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Post by brightspark on Aug 6, 2019 10:23:55 GMT
From all I have read and from my own experience the FS model of doing business does not work. The risks run by investors are too high for the actual returns. Some savvy investors can make money but FS needs more than those. Unless for property loans FS have a team doing good due diligence to ruthlessly weed out poorer prospects and outright scammers, reputable valuers on board, a system of monitoring and reporting accurately on progress of developments, then FS will remain just a bit player. Currently in their favour is that they do seem able to originate a steady supply of borrowers but by itself that is nowhere near enough. I will be making no further investments via FS until I am convinced that the majority of their offerings are solid prospects. Offering so-called secured loans that are hopelessly adrift is an easy way to alienate investors.
Pawnbroking is a simple business. Get the valuation of the asset about right and keep it under lock and key until redeemed. What can possibly go seriously wrong? Just read some of the threads on this forum!
It is a real pity that the previous management dug themselves into such deep holes. I just hope that this new lot can do better. Currently the jury is out and time is running out as the number of loans in difficulty continues to rise and Brexit clouds darken.
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rogerthat
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Post by rogerthat on Aug 6, 2019 11:15:19 GMT
From all I have read and from my own experience the FS model of doing business does not work. The risks run by investors are too high for the actual returns. Some savvy investors can make money but FS needs more than those. Unless for property loans FS have a team doing good due diligence to ruthlessly weed out poorer prospects and outright scammers, reputable valuers on board, a system of monitoring and reporting accurately on progress of developments, then FS will remain just a bit player. Currently in their favour is that they do seem able to originate a steady supply of borrowers but by itself that is nowhere near enough. I will be making no further investments via FS until I am convinced that the majority of their offerings are solid prospects. Offering so-called secured loans that are hopelessly adrift is an easy way to alienate investors. Pawnbroking is a simple business. Get the valuation of the asset about right and keep it under lock and key until redeemed. What can possibly go seriously wrong? Just read some of the threads on this forum! It is a real pity that the previous management dug themselves into such deep holes. I just hope that this new lot can do better. Currently the jury is out and time is running out as the number of loans in difficulty continues to rise and Brexit clouds darken. Totally agree..in fact I was just about to opine more or less what you've just posted. FS have clearly had difficulty monitoring the monitor in front of their eyes, never mind the development loans where our money has been sprayed recklessly, based on the 'feedback' from the borrower, without the slightest doubt to its credibility. Naivety beyond belief but that is what they set themselves up for and as has been stated already, unscrupulous blaggers (especially the multi loaners or their connected associates) have likely syphoned off oodles of our hard earned into black hole developments destined to fail and run off into the sunset. You cannot oversee a development sitting behind a desk. Independent oversight, like CBRE should have been retained on ALL developments and ive previously stated I would willingly have accepted a significant reduction in interest to pay for that.
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Mucho P2P
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Post by Mucho P2P on Aug 6, 2019 15:09:10 GMT
` I think the above is a very good point - clearly some investments are no-hopers e.g. the Park Homes but I agree just ditching them at a massive loss is not ideal. I am no expert in this field but I have come across failed developments where the original lender either finishes the project or retains a stake in them so if the new developer makes a killing (I think some of the buyers of FS developments will do exactly that) then the receivers/FS get a slice of the profit - granted more work and technical legal development expertise required. At the moment I think the FS business model is crazy i.e. a developer borrows short-term against a long-term investment which is based on future and often fanciful projections. When many of these developments fail there is (or was) no audit trail of the money and the developer simply walks away and I suspect laughs all the way to the bank...
The Newspork Hotel development is exactly the sort of thing I do - I think the costs were underestimated and the sales price overestimated and this one is going to run out of money so liable to be sold at a loss to FS investors. Maybe this one could be a candidate to FS to finish either directly or indirectly but that would involve them get a project manager etc and borrowing money to finish it - not sure if that would be in breach of current legislation as they are lenders. A bit of a pickle all round - sadly this one is outside my budget because if not I would definitely be interesting in buying it for a song...
I'm not moaning - I thank you. I tend to agree with your sentiments adrian77. The park homes should have been sold for more. Staff at FS should have phoned around all park sites in the UK and attempted to offload them in that manner rather than auction. From talks with the Directors at FS, they are attempting to turn around the situation they have been left by the old management, however, it is akin to turning around an oil tanker, slowly does it, and it cant be hurried.
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adrian77
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Post by adrian77 on Aug 6, 2019 15:27:19 GMT
especially if sailing in the Straits of Hormuz!
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rogerthat
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Post by rogerthat on Aug 6, 2019 15:38:53 GMT
Or off the coast of Newfoundland..ironic that the shipyard where she was built is destined to follow the same demise..lets hope the good ship SS Fundingecure doesn't follow the same course  |
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thedog
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Post by thedog on Aug 6, 2019 20:55:48 GMT
I went to the Investor Event a couple of weeks ago .....
Did the new management comment (or did you infer) as to why the new owners purchased such a tainted brand? Why start with the uphill task of tackling a plethora of litigation and reputational issues and not just ask Ablrate for a reskin in purple and start their own platform? Disregarding that, the moves fully attributable to the new owner include offering new loans in a) very little quantity b) what there is = more of ostensibly the same unappetising DFL's except with c) less interest, d) no interest pending activation and e) no bonuses. Maybe mismanagement would be a strong word, but misguided sounds about right. £40k filled of a £2.25m loan (Romford) - how is that even close to a sustainable business? Due to this and the continued inability to simply provide updates when they say they will, the new management is not exactly winning me back in spades. Ultimately even if they buck up their ideas in origination, as you say, there's a seemingly endless supply of historic issues. Yet ultimately they are now their issues whether they caused them or not - any individual one of which could handily sink their anaemic balance sheet. Trimmed my post back to not take up half a page.....
No specific discussion of why they bought the platform. Clearly they think they can turn it around and are spending time and money (management, lawyers etc) to do so. Reading between the lines therefore, and this is little more than stating the obvious, I think they felt that the cost of building up a base of investors and borrowers outweighed the expense of turning round FS. Owners clearly have links to some big investors -as you say Romford Rd has had poor take-up but is fully underwritten.
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bugs4me
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Post by bugs4me on Aug 6, 2019 21:57:09 GMT
Trimmed my post back to not take up half a page.....
No specific discussion of why they bought the platform. Clearly they think they can turn it around and are spending time and money (management, lawyers etc) to do so. Reading between the lines therefore, and this is little more than stating the obvious, I think they felt that the cost of building up a base of investors and borrowers outweighed the expense of turning round FS. Owners clearly have links to some big investors -as you say Romford Rd has had poor take-up but is fully underwritten. Thank you for posting further details although it does become more confused.com in my head although many would say that's not a difficult thing to do.
IMO, many existing investors already feel somewhat aggravated by the past and current performance of the platform. Whilst the past is the past nonetheless there appears to be little by way of results with the existing non-performing loans under the now newish management. Many of the legacy loans are seriously overdue but nonetheless they continue to crawl along, with little in the way of meaningful updates resulting in simply frustrating lenders further. Some lenders may continue to invest but I suggest many are simply looking to move on and away from FS.
What I fail to understand is why they are now offering lower interest rates, interest only when the loan is drawn down, etc if they are expecting to keep their existing lender base intact. If anything I would have thought the opposite would be the case and they are pushing them further away from the platform.
Furthermore, if they have links to some big investors, then why exert time and effort with the existing FS business. Surely it would be far easier to start afresh, with their big investors and simply bypass the traditional P2P market.
Something is simply not making sense in my head anyway.
Again, thanks for taking the time out to respond further.
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adrian77
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Post by adrian77 on Aug 7, 2019 7:20:49 GMT
Also I find the linkedIn profile for at least one of the new directors very interesting.
At the moment a few fun punts only...I am not moaning!
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