I don't care for it. I swear like a trooper in real life, think we're all adults, and understand that some people may find it offensive and not engage as a result (decisions have consequences etc). Equally there are other valid opinions out there, but one thing removing it would do would lessen the burden on moderators. The prohibition on borrowers is more difficult. I understand how frustrating it can be, accept that it imposes a cost on the forum and the moderators, but I don't think there's a way round it when it comes to a publicly accessible forum. See my points above about how the P2PIF could evolve, or how the SPF could work with the P2PIF. As to the last point, does anybody think personal attacks and insults should be tolerated? * The pocket Hitler hyperbole made me laugh. As staff most of the time I consider myself to be an office cleaner, more productively I spend time as a track worker, rarely and reluctantly I have to be a judge. Oh yeah, I do it for free, don't have any armies and have no plans to invade any neighbours . RM PS. Ozboy was last online yesterday and hor1997 deleted his account after being told not to personally attack other forumites. In doing so he called into question the independence of the P2PIF. I find this richly ironic. I always thought that were the forum to close it would be as a result of succumbing to pressure from a platform, and not because it was undermined by a small coterie of its own membership . I don't have any strong objections to the moderation policy (in some ways it's too weak for my taste, in the areas of bigotry and libel), but some members of the moderation team have been unreasonably confrontational in the exercise of their duties; I can see how some people could have been irritated, and I can also see how they might inappropriately tar all moderators for the actions of a few.
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Post by am on Oct 8, 2017 11:29:11 GMT
In the increasingly litigious environment that we find ourselves in today, then private discussion without censorship or fear of reprisal is a necessity unfortunately. Was I surprised to hear there was a private forum? No, moderators did after all suggest it in THIS THREAD last year. The opening post suggested that there are a number of people doing DD in private, and that this group of people are in a position to manipulate the market should they choose too, it also states that many of these people are "long standing P2PIF members" who are known and trusted by many readers I am sure, my question would be, why should these respected members of the forum be trusted any less just because they choose to do some of their musing over loans in private? I don't think so, I actually feel that DD discussed in private creates less work for the moderators of this forum, less noise, more facts. I value this forum, but also feel restrained as to what I can, and what I dare post here, it is however a place where firm findings can be shared with all, or at least clues to aid those who choose to do their own DD. Its also a valuable interface where we can occasionally get some response from platforms, although this seems to be getting less and less, and likely to the detriment of the platforms in question. Can the two forums co-exist beside each other? I would say yes, i would even go as far as saying it has been doing for quite some time if my suspicions are correct. What I find implausible is that a group of 60+ people could be organised to manipulate the market without someone blowing the whistle.
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Post by am on Oct 7, 2017 18:02:05 GMT
In the absence of much elsewhere that's worth lending to currently, I've decided to stick £4k back into my dormant old FC account, simply for the amusement value of seeing what I'm allocated... Curious. Amongst the six £20 loan parts it's already bought within a few hours of my transfer is a brand new Property Development loan (42889 Minsterley 1, 18 months, A+, 8%, £430k, 1st charge security, 59% LTV). I thought FC had stopped launching new property loans a while back? I've also picked up another A+, an A, 2 Bs and an E (actually not too smelly) so the new Autobid system seems to be working OK currently. Is it a refinance of an earlier loan? My expectation was that FC would stop financing new projects, but would refinance current projects rather than let them fail.
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Post by am on Oct 7, 2017 0:48:51 GMT
Having glanced at their web site (they let you see deals, if not the details, before registering - I wish more P2P platforms did that) I have some immediate reactions.
1) The projected annualised rate of return is 12% upwards. As equity holders are at the end of the queue when things go wrong, this means that the projects have to be better than projects at the likes of LY and MT and COL which are paying 12% upwards on debt. If things go badly wrong debt holders can still expect a decent proportion of their capital back; equity holders can expect to lose the lot.
2) All the properties funded so far are in London. IMHO opinion that makes them riskier; at FC I had a policy of not investing in London PDLs/bridges, unless the LTV was seriously low.
3) It depends on the debt/equity split, which I presume that you can see after registering, but the proportion of funding being raised via Homegrown looks to be small, so your right to vote as a shareholder in the SPV may be meaningless. Homegrown seems to be taking larger amounts in newer loans, so they may be fitting the amounts to lender demand.
4) How are the projected returns calculated? I am assuming it's after corporation tax, but is it before or after Homegrown's fees? (And is the 5% origination fee charged to the developer or to the lender?) Is tax charged on the profits before or after Homegrown's fees? Are fees charged against capital or dividends?
5) The secondary market valuation under simplified assumptions starts at 95% of your investment and increases linearly over the course of the term to the expected total return, so at the projected annualised rates of return you're looking at a loss for the first 5 or 6 months (unless the origination fee is charged to the developer). (Not as bad as UTs twenty years ago, where you paid the first year's profits in fees.)
Summary: this is a class of projects for which there should be a place in the P2P marketplace (the nearest equivalents that I'm aware of are platforms like PropertyCrowd who are doing refurbs), but I'm not sure the risk/reward adds up. One would need to take a closer look at project details to make an informed judgement.
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Post by am on Oct 7, 2017 0:00:49 GMT
I bought one yesterday and I get repaid on December 13th. I'm trying to get a monthly income for the next few years and am taking out yearly contracts with the aim of cashing them in each month when I finally retire. But this kind of thing makes it virtually impossible to plan ahead properly. With a fixed sellout fee of 1.5% it might look attractive to go for 5 yrs,depending on the premium over 1yr, with benefit of interest and repayments being made monthly. Takes a bit more work - I log in daily to reinvest or withdraw depending on rates and need for cash. RS have now changed the sellout fee to something non-punitive. But unless I've missed something there's still the interest rate adjustment on sale which could lead to a significant capital loss if prevailing interest rates have increased since the date of the loan.
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am
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Post by am on Oct 4, 2017 18:46:37 GMT
Unlike many advertising services I believe that ProBoards has shown signs of responsibility, so I suggest reporting it.
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am
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Post by am on Sept 22, 2017 13:44:41 GMT
I've wondered about the viability of a mutual (i.e. owned by the lenders) P2P business.
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Post by am on Sept 3, 2017 20:17:37 GMT
The Credit Report in section 2. mentions that that person: "....who is the Director and 100% shareholder of the company". However, a quick look at Companies House for the company in question reveals there are two Directors of the same Surname (the other person with a different First Name was appointed as Director on 25th July 2017). Or there are two Directors (them being brothers) or just one but not the one AC believes it is...either way the Credit Report seems to be wrong in that respect....? From the dates of birth I had tentatively inferred that the other director of a couple of companies was his son. (Supporting evidence, also non-probative, is that the other director's forename was used for the name of the failed US business. But the choice of names for UK companies suggests that perhaps he has the same first name, but uses his second name.)
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Post by am on Sept 3, 2017 20:12:56 GMT
As long as the loan is secured on something and it has been valued properly that is my main concern. Worst case scenario is they default and the asset is sold and I get my money back (hopefully plus interest). Look at #330, or Anglesey, or Campbelltown, or #56/#64 at Lendy. Property valuation is an art not a science.
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am
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Post by am on Aug 28, 2017 14:02:30 GMT
As I understand, one hazard of the packaged accounts is that your money can get tied up in them for a long time as the recovery process proceeds. (I'm a little disturbed that 15% of my GBBA holding, and my largest AC holding altogether, is in a loan that I deliberately avoided on the MLIA, and is approaching the end of its term. Regardless of whether I'm covered by the provision fund I could end up with that money getting tied up. I'd be happier if the diversification algorithm on the GBBA drove a more equal diversification - rather than 15% in one loan, and 10% in half a dozen others, and 0.1% or less is a variety of more recent loans.)
If someone thinks that a particular 7% loan is a particularly good risk, they might prefer to take the capital risk on the loan in the MLIA, rather than the liquidity risk of a basket of other loans in the GBBA.
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am
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Post by am on Aug 26, 2017 16:45:47 GMT
It is conceivable that someone might talkdown a loan in the expectation of being able to get a bigger slice.
It is also conceivable that someone might make dramatic statements about being "out", and then change their mind when further information is provided.
It is also conceivable, as suggested, that the social dynamics of the forum could lead someone to express negative views of a loan - finding a flaw in a loan is one of the quickest ways to social approbation. (It is also possible to err in the other direction.)
They may be other conceivable scenarios.
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