bababill
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Post by bababill on Oct 28, 2015 1:15:24 GMT
Now that the structure of SS has been sorted to more of a proper p2p I have decided to give it a go.
I have invested £500 with a view to invest in the five digits.
Following questions:
1) Why would borrowers pay 18%.. I cant fathom how any borrow can make that interest rate work even if it is only for 6-12 months….
2) The given security value of the property seems to be either misleading or totally wrong depending on one’s viewpoint.
I take the case of P PBL 33 S**** Place Hemel Hempstead
Security Value of 14,000,000 is indicated.
However on the valuation document it states
a) Market value (special assumption) Outline planning is granted—£9,800,000
Or
b) Market value (special assumption) Full planning is granted £14,000,000
So naturally I refer to the decision notice to read further and learn (PLAN NO. 4/*****/14/MOA) that only outline planning has been given.
Furthermore the bridging loan particulars document states
''The applicant has obtained planning permission (PLAN NO. 4/*****/14/MOA) …….. Total security value of site with planning permission i.e. today - £14,000, 000 (Open Market) ‘’
So with the combination of a borrower who is willing to pay 18% and fabricated security values I am having doubts.
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ablender
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Post by ablender on Oct 28, 2015 6:18:40 GMT
I do not understand your position of "Fabricated Security Value". SS is giving all the information and I see them as being very transparent. They made up a decision to follow the valuation of £14m resulting in a LTV of 35.7%. You have all the information in front of you and you can do your own calculations. Then decide if you want to invest in that particular loan or not like other platforms that allow you to do this. They are offering a loan at 12% interest against a security as opposed to other platforms which can go as low as (at least) 6% unsecured.
My position: Even if I consider a security value of £9.8m, with a loan of £5m it will still give me an LTV of 51%. I am happy with that. Am I missing something?
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bababill
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Post by bababill on Oct 28, 2015 6:47:34 GMT
You are correct they made up the decision to follow the valuation of £14m which is why I used term fabricated.
The property does not have full planning therefore they can not use the headline rate of 36% LTV. If they can use this value then why not use the GDV value of 70,000,0000 making a LTV of 7.1% which is even more appealing. This is why I am confused how it appears they arbitrarily pick which figure to use.
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Post by highlandtiger on Oct 28, 2015 9:53:56 GMT
1) Why would borrowers pay 18%.. I cant fathom how any borrow can make that interest rate work even if it is only for 6-12 months…. I think you'll find that a bridging loan of 1.5% per month is well within the industry range for these types of loans. It is certainly not excessive. www.money.co.uk/bridging-loans.htm
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mikes1531
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Post by mikes1531 on Oct 28, 2015 17:57:38 GMT
My position: Even if I consider a security value of £9.8m, with a loan of £5m it will still give me an LTV of 51%. I am happy with that. Am I missing something? If it turns out that full planning permission is not given, how realistic would the £9.8M valuation be?
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Post by Ton ⓉⓞⓃ on Oct 28, 2015 18:20:19 GMT
Am I right in thinking that this is the exit position that the loan is heading towards. Anyone who took on this loan has to take this view and valuation. Presumably there were other financiers and they couldn't or didn't take this view and so passed over. In taking on the loan they have to take this view or why take on the loan? The same goes for the Lenders if you can't agree don't take on the loan.
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ablender
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Post by ablender on Oct 28, 2015 18:38:58 GMT
My position: Even if I consider a security value of £9.8m, with a loan of £5m it will still give me an LTV of 51%. I am happy with that. Am I missing something? If it turns out that full planning permission is not given, how realistic would the £9.8M valuation be? The outline permission which results in a value of £9.8m has already been granted.
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SteveT
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Post by SteveT on Oct 28, 2015 18:45:00 GMT
And once Outline Consent has been granted, Full Consent only requires that the Developer addresses all of the Reserved Matters (things still to be worked up, like detailed design, materials, services, etc) to the satisfaction of the Planning Authority. Having secured Outline Consent, the only reason for having problems securing Full Consent is if the Developer's architects are not taking account of the Planners' issues and policies. In which case, get new architects.
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bababill
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Post by bababill on Oct 29, 2015 0:04:43 GMT
Am I right in thinking that this is the exit position that the loan is heading towards. Anyone who took on this loan has to take this view and valuation. Presumably there were other financiers and they couldn't or didn't take this view and so passed over. In taking on the loan they have to take this view or why take on the loan? The same goes for the Lenders if you can't agree don't take on the loan. Well it seems 18% for a bridging loan is par for the course.. My gripe is SS forces me to read all the small print and cross check all the 'facts' as they are presented..After reading all of the documents it is only then I can decide not to take on the loan. I can not rely on the summary pages... SS is very popular and growing fast so I believe I am in the minority.
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bigfoot12
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Post by bigfoot12 on Oct 29, 2015 8:26:19 GMT
My gripe is SS forces me to read all the small print and cross check all the 'facts' as they are presented..After reading all of the documents it is only then I can decide not to take on the loan. I can not rely on the summary pages... That seems to be the way things are going, invest little time and take little risk with Ratesetter, Assetz Capital Funds (GEIA, GBBA), Funding Circle auto invest and earn about 6%-7%, or put some time and effort in, take some risk and earn 10%-12% (before losses) with Assetz Capital Manual, Thin Cats, Saving Stream. How you are taxed will matter, but how valuable is your time compared to the size of your investment, and do you think that you can beat the average investor? Of course for some people this is more of a hobby; it is better than watching TV!
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adrianc
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Post by adrianc on Oct 29, 2015 8:44:13 GMT
My gripe is SS forces me to read all the small print and cross check all the 'facts' as they are presented..After reading all of the documents it is only then I can decide not to take on the loan. I can not rely on the summary pages... The other way of looking at it, of course, is that SS give you the option to go by the summary, or go into more depth via the docs provided. You can then, if you wish, due a chunk more behind-the-scenes due diligence building on the back of the information presented. Your call. If they provided less info, then you'd have to rely on the summary, since that's all you'd have. Over on the Firmly Critical board, there are serious gripes because the option for due diligence has been eroded due to recent platform changes. Wouldn't life be boring if we were all the same?
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Post by lynnanthony on Oct 29, 2015 11:04:23 GMT
Am I alone in wondering if the thread title verges on inflammatory or even libelous?
And "is site legit?" seems to me to indicate an OP who has rushed to post without reading any previous threads about a site that plenty of investors are apparently comfortable with?
DYOR bababill. Do Your Own Research. You have strayed into an area where ideally you need to be just a little bit "sophisticated" financially. Your surprise at typical bridging loan rates says a lot.
"My gripe is SS forces me to read all the small print". Oh dearie dearie me!
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jonno
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nil satis nisi optimum
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Post by jonno on Oct 29, 2015 11:23:16 GMT
bababill: With the greatest respect, and perhaps for your own good, I'd forget about the "five digits" and stick to your £500. Otherwise,given the tenor of your post, I think you may have some rather sleepless nights.
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sqh
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Before P2P, savers put a guinea in a piggy bank, now they smash the banks to become guinea pigs.
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Post by sqh on Oct 29, 2015 19:51:42 GMT
bababillThe loan particulars for PBL033 mention that the loan will be in two tranches. The full amount was not lent to the borrower until additional PP was granted. Therefore the LTV was always relatively low. From June 1st weekly update We completed on PBL 33 last week. We know have full security in place. The section 106 agreements will be signed this week. Following this important phase of the planning process we will be making a further £2.5m available in this loan as described in the original particulars.
From June 8th weekly update PBL 33 – The local council has this week, signed the Section 106 agreement. We have therefore agreed to release another £2.5m against the property as mentioned in the loan parts originally.
Good luck with your ambition to be the first centurion with no likes 
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Oct 29, 2015 20:17:20 GMT
bababill Further the links provided by sqh, it was reiterated in simpler form in the 20th July update herePBL 33 – Planning permission has been granted.Some idiot with far too much time maintains a full archive of this year's updates & comments on all current loans here (SS seems to have given up) p2pindependentforum.com/post/47560/threadFor clarity PBL33 entry has been amended to include the specific references provided by sqh
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