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Post by Deleted on Jul 2, 2016 15:38:30 GMT
I like what you're saying blender, could we be looking at a period of Portal mergers and Portal closures as part of this P2X scaling and maturing process, does anyone have any thoughts?
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Post by bluechip on Jul 2, 2016 16:28:31 GMT
Thanks for the comments. I think we will be seeing platform mergers in the near future, part of my disgruntlement is certainly down to platforms having to move on from the birth stage, fine tuning their plans and trying to formulate a strong position in their most profitable areas - time is running out for them to make a mark and being 'lean' as they call it can often lead to them being 'mean'. I think the general communication is pretty poor and understandably so (they focus only on the positive changes more often than not, ignoring the negative aspects of what that change means for some/most people), things can be a little misleading as well, but again we should be aware of the risks as 'pioneers' in a new sector. However I do think there is a case of some platforms treating us retail investors as second class investors, an after thought, a kind "they won't notice" attitude - which was inevitable but it doesn't mean we have to like it.
It happens in every sector and the last thing I want is over regulation, but I do worry that there are a hell of a lot of people with a less passive approach than myself who will raise hell when they realise all may not be what they thought it was with their investments. I gave several examples in my OP of little things that have irked me recently, I am sure there will be several others and a lot of investors are more engaged with platforms (and will have lost money). I have fortunately made a nice amount of money thus far from P2P, but it isn't about short term profits, it is about a reliable long term place to put money and "trust" that what it says on the tin stays written on the tin, not rubbed out in a whimsical fashion as they chase more lucrative markets and institutional investors.
Nature of being involved with a young industry I suppose, but some regulation would be good to protect us from platforms that swerve off the track they promised us when investing, as always too much will cripple the sector and that will be the aim of big business (unless they do the acquisitions).
Interesting times ahead, but I am far more skeptical now about P2P - there are too many warning signs for me personally about the way I was handling my investments. Others will have been more cautious and more informed - 15 platforms was a mistake for me, but I do have the majority of my money in 3 or 4.
P.S - I logged onto my Seedrs (Crowd Funding) account yesterday, before it would let me pass, despite investing in numerous companies with the platform over the past 18 months (some quite significant investments) it asked me to fill in information to confirm I was a savvy investor or a HNWI. It then said "congratulations you are now able to invest with Seedrs" or words to that effect, I wonder what would have happened if I had ticked the wrong box and whether this extra layer of regulation is a sign of things to come for the looser P2P market... I think I had to do it with TC when signing up as well, but that was the only one if I remember correctly.
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Post by Financial Thing on Jul 3, 2016 13:16:35 GMT
I find if I read too much (news and opinions) I'm easily spooked and prone to making rash decisions.
There is a saying within the stock market world "stay the course". When I used to read the news about upcoming market fallouts, I would sell and buy, leading to lots of poorly timed decisions.
I keep a wary eye on this forum and other news sources things but always verify the info. presented as sometimes the info is just an opinion and not fact.
Lots of great information found on this forum has lead me to make changes to p2p allocations.
I haven't adjusted my p2p much other than a reduction in property loans.
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Post by bluechip on Jul 3, 2016 15:26:44 GMT
I agree Options Trade - I also get easily spooked but only an ultra-HNWI wouldn't or a compulsive gambler when entering a new-ish sector. The problem is trying to separate the wheat from the chaff and sods law says you don't listen to the one tip that could have saved you a fortune in time and money. If you listen to everything you will be going around in circles though - pointless.
Back in March I put quite a bit in various stocks and shares funds as I had some bonds mature and was over my comfort zone with P2P, then when BREXIT happened I was worried that I had gone in at completely the wrong time (the Mrs was bending my ear about it, saying only I would be dopey enough to put so much in S&S's at this time), as it turns out I'm up over 10% in a week - but there was little method in the madness being honest, I just wanted a different home for my money. Sometimes you have to just roll the dice and if you are a HNWI you can run out of safe places and get frustrated with the bank rates, so places like P2P are ideal for diversification. I just want them to remember where their bread was/is buttered and to treat us with the same consideration that we treat them and our money.
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Post by Deleted on Jul 3, 2016 15:41:05 GMT
I just want them to remember where their bread was/is buttered and to treat us with the same consideration that we treat them and our money. Bluechip, bang on. I fear it is too easy for P2X to overlook the lenders that grace their Portal's with their patronage and with the money that they bring to meet borrower requirements. Should they become complacent and leave lenders feeling disenfranchised then those lenders may just up sticks and relocate elsewhere. Whether as a lender you may be considered HNW, MNW or LNW is immaterial each should be afforded the same respect as each may and often does contribute. If one Portal fails to recognise, then actively consider the needs of those who would wish to place funds with them then should they be surprised if 'their' lenders depart, sometimes en masse? Thank you for sharing your thoughts with us.
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Liz
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Post by Liz on Jul 3, 2016 15:42:35 GMT
I find if I read too much (news and opinions) I'm easily spooked and prone to making rash decisions. There is a saying within the stock market world "stay the course". When I used to read the news about upcoming market fallouts, I would sell and buy, leading to lots of poorly timed decisions. I keep a wary eye on this forum and other news sources things but always verify the info. presented as sometimes the info is just an opinion and not fact. Lots of great information found on this forum has lead me to make changes to p2p allocations. I haven't adjusted my p2p much other than a reduction in property loans. It's hard in p2p to diversify away from property, unless you want to go totally down the RS/Zopa route, and those sites are by no means risk free. Lots of sites TC, FS, MT, AC etc, have all gone largely down the property route, and lots of the none property loans are debt I wouldn't touch with a bargepole. And I've never been a fan of FC. It all leaves one in a tricky position, stick with risky p2p, go down the stock market route, which can be volatile, or stick the money in the bank earning nothing.
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daveb4
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Post by daveb4 on Jul 3, 2016 18:30:55 GMT
Yes slightly concerned mainly because vast majority of my p2p is secured eg property but much bether than unsecured! The however is that how much will property go down? Mr Osborne said 18%? Personally i doubt it for lots of reasons, high price £2m in London possibly over next year or so. Check out Large estate agent reports like Savills and they do not have a hugely negative outlook.
We all know individual commercial security you could lose 50% but unlikely on average and residential 20% in a quick sale, so as long as you invest carefully over numerous busineses you can reduce the risks of loosing some money. Plus think about average rate in the year after losses.
Main risk in my mind is platform risk, whether this be platform failure or their security? Still to be proven especially on some of the larger platforms. As I have said before on other comments what is important is that they make money. If this is the case they will generally survive unless battered by FCA, this wI'll be seen overy the next year. To make money they may have to reduce rates? AC just advised taking some profits from income, to me that shows they are in a strong position?
Another positive for future, will Brexit cause businesses to borrow less? Possibly and probably but how will this affect p2p? Depends on banks and if they are going to pull back more on lending after they have started to lend more.
Hopefully people will not invest more in p2p mainly as I believe there will be less loans and rates will therefore come down as platforms could get more competitive and more fastest finger first for those who can log on at specific times.
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bababill
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Post by bababill on Jul 4, 2016 7:45:18 GMT
Interesting posts..
I have had itchy feet recently but I don’t see better options elsewhere (for me). Been in the game since 2012.
Platform risk scares me most and I would have got caught out by FK if it wasn’t due to GLI. Having said that, the main reason I invested with FK was because GLI were active investors at the time.
My biggest gripe with the sector is what I call mis-selling/mis-leading/mis-representation etc. I have used the words before in posts and the moderators have deleted some of my words because it is inflammatory and potentially libel.
As Bluechip mentioned- the recent issue with Assetz and being locked into suspended loans in the GBBA was not my understanding either. I will exit the GBBA but continue with the MLIA.
On TC-being told a loan will be redeemed early and then it doesn’t happen. No big deal. But then not being allowed to sell the said loan on the secondary market even after it becomes obvious early repayment will not occur. In fact, had roughly the same issue with FK.
Being told on LendInvest – that a loan can be extended as long as they want and that I ‘’only have the right to receive interest.’’
There are others gripes but the one that actually made leave a platform is as follows:
Being told on the website’s dashboard that a property’s LTV is 35.7%.
When reading the fine print I discovered that it was based on the ‘‘belief’’ that full planning permission would be given.
I think P2P will continue to grow but don’t base your investments decisions on my ‘beliefs.’
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archie
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Post by archie on Jul 4, 2016 8:00:38 GMT
Being told on LendInvest – that a loan can be extended as long as they want and that I ‘’only have the right to receive interest.’’ In my experience on LI they will usually only extend a loan by up to 3 months while keeping you locked in. If the extension is longer they often repay and relist the loan. I can only recall one of the loans I was invested in being extended by more than 3 months. They are conducting a survey at the moment for secondary market options so that problem may disappear in time.
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Post by Deleted on Jul 4, 2016 8:40:54 GMT
Surely some of this is fundemental stuff
LTV have to based on something, you have to read the details or ask the questions to get to it, but checking is part of the process if you want more than 6%
Similarly planning permissions either exist or they don't. Hope is not really a concept that makes any sense in a valuation.
Portal rules are worth understanding.
The core problem with AC's managed accounts have been clear from the outset. Getting money in and getting money out was always going to be an issue at times of change. AC even wrote about it, their strategy was clear and since the big change they have been pretty consistent.
Good P2P investment takes a lot of time. Don't rush it.
Will there be consolidation. Well yes, some P2Ps have been closing but I don't see a sudden change in the rate, there has yet to be a test of P2P when one goes down and they are not snapped up by a competitor. (now that will be interesting).
As far as I can see FC, RS and Zopa have bagged the two obvious low cost positions. There are some newcomers trying to muscle into that area (AC and W), in the higher rate/risk section you have basically pawn shops and property. Will there continue to be failures in this area, oh yes, especially amongst older ones who over-spent on IT/Office/Staff, so large size will not be a protection.
Kevin from RS feels that a failure of a portal which is allowed to go to the wall will focus minds on improving processes and the risks of the business. I think it will have the sheep running for the door.
Despite my comforting words I still see 5% a the natural limit to investments in this sector.
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Post by propman on Jul 4, 2016 9:02:47 GMT
Yes slightly concerned mainly because vast majority of my p2p is secured eg property but much bether than unsecured! The however is that how much will property go down? Mr Osborne said 18%? Personally i doubt it for lots of reasons, high price £2m in London possibly over next year or so. Check out Large estate agent reports like Savills and they do not have a hugely negative outlook. We all know individual commercial security you could lose 50% but unlikely on average and residential 20% in a quick sale, so as long as you invest carefully over numerous busineses you can reduce the risks of loosing some money. Plus think about average rate in the year after losses. Sorry to be a stuck record, but after 20 years in property I think it is a bit more risky than most think. 50% losses in resi have happened in a number of countries and were predicted b on respected forecaster on central London property a few years ago.
That said, I think the biggest issue is that there is a world of difference between the price of a single existing house and a speculative development. The former is only likely to drop >20% if there is a local issue making the neighbourhood less desirable. For a development, profitability requires rapid sale of multiple units with net profit only coming with the last 10-20% of sales. In addition, development of later units often requires he proceeds from the earlier ones and failing to complete will substantially reduce profits as land and the interest on it and planning costs etc. are sunk costs. Also, the Gross Development Value often used for the LTV will usually not be based on current prices, forecast prices. These will not only include forecast house price inflation, but also increases due to the improvement to the area and perception from the development (which will often include local amenities) and other anticipated local changes. As a result, if there is an anticipated recession, GDV can often fall much more than house prices generally. There are also possible cost increases that will reduce the funds available to repay loans from profits.
Finally, many of the loans are only for part of the time required to build and sell the houses. As a result, they are often dependent on refinancing to repay the loans. The LTV after factoring in interest and other costs to project completion is often much higher than Initial loan / GDV!
Property loans have security INSTEAD of anticipated available income, that is why the interest rate is often higher than other loans. Unsecured loans are generally only given where there is a proven source of income, while the whole business / all assets and income of an individual will be available to repay these loans, while only the security is often available for a property loan.
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daveb4
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Post by daveb4 on Jul 4, 2016 14:13:00 GMT
Yes slightly concerned mainly because vast majority of my p2p is secured eg property but much bether than unsecured! The however is that how much will property go down? Mr Osborne said 18%? Personally i doubt it for lots of reasons, high price £2m in London possibly over next year or so. Check out Large estate agent reports like Savills and they do not have a hugely negative outlook. We all know individual commercial security you could lose 50% but unlikely on average and residential 20% in a quick sale, so as long as you invest carefully over numerous busineses you can reduce the risks of loosing some money. Plus think about average rate in the year after losses. Sorry to be a stuck record, but after 20 years in property I think it is a bit more risky than most think. 50% losses in resi have happened in a number of countries and were predicted b on respected forecaster on central London property a few years ago.
That said, I think the biggest issue is that there is a world of difference between the price of a single existing house and a speculative development. The former is only likely to drop >20% if there is a local issue making the neighbourhood less desirable. For a development, profitability requires rapid sale of multiple units with net profit only coming with the last 10-20% of sales. In addition, development of later units often requires he proceeds from the earlier ones and failing to complete will substantially reduce profits as land and the interest on it and planning costs etc. are sunk costs. Also, the Gross Development Value often used for the LTV will usually not be based on current prices, forecast prices. These will not only include forecast house price inflation, but also increases due to the improvement to the area and perception from the development (which will often include local amenities) and other anticipated local changes. As a result, if there is an anticipated recession, GDV can often fall much more than house prices generally. There are also possible cost increases that will reduce the funds available to repay loans from profits.
Finally, many of the loans are only for part of the time required to build and sell the houses. As a result, they are often dependent on refinancing to repay the loans. The LTV after factoring in interest and other costs to project completion is often much higher than Initial loan / GDV!
Property loans have security INSTEAD of anticipated available income, that is why the interest rate is often higher than other loans. Unsecured loans are generally only given where there is a proven source of income, while the whole business / all assets and income of an individual will be available to repay these loans, while only the security is often available for a property loan.
Propman not going to disagree and useful information. I think all I was trying to say is there are some better deals out there than others so be careful as well as spread your risk as there will be some more defaults over the next year than last. Plus any property development try and sell on before completion to reduce sales risk.
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Post by Financial Thing on Jul 5, 2016 11:58:28 GMT
I find if I read too much (news and opinions) I'm easily spooked and prone to making rash decisions. There is a saying within the stock market world "stay the course". When I used to read the news about upcoming market fallouts, I would sell and buy, leading to lots of poorly timed decisions. I keep a wary eye on this forum and other news sources things but always verify the info. presented as sometimes the info is just an opinion and not fact. Lots of great information found on this forum has lead me to make changes to p2p allocations. I haven't adjusted my p2p much other than a reduction in property loans. It's hard in p2p to diversify away from property, unless you want to go totally down the RS/Zopa route, and those sites are by no means risk free. Lots of sites TC, FS, MT, AC etc, have all gone largely down the property route, and lots of the none property loans are debt I wouldn't touch with a bargepole. And I've never been a fan of FC. It all leaves one in a tricky position, stick with risky p2p, go down the stock market route, which can be volatile, or stick the money in the bank earning nothing. Agreed Liz. When has investing ever not been tricky? Personally I would say if you aren't in your retirement years, the stock market is the least risky of all the investment vehicles, providing you know take a simple approach and stay away from single stocks. When it comes to the property sector, I wish a p2p company could develop a higher paying rate offering based on a residential property income model (Landbay etc) as I think property rentals will continue to be strong. I'd prefer not to be placing bets in the property development sector.
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Post by zzr600 on Jul 5, 2016 14:34:01 GMT
In 2007/8 it was widely repeated that what was important was a 'return OF capital' rather than a 'return ON capital'. What we are seeing now includes: 1. Massive sterling devaluation 2. Slow motion implosion of Italian banks ( with ~€360 B bad loans will they do a Cyprus and confiscate deposits?) 3. Capital flight and unsustainable debts from China 4. Deutsche Bank share price closely following Lehman's before it collapsed and triggered the 2008 depression 5. Tanking UK bank shares- many are down 95%+ from their peaks 6. Rapid drop in value of UK property funds and house-builders 7. Restrictions on withdrawals from property funds So, on the upside, 10%+ annual interest on investments On the downside, another (at the minimum) property crash and possible disappearance of liquidity as with 2008. So yes, I have VERY cold feet and I'm liquidating all my property-linked P2P investments. If I'm wrong, I may lose a few months interest, but if I'm right then I may have saved myself from losing a large portion of my investments. |
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Post by lb on Jul 5, 2016 14:47:48 GMT
You could take the view that money secured against a real asset (or indeed the asset itself) is safer than in a bank account (over £75k) - negative gilt yields are evidence that the market believes an asset (IOU) is better than cash ..................................................
P2P is going to grow and grow and zero/negative interest rates is only going to speed that up - P2P now is not what P2P will evolve into in 2 or, even more so, in 5 years time
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