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Post by Financial Thing on Mar 15, 2016 14:50:05 GMT
When I look at all the upcoming loans, I see more and more property as FS move further away from their original staples of gold, cars and other interesting pawn items. While I understand why they are moving in this direction (to facilitate growth as a business), as an investor, I started feeling uneasy and concerned.
We all know that eventually, a downturn in property will once again occur. Question is when it does and if FS experiences a glut of defaults, can FS sustain through such a downturn?
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huxs
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Post by huxs on Mar 15, 2016 15:09:39 GMT
I don't have any problem with FS expanding into Property as long as the non-property loans are still coming through which I think they are.
The bigger problem I see is that FS are using the business model for pawn items on property, in so much that interest is only collected at the end. To me this makes a 12% at FS worth less than 12% at SS or MT (which with compounding interest works out to more like 12.6%) and causes the illiquid SM due to tax implications you don't have on SS or MT.
For pawn I understand that I am in the loan until the borrower pays up or the item is sold as that is the nature of the beast, for property I would prefer more flexibility. Unfortunately I don't think FS want to have a different approach for property so will need to keep offering bonuses and even then may struggle to fulfil there current pipeline.
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spyrogyra
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Post by spyrogyra on Mar 16, 2016 19:59:46 GMT
It is more than obvious that they will struggle to fill property loans. Most lenders still keep high hopes of selling through the SM later on but that will be more and more difficult. Big lenders that enjoyed a few % of bonus will rig the SM by offering such discounts that the small lenders would not be willing to challenge. High tax payers will offer better discounts as well. 0.75% discount after only 20 days into the loan may suit only the two above mentioned categories. It will be interesting to see what discounts will be on offer after a few months on loans with less than 40 days left. Imo we could see 3% discounts after the loan has only 31 days left. That could equate to no-risk 6.5% annual interest with no tax for 40% tax payers for 15% loan (12%+3% bonus). The very same discounted parts might be of great interest to non-tax payers who are willing to take the risk of holding the loans through difficulties.
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ben
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Post by ben on Mar 16, 2016 20:42:28 GMT
There is currently 8 loans awaiting funding do not think seen that many wanting to be funded, some of them have offers to of bonus and one or two are paying interest from tomorrow and still not moving. Think they have got to the point of finding it difficult to fund them and the bonus would not have helped as the big hitters will be hanging around for bonus before investing and a lot of medium ones will wait till they are closer to paying interest so at moment appears to be a bit stalled
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spyrogyra
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Post by spyrogyra on Mar 16, 2016 20:45:58 GMT
It is stalled for all the above mentioned reasons that keep small investors uneasy.
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hendragon
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Post by hendragon on Mar 17, 2016 10:17:40 GMT
It also seems that it has been difficult for FS to resolve some defaulted/overdue loans quickly. (carpets and rangerovers spring to mind). Some 5% of my loan book is now overdue, or the borrower has been granted an extension. I cannot re-invest this money in the new loans. Property loans can take a long time to resolve if they are not repaid. FS have overestimated my risk appetite (and I suspect a number of others) for property loans of this type, and made using their pawn model. The lack of monthly interest and liquidity of the SM reinforces this.
If I am to invest in property with FS I need,
Monthly interest payments, improved liquidity, and better detail and communication on these type of loans.
Since my first loan in 2013 FS has performed well, with only 1 loss. They have worked hard on improving their site and providing better info. Perhaps some more innovation (portfolio loans ala MT?) is needed rather than jumping on the bridging loan bandwagon. FS have struck me as quite a shrewd operation. I suspect that they have noticed what has been happening and are working on alternatives and solutions.
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Post by Deleted on Mar 17, 2016 10:25:41 GMT
You have to laugh, When there are not enough loans around, people complain. When loans go too quickly, people complain. When there are too many loans around, people complain. When loans fill too slowly people complain. When FS don't change their system to deal with each of the above, people complain.  My advice is, if you don't like the loans on offer, and I don't like a lot of them, don't lend. |
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Post by Financial Thing on Mar 17, 2016 13:56:13 GMT
You have to laugh, When there are not enough loans around, people complain. When loans go too quickly, people complain. When there are too many loans around, people complain. When loans fill too slowly people complain. When FS don't change their system to deal with each of the above, people complain. My advice is, if you don't like the loans on offer, and I don't like a lot of them, don't lend. Are you complaining about people complaining? My post wasn't a complaint, only an observation / discussion which is what forums were designed to foster. I wondered what peoples thoughts are on FS's business model being able to survive a property downturn since they are becoming so heavily weighted in that sector. If we took your advice of "if you don't like the loans, don't lend" there wouldn't be much discussion going on in 99% of the threads on this board. I hate Marmite, it tastes awful, I wish they would make it taste like dark chocolate. Now that's a complaint. 
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brin
I am trying to stay calm.
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Post by brin on Mar 17, 2016 14:55:00 GMT
there seems to be a lot of conversation on the "funding(in)secure" thread with regards to this question, especially around a provision fund and the insecurity of paying interest at the end of the loan with regards to the large amounts now being issued on properties.
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hendragon
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Post by hendragon on Mar 17, 2016 17:11:00 GMT
You have to laugh, When there are not enough loans around, people complain. When loans go too quickly, people complain. When there are too many loans around, people complain. When loans fill too slowly people complain. When FS don't change their system to deal with each of the above, people complain. My advice is, if you don't like the loans on offer, and I don't like a lot of them, don't lend. Are you complaining about people complaining? My post wasn't a complaint, only an observation / discussion which is what forums were designed to foster. I wondered what peoples thoughts are on FS's business model being able to survive a property downturn since they are becoming so heavily weighted in that sector. If we took your advice of "if you don't like the loans, don't lend" there wouldn't be much discussion going on in 99% of the threads on this board. I hate Marmite, it tastes awful, I wish they would make it taste like dark chocolate. Now that's a complaint. My personal view is the glass in neither half-empty or half-full. It is the wrong blinking glass with something I didn't want to drink in the first place.
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oldgrumpy
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Post by oldgrumpy on Mar 17, 2016 17:16:56 GMT
Like Worthington Creamflow or John Smith Extra Smooth?  |
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hendragon
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Post by hendragon on Mar 17, 2016 17:20:49 GMT
Like Worthington Creamflow or John Smith Extra Smooth? I thought we all had an e-mail to keep comments polite. 
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oldgrumpy
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Post by oldgrumpy on Mar 17, 2016 18:04:50 GMT
Well , I did draw the line at suggesting C*****g Ex** C*ld. |
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Post by profunder on Mar 21, 2016 18:29:29 GMT
In my opinion no - I'm surprised no sites haven't just moved to a property only model.
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baldpate
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Post by baldpate on Mar 21, 2016 20:03:35 GMT
FS have struck me as quite a shrewd operation. I suspect that they have noticed what has been happening and are working on alternatives and solutions. One thing they will surely have to do is to better reflect the quality of the various property loan offerings in the rates they offer. With rare exceptions, there is a 12% basic cap. But look at the latest Plymouth Hotel loan : as it stands, I might take a punt on it as a bridging loan if it were offering 14% basic, but I won't touch it at the current offered rates. Come back later as a development loan with full planning permission already granted, and you might get my attention at 12%.
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