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Jul 19, 2014 0:06:40 GMT
Post by gingergent on Jul 19, 2014 0:06:40 GMT
For a while, Assetz have been able to claim that they have had no defaults. They have also played heavily on the past experience of their employees in distressed debt and recovery. It's an easy card to play early on: the proof is in the pudding. We've now had a small number of loans where things have not gone "to plan", and I have to say that so far I'm very pleased. Communications have been excellent, and the feel-good factor is present. It might yet all go horribly wrong, and I may well change my tune: I reserve the right to resurrect this thread in 2016. For now, though, I'm extremely content with the status, and reassured by the approach. As someone who places more value on return of capital than return on capital, I'm happy to be achieving both so far. I'll happily beat up "the usual suspects" about draw-down etc, but to date I've more faith that I'll get my capital back with AC than the other platforms I've looked at and\or invested in. A bit more volume to allow diversification and I'll be content (unless rates go down the toilet!). My main concern at the moment is that I'm not cynical enough: who am I, and what have they done with the real gingergent? Am I being daft? Thoughts?
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merlin
Minor shareholder in Assetz and many other companies.
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Jul 19, 2014 9:15:58 GMT
Post by merlin on Jul 19, 2014 9:15:58 GMT
For a while, Assetz have been able to claim that they have had no defaults. They have also played heavily on the past experience of their employees in distressed debt and recovery. It's an easy card to play early on: the proof is in the pudding. We've now had a small number of loans where things have not gone "to plan", and I have to say that so far I'm very pleased. Communications have been excellent, and the feel-good factor is present. It might yet all go horribly wrong, and I may well change my tune: I reserve the right to resurrect this thread in 2016. For now, though, I'm extremely content with the status, and reassured by the approach. As someone who places more value on return of capital than return on capital, I'm happy to be achieving both so far. I'll happily beat up "the usual suspects" about draw-down etc, but to date I've more faith that I'll get my capital back with AC than the other platforms I've looked at and\or invested in. A bit more volume to allow diversification and I'll be content (unless rates go down the toilet!). My main concern at the moment is that I'm not cynical enough: who am I, and what have they done with the real gingergent? Am I being daft? Thoughts? I agree with most of your post and I don't think you are daft but absolutely right to be cautious. I know that Andrew and Co would like to grow the business substantially over the next half year and may be that growth will yield more diversification, at least I hope so. Yes, most of us are currently awaiting the outcome of two sour loans but signs are that a full recovery may well be possible but it may take some time. Hopefully this will ably demonstrate that Assetz do have the knowledge and experience to adequately guard and protect our investments.
I have investments with three other P2P businesses and none of these match-up to Assetz in terms of communication and access or true yield.
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mikes1531
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Jul 19, 2014 15:33:44 GMT
Post by mikes1531 on Jul 19, 2014 15:33:44 GMT
For a while, Assetz have been able to claim that they have had no defaults. They have also played heavily on the past experience of their employees in distressed debt and recovery. It's an easy card to play early on: the proof is in the pudding. We've now had a small number of loans where things have not gone "to plan", and I have to say that so far I'm very pleased. Communications have been excellent, and the feel-good factor is present. It might yet all go horribly wrong, and I may well change my tune: I reserve the right to resurrect this thread in 2016. For now, though, I'm extremely content with the status, and reassured by the approach. As someone who places more value on return of capital than return on capital, I'm happy to be achieving both so far. I'll happily beat up "the usual suspects" about draw-down etc, but to date I've more faith that I'll get my capital back with AC than the other platforms I've looked at and\or invested in. A bit more volume to allow diversification and I'll be content (unless rates go down the toilet!). My main concern at the moment is that I'm not cynical enough: who am I, and what have they done with the real gingergent? Am I being daft? Thoughts? I agree with most of your post and I don't think you are daft but absolutely right to be cautious. I know that Andrew and Co would like to grow the business substantially over the next half year and may be that growth will yield more diversification, at least I hope so. Yes, most of us are currently awaiting the outcome of two sour loans but signs are that a full recovery may well be possible but it may take some time. Hopefully this will ably demonstrate that Assetz do have the knowledge and experience to adequately guard and protect our investments.
I have investments with three other P2P businesses and none of these match-up to Assetz in terms of communication and access or true yield.
Overall, I'd give AC high marks so far, but they're being severely tested now so my final judgement is awaiting resolution of current problems. The true yield at AC can't be calculated accurately until the outcome of the currently non-performing loans is known and if things proceed as they seem likely to then the full outcome won't be known for more than a year. I also believe AC have more than just two problem loans. Looking at their list of loans, I see four with a highlighted message "WARNING: There has been a change in the credit position of this loan." Finally, I would ask what merlin and others think is meant by "a full recovery". Does it mean that all capital is repaid along with accrued interest? Or just that all capital is returned? IMHO, it should mean the former, but that may not be what others think. In the case of AC's worst problem loan, I get the feeling that a full recovery (by my definition) will be nigh unto impossible, especially if the recovery process does run on for more than a year.
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Vero
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Post by Vero on Jul 19, 2014 17:05:21 GMT
I have funds in 3 "problem" loans. All seem "safe as houses" to me, with the addition of 50% extra interest due to the default.
1. Property bridge, borrower died Happens. AC has 1st charge and is 1st in the queue, probate proceeding, extra 50% interest accruing.
2. Property bridge, refinancing delayed. Property bridges quickly bridge the gap until a property is ready to be refinanced (eg to reach required development stage, 6 month "rule", or just plain time) It seems this is happening; the refinance looks to be in progress, AC sighted offer letter, but legals are delaying drawdown. Bridges often get extended; it is so hard to time the refinance drawdown (especially legals), with the expiry date of a bridge. Again, extra 50% interest accruing.
3. Property bridge, developer juggling, dropped a ball Some developers like to buy/develop/flip; a potential risk is delayed completion of a sale disrupting overall cashflow calculation. It seems the developer/introducer began with a "cheque is in the post" type excuse for overdue payment, AC politely had none of it. It looks like another delayed completion had the developer counting chickens that did not hatch in time. The delayed sale has now completed, AC has received all outstanding funds and paid lenders. AC also received 50% extra interest which they said lenders should receive in a few days.
Bridges are temporary finance, a kind of expensive get out of jail free card. The in and out fees are usually high, relative to the day to day costs of a bridge. Some borrowers feel if all else fails "we will just have to extend that expensive bridge a bit", as opposed to "I'll default on my cheap mortgage and risk my portfolio", or rather than losing the deal.
In these 3 particular cases, it looks like AC's security, paperwork and processes are watertight.
I actually lent more on each when I saw them default. (only because all are well secured, and on UK property, something I understand and perceive to be safe in these instances, I'd have thought twice about anything else)
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mikes1531
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Jul 19, 2014 18:35:07 GMT
Post by mikes1531 on Jul 19, 2014 18:35:07 GMT
In these 3 particular cases, it looks like AC's security, paperwork and processes are watertight. I'm in those three as well, and I feel reasonably confident that I'll get my capital back -- eventually! I'm also in the fourth non-performing loan and that's a completely different situation. The lack of investment opportunities earlier -- especially during the April cashback offer -- led me to over-invest in a few loans, and that includes some of those which have gone past their expected maturity dates. I accept that this over-investment is my own fault, and I'll try not to make that mistake again. But it emphasises the point that the timing of the return of capital is really quite uncertain, and if AC have to enforce security and sell it I wouldn't be surprised if the recovery process took the better part of a year. I also had what has turned out to be a false sense of confidence provided by the Aftermarket, in that I thought selling loan parts would be pretty easy. For some loans -- notably the smallest ones -- it is. But as anyone who's tried -- or is trying -- to sell units of the large loans that are available on the Aftermarket now can testify, very little purchasing seems to have happened recently. This is somewhat surprising to me, considering the relative lack of fresh investment opportunities. I take that to mean that the substantial flow of money into AC back in April has been followed by a wait-and-see attitude from existing lenders and a shortage of new investors. This simply may be a 'summer holiday time' effect, but the news about some loans not being paid back on time -- even if the security is solid -- is bound to make investors old and new more cautious. The lessons I'm learning are that I shouldn't invest too much in a given loan no matter how attractive it is, and that I should be particularly careful what I invest in large loans since selling any of those units on the Aftermarket might be difficult. If AC can continue to make attractive investment opportunities available, it should become easier to achieve better diversification in the future.
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merlin
Minor shareholder in Assetz and many other companies.
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Jul 19, 2014 22:39:31 GMT
Post by merlin on Jul 19, 2014 22:39:31 GMT
In an earlier post I used the term "full recovery" and I was asked what I meant by that. Quite simple it is what I said, recovery of everything owed to me, capital and interest up to the point when I am paid. However pragmatically I realise that this may not be possible in all instances then any losses need to be offset by the higher rates of interest received. With AC I have budgeted to lose a small proportion of the interest that I am paid in order to offset any losses that I may incur. To give an example. Had FF been a 50% loss it would have cost me around 16% of my expected gross interest income for the year. By comparison my losses on FC last year cost me almost 50% of my gross interest income. So in my view investing in AC by comparison has to be a no brainer.
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mikes1531
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Jul 20, 2014 2:10:59 GMT
Post by mikes1531 on Jul 20, 2014 2:10:59 GMT
In an earlier post I used the term "full recovery" and I was asked what I meant by that. Quite simple it is what I said, recovery of everything owed to me, capital and interest up to the point when I am paid. However pragmatically I realise that this may not be possible in all instances then any losses need to be offset by the higher rates of interest received. With AC I have budgeted to lose a small proportion of the interest that I am paid in order to offset any losses that I may incur. To give an example. Had FF been a 50% loss it would have cost me around 16% of my expected gross interest income for the year. By comparison my losses on FC last year cost me almost 50% of my gross interest income. So in my view investing in AC by comparison has to be a no brainer. Thanks for your thoughts on 'full recovery'. They match with mine. I'm not sure they match with AC's though, as I don't see how the proposed FF solution could result in a full recovery once admin costs are paid and all the accrued interest is included. Perhaps AC will enlighten us at some point. merlin's comparison of his FC and AC results is encouraging for AC, but I do note that AC's loan book is rather young and losses often take a little while to show themselves. In any case, it emphasises the need to have a diversified loan book. Finally, because of the unfavourable tax treatment of P2P losses, I do hope merlin isn't a higher-rate taxpayer. With 50% FC losses and 40% tax he'd be left with just 10% of his gross interest income in his pocket.
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merlin
Minor shareholder in Assetz and many other companies.
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Jul 20, 2014 6:28:07 GMT
Vero likes this
Post by merlin on Jul 20, 2014 6:28:07 GMT
Mikes1531. Yes I am a am on higher rate tax so I have to watch the risks of P2P very closely. Fortunately my investments are already well diversified and include property, shares and direct investment in businesses. In the last two years property has been the most profitable with rentals and capital growth doing well and shares a close second. In reality P2P has been a bit of an adventure and a big learning experience with a lot of the learning coming from this forum. However now I limit my nvestments in P2P to what I can afford to loss and provided I can make more that I would with the money in a building society I will stay with it.
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Post by chris on Jul 22, 2014 9:30:53 GMT
Rather than create a new thread I thought I'd hijack this one. Cashback on Yorkshire L****** and default interest on Liver**** Br**** were paid just now and yesterday afternoon respectively.
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