G***n L**e IG3 - loan part 1d | P2P Independent Forum

Ace
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G***n L**e IG3 - loan part 1d Apr 2, 2018 21:07:12 GMT jnm21 and kuflink like this

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Post by Ace on Apr 2, 2018 21:07:12 GMT

It seems I may be a little late to the party on this loan. I took a £100 punt without doing DD in order to get the £100 introductory bonus. However, there are a few things that concern me that I couldn't see any discussion of anywhere else:

1) Why are Kuflink intending to lend 1,224k of our (and their) money on this when their valuation report states that "the property offers security suitable to a loan of 1,000k"?

2) Why are Kuflink using the Open Market Valuation (£2,000k) to calculate their LTV figures when hovering over their 90 Day Valuation figure (800k) explains that this is the value to use in the case of a default?

3) This is the 4th tranche of this loan, but there is no update on how the development is progressing, just a vague statement that they are satisfied with the surveyor's report. Surely investors are entitled to see this report, or, at least be given a better idea of it's conclusions.

It could be that lots of value has been added since the valuation was performed and that this can justify a low LTV commensurate with the 7% return, but as things stand there is no way of telling. The valuation report makes it clear that a half competed development of this type is a extremely difficult to sell, so it would good to know why we are lending based on anything above the, more conservative, 90 Day Valuation.

Last Edit: Apr 2, 2018 21:12:29 GMT by Ace

I'm an equity investor in AxiaFunder and a minor equity investor in Brickowner, Crowdstacker, Proplend, CrowdProperty, Assetz Capital, Elfin Market, Qardus, Loanpad, Shojin & CapitalRise (and regrettably Fund Ourselves and ABLrate). All info and opinions stated are in a personal capacity. This time next year I'll be a miwionaire Rodders!

kuflink
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G***n L**e IG3 - loan part 1d Apr 3, 2018 16:10:37 GMT Ace likes this

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Post by kuflink on Apr 3, 2018 16:10:37 GMT

Ace - all very good points raised. With regards to #3, we are all up for it and are building our product roadmap to include regular loan updates from our borrowers including updated development pictures, documents etc. We have been overwhelmed with numerous changes to our platform but are chugging through our product backlog.

With regards to #1 and #2, Olivia is getting the answers for you.

Kind regards,
Hari

Olivia
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Email: d.nota@kuflink.co.uk

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G***n L**e IG3 - loan part 1d Apr 4, 2018 11:02:27 GMT pmjenkins and kuflink like this

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Post by Olivia on Apr 4, 2018 11:02:27 GMT

Hello Ace,

The total loan is £1.224m against an OMV of £2m and therefore we will not breach 61.20% LTV during the term of the loan, on the basis that they are servicing interest. We were originally providing a facility of £1m, however it was increased after we had received the valuation report.

At the time the valuation report was produced those figures applied, since the valuation, circa £800k has been expended on the development and therefore these figures no longer apply.

We were happy to lend against the market value on the basis that the clients have extensive development experience, the fact that a re-finance is progressing and finally that the remaining works to be completed are only internal.

It is stated on the case that we are lending against the OMV.

Olivia.

Apr 2, 2018 21:07:12 GMT Ace said:

It seems I may be a little late to the party on this loan. I took a £100 punt without doing DD in order to get the £100 introductory bonus. However, there are a few things that concern me that I couldn't see any discussion of anywhere else:

1) Why are Kuflink intending to lend 1,224k of our (and their) money on this when their valuation report states that "the property offers security suitable to a loan of 1,000k"?

2) Why are Kuflink using the Open Market Valuation (£2,000k) to calculate their LTV figures when hovering over their 90 Day Valuation figure (800k) explains that this is the value to use in the case of a default?

3) This is the 4th tranche of this loan, but there is no update on how the development is progressing, just a vague statement that they are satisfied with the surveyor's report. Surely investors are entitled to see this report, or, at least be given a better idea of it's conclusions.

It could be that lots of value has been added since the valuation was performed and that this can justify a low LTV commensurate with the 7% return, but as things stand there is no way of telling. The valuation report makes it clear that a half competed development of this type is a extremely difficult to sell, so it would good to know why we are lending based on anything above the, more conservative, 90 Day Valuation.

Ace
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Posts: 5,025
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G***n L**e IG3 - loan part 1d Apr 4, 2018 22:11:59 GMT Jack Barlow, jnm21, and 3 more like this

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Post by Ace on Apr 4, 2018 22:11:59 GMT

Thanks for your replies Hari and Olivia, along with Kuflink's 20% skin, your willingness to engage with investors on an open platform are the things that are currently setting your platform apart from the crowd imo.

I wasn't intending to imply that Kuflink were dishonest, or even misleading, in the quoted figures. The information was explained well in the valuation report. My problem with the quoted LTV was that there is little point quoting this figure unless the 'V' relates to the value that is likely to be achieved in the event of a default. The information provided when clicking on the 90 Day Valuation figure is "A 90 Day valuation is used as if a borrower were to default on a loan the property would have to be repossessed and sold quickly to allow the lender to recoup their funds. The open market value is often not achievable in the timescales available. ..." This strongly implies that the 90 Day valuation is the one that lenders should consider as their security.

I take Olivia's point that "these figures no longer apply" due to £800k having been spent, but the original valuation figures are the only figures that have been made available to lenders. IMO it is not reasonable to expect lenders to assume that all valuation figures have increased by the amount that has been spent, particularly since the valuer stated that half completed developments of this type are hard to sell. There are multiple examples of defaulted loans on other platforms where the value of developments did not increase by the amount spent, if at all.

Again, I really like the feel of Kuflink and wish you every success. I would really like it to develop in to my "go to" platform when looking to invest funds. I wouldn't normally have bothered to comment to this extent, but I got the feeling from this forum that Kuflink genuinely wanted to hear what investors thought and were willing to take constructive criticism on board.

I just read the above back and realize that it might not be considered as constructive... Oops. So here goes an attempt at a constructive suggestion as to how this loan might have been better handled from an investors viewpoint. Not that I'm any kind of expert. I'm a totally novice lender, but the following seems logical to me:

The first couple of tranches could have been justified with a low LTV based on the 90 Day Valuation. Further tranches could have been made conditional on sufficient value being added by previous tranches and evidenced by new valuations where this would take the 90 day LTV beyond an agreed limit. With the new valuations being made available to investors.

I see that the fifth tranche of this loan has now been released with no update to any of the figures and has substantially filled in its first day. So, perhaps this shows that I'm too fussy, or simply out of touch with what lenders expect!

As a side issue, I would be more likely to put more funds your way if there was a select invest ifisa😉.

Kind regards and good luck,
Ace

I'm an equity investor in AxiaFunder and a minor equity investor in Brickowner, Crowdstacker, Proplend, CrowdProperty, Assetz Capital, Elfin Market, Qardus, Loanpad, Shojin & CapitalRise (and regrettably Fund Ourselves and ABLrate). All info and opinions stated are in a personal capacity. This time next year I'll be a miwionaire Rodders!

Olivia
Representative of Kuflink

Email: d.nota@kuflink.co.uk

Posts: 53

Likes: 45

G***n L**e IG3 - loan part 1d Apr 5, 2018 8:50:40 GMT kuflink likes this

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Post by Olivia on Apr 5, 2018 8:50:40 GMT

Hello Ace,

Thank you for your reply. We do appreciate and evaluate all feedback from our investors so that we may enhance your experience when investing with us.

Please know that I will be sure to pass on your comments to senior management to review.

Thanks again,

Olivia

Apr 4, 2018 22:11:59 GMT Ace said:

Thanks for your replies Hari and Olivia, along with Kuflink's 20% skin, your willingness to engage with investors on an open platform are the things that are currently setting your platform apart from the crowd imo.

I wasn't intending to imply that Kuflink were dishonest, or even misleading, in the quoted figures. The information was explained well in the valuation report. My problem with the quoted LTV was that there is little point quoting this figure unless the 'V' relates to the value that is likely to be achieved in the event of a default. The information provided when clicking on the 90 Day Valuation figure is "A 90 Day valuation is used as if a borrower were to default on a loan the property would have to be repossessed and sold quickly to allow the lender to recoup their funds. The open market value is often not achievable in the timescales available. ..." This strongly implies that the 90 Day valuation is the one that lenders should consider as their security.

I take Olivia's point that "these figures no longer apply" due to £800k having been spent, but the original valuation figures are the only figures that have been made available to lenders. IMO it is not reasonable to expect lenders to assume that all valuation figures have increased by the amount that has been spent, particularly since the valuer stated that half completed developments of this type are hard to sell. There are multiple examples of defaulted loans on other platforms where the value of developments did not increase by the amount spent, if at all.

Again, I really like the feel of Kuflink and wish you every success. I would really like it to develop in to my "go to" platform when looking to invest funds. I wouldn't normally have bothered to comment to this extent, but I got the feeling from this forum that Kuflink genuinely wanted to hear what investors thought and were willing to take constructive criticism on board.

I just read the above back and realize that it might not be considered as constructive... Oops. So here goes an attempt at a constructive suggestion as to how this loan might have been better handled from an investors viewpoint. Not that I'm any kind of expert. I'm a totally novice lender, but the following seems logical to me:

The first couple of tranches could have been justified with a low LTV based on the 90 Day Valuation. Further tranches could have been made conditional on sufficient value being added by previous tranches and evidenced by new valuations where this would take the 90 day LTV beyond an agreed limit. With the new valuations being made available to investors.

I see that the fifth tranche of this loan has now been released with no update to any of the figures and has substantially filled in its first day. So, perhaps this shows that I'm too fussy, or simply out of touch with what lenders expect!

As a side issue, I would be more likely to put more funds your way if there was a select invest ifisa😉.

Kind regards and good luck,
Ace