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Post by valueinvestor123 on Sept 18, 2017 9:54:06 GMT
Actually the loan book is running at under 60% average and even new lending each month is well under 70% and the weighted average is actually close to 60% LTV on day of drawdown. Thank you. If I re-do the simplistic example with an expected selling price of £1,667k (LTV 60%) a 25% drop would reduce the selling price to £1,250k making the land worth £1,250k - £750k = £500k which exactly covers the amount advanced. Coincidence or not? What happens to the figures if you include the cost of recovering debt (10% of capital?) plus opportunity cost having the funds locked up? (4-5 years?)
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pikestaff
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Post by pikestaff on Sept 18, 2017 11:13:34 GMT
Thank you. If I re-do the simplistic example with an expected selling price of £1,667k (LTV 60%) a 25% drop would reduce the selling price to £1,250k making the land worth £1,250k - £750k = £500k which exactly covers the amount advanced. Coincidence or not? What happens to the figures if you include the cost of recovering debt (10% of capital?) plus opportunity cost having the funds locked up? (4-5 years?) The simple examples are about coverage, not recovery. If you want to assume additional costs, and assume no recovery other than from the main security, you are welcome to do so. I'm sure you can do the sums as well as me. 
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oldgrumpy
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Post by oldgrumpy on Sept 18, 2017 11:21:14 GMT
Development loan risk is somewhat complex as it involves regular advances through the construction and against works completed and certified usually by a monitoring surveyor. We look at day one LTV of the value of the land versus the first draw and want that to be a sensible % and in addition to that the end result value (GDV) needs to be sensible versus the loan advanced. The two key valuations are the land value before construction and the final scheme value. There are many many other issues to manage along the way and that's why we have seen so much noise on development loans in the P2P space when companies unfamiliar with developments start funding them. We have a sound and experienced team and stand by our results to date. Very reassuring, Stuart, and no doubt(?) the lower rates AC offers compared with certain "other" platforms are a truer reflection on the creditworthiness of the borrowers and developers, of whom (no doubt) you also now look into the history before offering our money. Just don't fall into the trap of calling your team " highly experienced" stuartassetzcapital
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clay
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Post by clay on Oct 23, 2017 18:09:25 GMT
I was reminded of this thread when reading up on loan #563. The headline LTV is 67.71%, and the credit report says "LTV 68%".
However, the first release of capital is for £135,182 and will be secured against a site worth £150k, giving an initial LTV of 90.12%.
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