pom
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Post by pom on Sept 7, 2016 14:20:39 GMT
Hmm Well my £10 went into 20 loans not just the one that Vanessa's answer would suggest. Slightly regret not putting in more as I seem to have hit a high point (the beginning) of rates with my 5.6% average, now seems to be 4.9% target. Does suggest there may be some element of timing required as target rate apparently updates regularly (actually thought it was 4.7 earlier but might have misremebered) When I first signed up it told me how many loans were available for investment but that disappeared when I invested and map changed to show my loans - would be useful if this info was displayed somewhere Maybe they changed it - my opening £100 went into 20 diff loans....wouldn't surprise me if they then tweaked it to a minimum Maybe the target is the average of whatever's currently available?
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upland
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Post by upland on Sept 7, 2016 15:06:25 GMT
my opening £100 went into 10 loans , added a few more £100s and it went to 20. Doubled that again and it went to 21.
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Post by vanessaiman on Sept 7, 2016 16:59:57 GMT
Hi Propman,
You are correct, though, our stringent and consistently applied underwriting criteria and the resulting low default rates across the book indicate that all of our loans have a comparable risk profile. Albeit that past performance is no guarantee, our lending team have been operating for over 8 years, in this time we have lent over £2bn with capital losses of just £6k.
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jonah
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Post by jonah on Sept 7, 2016 18:16:17 GMT
That seems a remarkable percentage!
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upland
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Post by upland on Sept 8, 2016 7:56:25 GMT
Hi Propman, You are correct, though, our stringent and consistently applied underwriting criteria and the resulting low default rates across the book indicate that all of our loans have a comparable risk profile. Albeit that past performance is no guarantee, our lending team have been operating for over 8 years, in this time we have lent over £2bn with capital losses of just £6k. Hi Vanessa , it would be interesting to know how many / much of the loans broke the terms of the contract and had to be sold off to retrieve the investors capital. After all if one in a portfolio of 20 loans failed and the property had to be sold off. This would take some time , say a year. The loss of income would be comparable to the income from the remaining 19 loans which would lead to a poor investment for that year although you will have not lost any capital. Is that a possible scenario ?
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Post by propman on Sept 8, 2016 7:57:08 GMT
Hi Propman, You are correct, though, our stringent and consistently applied underwriting criteria and the resulting low default rates across the book indicate that all of our loans have a comparable risk profile. Albeit that past performance is no guarantee, our lending team have been operating for over 8 years, in this time we have lent over £2bn with capital losses of just £6k. Apologies for repeating what I have said elsewhere, but in a rising market with good liquidity, it is easy to refinance secured property debt as LTV will have decreased. Indeed (and I have no way of knowing whether this applies here), it is common for the same institution to refinance their own loans by rolling them over and taking a further fee. Even with reduced liquidity, it is possible to force a sale that should yield sufficient to repay the loan.
The trouble is that in a falling market most property vehicles are structured with no other assets and their ability to service the debt is dependent on sales of the product which are likely to be harder to achieve in a falling market. As a result losses on such loans are often substantial but only during 1 phase of the cycle. Add that property finance was very tight for several years after the GFC and so anyone lending had the pick of the industry and achieved improved terms and so loans made 2008-11 are likely to have been much better quality than those now writable in a much more crowded market. historically the combination means that riskier loans late in the cycle multiply the losses that would always have occurred after the downturn. this is why we should be very cautious of property lending based on post 2007 track records.
Vanessa, can you indicate whether there have been any other losses of expected income over this period?
- PM
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elliotn
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Post by elliotn on Sept 9, 2016 3:50:59 GMT
Would putting in 400 give us a spread of the intended 40 loans; if not yet, what is expected minimum to get the current maximum loan diversification available? Thanks. Hi Upland, I'm happy to hear you're opened up an account with us! At Octopus Choice we aim to reach 40 loans as there is a very marginal reduction of risk for a portfolio above 40, you can find our reasoning behind this here. Like you said getting the algorithm balance can be difficult, so every time somebody invests with us we distribute that investment across loans with a minimum of £10 in each loan. For example if you invest £30, we will then invest 3 loans for you (so not 20 or 40). Please do let me know how its going. Best, Vanessa |
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ashtondav
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Post by ashtondav on Sept 9, 2016 7:19:30 GMT
Am I correct in thinking that, at the time of investment, I have no idea what my interest rate will Be? Only an estimate of what it "should" be? If so not interested.
I want to know what my return will be, not between 4.8% and 5.2%, for example.
I am also unsure how Octopus differentiates itself from very similar longer established competitors.
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elliotn
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Post by elliotn on Sept 9, 2016 7:36:50 GMT
Am I correct in thinking that, at the time of investment, I have no idea what my interest rate will Be? Only an estimate of what it "should" be? If so not interested. I want to know what my return will be, not between 4.8% and 5.2%, for example. I am also unsure how Octopus differentiates itself from very similar longer established competitors. Correct. This rate will also fluctuate depending on the make up of the available loans (currently briding/btl residential) that you will be reinvested in. Main selling point is the record of Dragonfly originating the loans but you're offered an unremarkable rate vs other secured property sites without any control.
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upland
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Post by upland on Sept 9, 2016 7:56:17 GMT
Would putting in 400 give us a spread of the intended 40 loans; if not yet, what is expected minimum to get the current maximum loan diversification available? Thank
I would guess not as I put a £425 tranche in and it just added to the already 21 loans. I am guessing but they probably have approximately 20 open loans when I started.
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pom
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Post by pom on Sept 9, 2016 8:14:00 GMT
Am I correct in thinking that, at the time of investment, I have no idea what my interest rate will Be? Only an estimate of what it "should" be? If so not interested. I want to know what my return will be, not between 4.8% and 5.2%, for example. I am also unsure how Octopus differentiates itself from very similar longer established competitors. Correct. This rate will also fluctuate depending on the make up of the available loans (currently briding/btl residential) that you will be reinvested in. Main selling point is the record of Dragonfly originating the loans but you're offered an unremarkable rate vs other secured property sites without any control. And that is the point - active investors aren't their target market. If you're wanting to squeeze the max return out of ever penny then it won't be for you. Personally I'm happy to have a small chunk of my portfolio not needing any input from me. Rates are better than landbay (which in fairness is probably lower risk) which is the only other fire and forget property backed platform I'm aware of.
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Post by vanessaiman on Sept 9, 2016 8:16:34 GMT
Hi Upland,
Clearly we haven't been going all that long yet, and so as you'd expect, all loans have performed exactly as they should! But even across our more than seven years of performance as a lender in this market, we have had capital losses of less than 0.1% on over £2 billion in lending.
In terms of interest (rather than just capital), we haven't lost any in the last four years.
In short, we're very confident in the track record that we've established over the years – ultimately, we wouldn't put our money where our mouth is if we weren't!
Best,
Vanessa
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pom
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Post by pom on Sept 9, 2016 8:18:34 GMT
Would putting in 400 give us a spread of the intended 40 loans; if not yet, what is expected minimum to get the current maximum loan diversification available? Thank
I would guess not as I put a £425 tranche in and it just added to the already 21 loans. I am guessing but they probably have approximately 20 open loans when I started. Diversity is based on availability not amount invested. My guess based on what I've seen so far is you'd need up to 4 deposits, at least 2 weeks apart, possibly a bit more (which is significantly quicker than any other platform I'm investing in). No platform is likely to have 40 open property loans at the same time....tho when they have a bigger investor base investing regularly, who knows?
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upland
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Post by upland on Sept 9, 2016 8:26:05 GMT
Correct. This rate will also fluctuate depending on the make up of the available loans (currently briding/btl residential) that you will be reinvested in. Main selling point is the record of Dragonfly originating the loans but you're offered an unremarkable rate vs other secured property sites without any control. And that is the point - active investors aren't their target market. If you're wanting to squeeze the max return out of ever penny then it won't be for you. Personally I'm happy to have a small chunk of my portfolio not needing any input from me. Rates are better than landbay (which in fairness is probably lower risk) which is the only other fire and forget property backed platform I'm aware of. I think that that sums it up well.
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upland
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Post by upland on Sept 9, 2016 8:37:33 GMT
Hi Upland, Clearly we haven't been going all that long yet, and so as you'd expect, all loans have performed exactly as they should! But even across our more than seven years of performance as a lender in this market, we have had capital losses of less than 0.1% on over £2 billion in lending. In terms of interest (rather than just capital), we haven't lost any in the last four years. In short, we're very confident in the track record that we've established over the years – ultimately, we wouldn't put our money where our mouth is if we weren't! Best, Vanessa Hi Vanessa , If I were to put 10K in at the moment it looks like it would go into about 20 loans. Would you know how long it would take to get up to 40 loans ?
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