How long will it take to get out of FS

It's good to hear everyone's thoughts on this. My FS strategy isn't actually as bad as it might have sounded - I only buy parts in non-renewed loans with a rate of 13% or lower. And I never renew. Since adopting this strategy I've only had one loan go into default (Westbury riding school). Before that and fortunately at a time when I had only a tiny bit of money in FS, three of my loans went bad - Wimbledon, Knaresborough and Astbury. Luckily my total funds in these four defaulted loans only adds to £1000, which is somewhat less than I've earned in interest, so I've made modest gains overall, even if all capital has to be written off. But it won't be that bad, I'm sure

As for DD, I'm not convinced by my ability to do DD that goes beyond simply saying that I won't invest in certain types of loan. But then again, I've seen every kind of loan go bad - land, commercial, residential, development - and I've seen every kind of loan repay. I guess moving forward I should try a bit harder with DD, rather than relying on gut instinct, luck and the overall feeling on the forum about each loan.

Someone here said that loans seem to be getting more risky. I suspect there's a strong temptation for some platforms to add new loans just to seem like they are still alive and kicking, even if the loans aren't good. But for platforms that don't need to prove that they are still alive (and FS certainly doesn't), the loan quality ought to improve over time as the people running the platform get more experienced. There's definitely been a strong element of incompetence on a lot of P2P platforms, and it's galling that the learning curve and mistakes are all funded with our hard-earned money. But hopefully some lessons have been learned, and punishments duly handed out - in the form of people withdrawing from platforms, refusing to participate in dodgy looking loans, and posting negative comments on forums and elsewhere. Platforms must be realising that they can't get away with blue murder forever.

Final point - it seems to me that the horrible and long-drawnout losses that happen from time to time in P2P do scare off new investors, and in a way that benefits all those who stick with it, because it means that platforms have to keep us interested by offering nice high rates. P2P still gets regularly slammed in the mainstream financial media, and is seen as a high-risk thing that only crazy people would put much money into. I'm not unhappy for that perception to remain. I remember when Lendy was going through a slightly "we can do no wrong" phase, and started offering rates like 7%. If investors had carried on flooding them with new money, this would have become the norm, but obviously loads of people pulled back, and Lendy's recent offerings have been back on the old rates, and they've even retrospectively raised rates on some lower rate loans. People don't want to take on significant risk for rates of only 7%. FS haven't even bothered trying it on with rates lower than 10%.

So I think there's a silver lining to the black cloud of occasional losses, although obviously I feel very sorry for anyone who's had losses that wiped out all their gains, or worse.

some really great strategy advice above, I would also recommend not lending to FS on anything larger than a car, so about 20 feet is my objective longest dimension.  It seems to be working but what I would do if they offered a wind turbine?

Good point on renewals and the time a developement might take mrclondon. Perhaps I might rephrase my caveat as be very careful about renewing any FS loan that is increasing the ammount to pay the interest, and is not making any progress. However given the example of W********n, this is easier said then done.

"other platforms are still on the learning curve that extensive monitoring is a neccessity not a luxury. There is some evidence that FS have learnt from Whitehaven..."

Absolutely no excuse, NO excuse at all. The Platforms had/have a basic Duty of Care and even an imbecile knows you never trust what a builder tells you without thoroughly double checking everything you are told.  (Apologies to the honest builders out there. Both of you.    )

The undeniable truth is that many Platforms are louche because, as we all know, it wasn't/isn't their money. Any fool knows there would be hugely different outcomes (in Lenders' favour) regarding many Loans currently in difficulty if it was the Platform's own funds at risk. 

Learning indeed, they shouldn't be in the P2P Property Lending business if they're "learning".  Especially at Investor's expense.

The problem is that platforms make their money by arranging loans.  The more loans they can supply to investors, the better their bottom line.  It's only when they get to the point that the losses on their loans become so significant that they have trouble funding new offerings that they'll start being more selective and doing more DD and monitoring of their borrowers and loans. 

ISTM that Lendy have reached that point, as their flow of new loans has dropped to a trickle and their main concern these days seems to be finding funding to keep the existing developments they've been funding from stalling. 

ISTM that FS don't seem to have reached that point yet, though some renewals do seem to have taken an awful long time to fund.  Part of the reason for FS's continued support from investors is, IMHO, because they've managed to avoid having some of their non-performing loans turn into losses by putting off the day of reckoning.  When that day finally arrives -- if they're unsuccessful at postponing it forever -- their investor support could take a beating.

I suspect that what will trip platforms up in the end will be their failure to disclose material facts about borrowers and/or the security when promoting loans to invest in.  Or possibly their failure to monitor loans so as to prevent losses being greater than they would have been with closer control.

The only question I have is when that will come -- before or after a platform's creators have 'taken the money and run' by passing the platform on to someone else.

IMO - and it's only a gut feeling it will be a 'take the money and run' job and try to get someone else to take the fall. The alternative is just walk away and let the cold nosed receivers sort it out - then the XIRR's really will take a hit.

Possibly at least one this year as those defaults sure are piling up quicker than they can be resolved.