LandlordInvest Blog

filip, given the comment in this article:

"We do for the first time in our history, since we began trading in 2017, believe it’s possible that lenders may suffer capital losses. However, we are currently unable to quantify what they may be."

Have lenders in those loans where losses are possible been notified? And has trading in those loans been suspended? 

Hi Ace,

A very good question indeed and I am of course well-aware of our regulatory duties (having been in this industry longer than most - the less intelligently run platforms have had a habit of failing sadly).

In any event, the blog post was written by our CTO Joe, showing the depth of our team’s financial knowledge (in addition to Joe’s outstanding tech skills). 

But to answer your question, we do not now know which loan(s) may suffer capital loss(es) or are able to quantify any such losses and as further set out in the blog post, so therefore, we’re unable to communicate the same to lenders in specific loan(s) as we simply don’t know yet.

I can confirm that all those loan(s), where we reasonably believe that loss(es) could occur, are excluded from the secondary market.

Do let me know if you have any other questions.

Filip

That’s a very good question, I am sure that it puzzles many.

The simple answer is: our revenues have exceeded our expenses during the last four years and therefore we even produce a small profit each year (and not only manage to exist).

How is it done? Cost control is at the heart of everything we do; we have few overheads and keep things lean, having developed own systems and process to manage our affairs as efficient as possible. We have a small team that are each specialists in what they do, and are able to do so efficiently with little internal red-tape or bureaucracy that may prevent efficient execution of processes and tasks in other companies.

Quoting Warren Buffett: ”Our experience has been that the manager of an already high-cost operation frequently is uncommonly resourceful in finding new ways to add to overhead, while the manager of a tightly-run operation usually continues to find additional methods to curtail costs, even when his costs are already well below those of his Competitors.”

From a revenue point of view, we only accept profitable business. That is, we do not bid on business which does not produce any profit, as many others do. Although such practices would grow volumes, they do not produce any profit and only require resources to originate and maintain. It is quite typical in transaction driven businesses, that several industry participants originate non-profitable businesses due to pressure from various stakeholders, including from institutional or retail investors to deploy funds quickly, regardless of if the particular transaction is profitable or not (institutional funds often carries penalties when funds are not deployed).

It is indeed difficult to reach profitability in the lending sector (not just limited to P2P) and only a few are able to do so. It does generally however, serve as a good indicator of management competence, if the business that is able to reach consistent profitability (as evidently few are able to do).

I still fondly recall a blogger that for long predicted our demise, based on the size of our loan book, whilst trumpeting a big well-known and now failed platform. Perhaps that blogger had a good lesson in capitalism by now.

Do let me know if you have any further question on the above or any specific questions about us. 

Filip

Looks good on paper, but only if you can keep your £20k fully invested.

Come the new financial year when I will be reviewing and making adjustments to my investments that may be a big possibility.
My £20K invested in LLI since August 2019 is only worth just over £25K and at present only 75% invested.

With the increase in interest rates in the last couple of years I am finding that P2P property loans becoming less attractive either because they are only a couple of %points above a cash ISA and not worth the risk for the little extra or P2P property interest rates have increased making them unviable to borrowers and therefore an increased risk especially for commercial property. Since I believe we are heading for a crash I am planning on moving into cash and gold. 

Hi gramsky



I've had a further look into your ISA with us and it would appear that you would be able to liquidate it very quickly, shall you wish to move your ISA funds elsewhere.



This is of course a luxury that many forum users don't have, if they have lent through some of the more popular platforms with either no secondary market or as many loans have been non-performing for years (especially multimillion development loans, that are notoriously illiquid and I have personally warned about many times).



You should of course do what you think is best with your ISA funds and what suits your risk appetite and return requirements and seek independent advice shall you believe that it is required or get in touch with us if you have any questions or concerns.



Best,

Filip