blender
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Post by blender on Jul 18, 2015 11:15:00 GMT
Flippers come in various forms. Note that 14192 is an A+ loan at 10% with 1% cashback. If you hold A+ property loans at 8% bought with 2% cash back, then it makes sense to sell those at up to 0.8% discount and without loss and to buy the new loan at 10%. Personally I am doing some of that with loans which are closest to term. You could call that flipping, or just slow churning to avoid risk and maximise return. But I think that the cause of the high discounts at present is 14192 and similar opportunities.
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Post by Deleted on Jul 18, 2015 18:08:30 GMT
I understand the two previous answers to my question.
Flipping to grab a quick profit I can understand. Flipping to avoid risk I cannot.
Nobody really knows the risk of anything that we are lending to other than the headline default rates for each risk band.
You can't tell where in a loan's lifecycle there will be a default; beginning, middle or end.
So buying and flipping opens you up to as much risk as a buying and holding. Many more loans are passing through the account of a flipper than for a buy and hold strategist.
Take the imaginary case of a flipper who buys and holds at some point every loan that goes through FC. They will get every default that will occur.
For the average flipper that is not going to be the case but they are going to get some defaults and I would suspect as many as a fully diversified buy and hold strategist.
My risk metric is having a profit that when divided by my £20 bid gives me enough to cover the average number of defaults per band for my portfolio. I only started in March but my £10K is now worth £10,160 so I have 8 * £20 in profit. I have about 550 loans and none are over £20. So I can currently afford for 8 / 550 ~ 1.5% of them to go belly up without a single repayment for me to still be in the black. As I steer clear of anything C and under I believe I am doing fine. I look at a loan decide if it's not ridiculous and is in a sector that I understand and give it my £20. These days though there are plenty of flipped bargains in Loan Parts that I don't bother with bidding for the time being.
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Post by goldservice on Jul 18, 2015 18:29:59 GMT
The idea is that loans of risk bands A+, A, B and C (not C- [now D] or E 'cos there is not enough data as they are more recent bands) are more likely to go bad after 6 months than in the first 6 months. So it's a good idea to sell loans after say, 6 repayments. This is 'slow churn'. It looks like flipping but the motive is different: to reduce risk rather than make a profit. There was a thread on this which I'll try to find. EDIT This thread may help: p2pindependentforum.com/thread/1550/sell-after-repayments-strategy
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Post by GSV3MIaC on Jul 18, 2015 19:13:58 GMT
You can't tell where in a loan's lifecycle there will be a default; beginning, middle or end. For any individual loan you can't tell. For a statistically significant sample of them you can (and several folks did) .. just download the loan book at look at default rates vs age of loan. With the exception of a few ..hmm 'dubious is perhaps safe .. loans, most of them are =fairly safe= for 6 or 7 months. Month 8 is like falling off a cliff, and there are some more hiccups downstream from there. The water is muddied by ever changing risk bands, loan durations (now we have 6 month loans .. we didn't originally) and security (property loans are very probably different). For 'vanilla' SME loan of 3-5 years, the analysis still holds last time I looked.
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blender
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Post by blender on Jul 18, 2015 21:43:29 GMT
I understand the two previous answers to my question. Flipping to grab a quick profit I can understand. Flipping to avoid risk I cannot. Nobody really knows the risk of anything that we are lending to other than the headline default rates for each risk band. You can't tell where in a loan's lifecycle there will be a default; beginning, middle or end. So buying and flipping opens you up to as much risk as a buying and holding. Many more loans are passing through the account of a flipper than for a buy and hold strategist. ... Sorry, I disagree. Your earlier post was about property loans. Because FC takes the full interest up front, retains it on behalf of the borrower, and pays it back in monthly instalments, then there is no risk of a missed payment until the last in the term. There is a risk of being stuck with the loan if the project runs into delays, but generally fixed-interest property-development loans are safe, I would say, up to half way through the term. If you are a diversity criminal and prefer to manage a few loans rather than take the statistical average losses through diversity, then an assessment of the time for which a loan is safe is most important. There are many ways of playing the FC game.
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min
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Post by min on Jul 19, 2015 7:17:09 GMT
I understand the two previous answers to my question. You can't tell where in a loan's lifecycle there will be a default; beginning, middle or end. So buying and flipping opens you up to as much risk as a buying and holding. Many more loans are passing through the account of a flipper than for a buy and hold strategist. Take the imaginary case of a flipper who buys and holds at some point every loan that goes through FC. They will get every default that will occur. For the average flipper that is not going to be the case but they are going to get some defaults and I would suspect as many as a fully diversified buy and hold strategist. My risk metric is having a profit that when divided by my £20 bid gives me enough to cover the average number of defaults per band for my portfolio. I only started in March but my £10K is now worth £10,160 so I have 8 * £20 in profit. I have about 550 loans and none are over £20. So I can currently afford for 8 / 550 ~ 1.5% of them to go belly up without a single repayment for me to still be in the black. As I steer clear of anything C and under I believe I am doing fine. I look at a loan decide if it's not ridiculous and is in a sector that I understand and give it my £20. These days though there are plenty of flipped bargains in Loan Parts that I don't bother with bidding for the time being. The general consensus seems to be that except for a few infamous loans (Crappy Scrappy, Breath of Foul Air, S..t House, Runaway Off Licence) most will make repayments ok up to 6 months. Therefore some flippers try to keep churning their loan parts so all are less than 6 months old. It takes a lot of time unless you've got a bot to do most of the work for you.
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Post by goldservice on Jul 19, 2015 8:54:49 GMT
Min said: "Therefore some flippers try to keep churning their loan parts so all are less than 6 months old." I've been thinking of flipping and churning as different things. Flipping may be immediately after purchase, churning won't be; flipping is for profit on the purchase/sale while churning is for getting interest for some months and then selling to avoid the higher risk of default.
Churning may take time but this can be reduced - I don't have a bot but a few keyboard short cuts can cut significantly the time it takes to list parts.
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arbster
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Post by arbster on Jul 19, 2015 10:11:05 GMT
Churning may take time but this can be reduced - I don't have a bot but a few keyboard short cuts can cut significantly the time it takes to list parts. Can you share? Also, is there a good source of downloadable data about loans that you hold, including their age and repayment dates? I'm thinking of something I can easily download and import/paste into an Excel spreadsheet?
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pom
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Post by pom on Jul 19, 2015 10:19:12 GMT
Also, is there a good source of downloadable data about loans that you hold, including their age and repayment dates? I'm thinking of something I can easily download and import/paste into an Excel spreadsheet? I've also been wondering how people are working out how old their loans are, as the downloadable spreadsheets appear to be intended to make it harder!
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blender
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Post by blender on Jul 19, 2015 10:26:11 GMT
Min said: "Therefore some flippers try to keep churning their loan parts so all are less than 6 months old." I've been thinking of flipping and churning as different things. Flipping may be immediately after purchase, churning won't be; flipping is for profit on the purchase/sale while churning is for getting interest for some months and then selling to avoid the higher risk of default. Churning may take time but this can be reduced - I don't have a bot but a few keyboard short cuts can cut significantly the time it takes to list parts. There is no sharp division between flipping and churning, but a continuous spectrum of strategies between churning after six months or so to avoid losses, and buying loans to flip preferably before the first payment for profit, avoiding risk, fees, and taxable income. If you buy property loans with cash back and immediately put them up for sale at par - that is attempted flipping, if you them sell them at a discount after a few months, that is churning. So I have to admit to having joined Flipping Churners.
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min
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Post by min on Jul 19, 2015 10:50:25 GMT
Also, is there a good source of downloadable data about loans that you hold, including their age and repayment dates? I'm thinking of something I can easily download and import/paste into an Excel spreadsheet? I've also been wondering how people are working out how old their loans are, as the downloadable spreadsheets appear to be intended to make it harder! Not perfect as it doesn't tell you the term of the loan but the 'export current view ' from my loan parts works for me. The loan number gives a rough idea of age. Or change current view to loan parts and sort by id.
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Post by goldservice on Jul 19, 2015 10:54:19 GMT
Timmy: In the Sell individually tab of the Sell page, consider setting the parts per page to a high number.
To pick out the parts to be sold, obviously sort the relevant columns.
By keyboard short cuts I simply mean the things that you can do with the keyboard instead of the pesky mouse. For example, if you have 10, 20, 50 … parts to list at par then go to the premium box for the first one (I use the mouse for this) and then choose the 0% for the first one by typing Return, then TAB, space bar to check the sell box, TAB x 2, space bar, TAB x 2 space bar etc to rapidly tick all the sell boxes.
If you want to set a non-zero premium or discount, then each time you are in the premium box, use the up/down arrows and then Return to choose your rate. Alternate this with the TAB to move to the check box etc. Using both hands you can soon list large numbers of parts in a few seconds. I can’t speed this up by using Shift to select ranges. I’m using Chrome on a Mac; in my experience, Windows has more, and more useful, short cuts such as CTRL+ Home/End to navigate lists etc.
To check whether parts I have listed have expired after 14 days, I inspect My loans parts on the Summary page. Choose to display Loans, not Loan parts (box at top right of list). It is tedious that you cannot list more than 10 per page (unless you export etc). To get round this, consider what column to sort on such that the loans you are after will be at the top or bottom of the list. Then sort on that column; sort again in order to reverse sort if your loan may be at the end. All this is not using keyboard short cuts; it’s just sorting judiciously.
Apologies if this is not what you wanted or is too bleeding obvious! Others may have much better suggestions?
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Post by goldservice on Jul 19, 2015 11:02:29 GMT
Min said: "Therefore some flippers try to keep churning their loan parts so all are less than 6 months old." I've been thinking of flipping and churning as different things. Flipping may be immediately after purchase, churning won't be; flipping is for profit on the purchase/sale while churning is for getting interest for some months and then selling to avoid the higher risk of default. Churning may take time but this can be reduced - I don't have a bot but a few keyboard short cuts can cut significantly the time it takes to list parts. There is no sharp division between flipping and churning, but a continuous spectrum of strategies between churning after six months or so to avoid losses, and buying loans to flip preferably before the first payment for profit, avoiding risk, fees, and taxable income. If you buy property loans with cash back and immediately put them up for sale at par - that is attempted flipping, if you them sell them at a discount after a few months, that is churning. So I have to admit to having joined Flipping Churners. blender - I hesitate to chop logic with you as I am still a newbie here! But here goes: you lump flipping and churning together on a spectrum (which I like) but then in your property example you describe the difference between them ...
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mikeb
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Post by mikeb on Jul 19, 2015 19:02:39 GMT
If you buy property loans with cash back and immediately put them up for sale at par - that is attempted flipping, if you them sell them at a discount after a few months, that is churning. So I have to admit to having joined Flipping Churners. You make it all sound so nasty "Attempted flipping" "Bidding with intent to flip" "Aggravated churning" "Crimes against diversity"
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blender
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Post by blender on Jul 19, 2015 21:25:35 GMT
If you buy property loans with cash back and immediately put them up for sale at par - that is attempted flipping, if you them sell them at a discount after a few months, that is churning. So I have to admit to having joined Flipping Churners. You make it all sound so nasty "Attempted flipping" "Bidding with intent to flip" "Aggravated churning" "Crimes against diversity" Please add "living off immoral earnings"
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