yangmills
Member of DD Central
Posts: 83
Likes: 494
|
Post by yangmills on Oct 14, 2017 17:50:30 GMT
I think I've invested in every single 12% loan that has defaulted or been suspended. I was in the garden centre, Somerset, Glos, Gateside, IOW etc etc. But I sold out before the brown stuff hit the fan. In my opinion this is a sounder investment strategy than pretending to yourself that you have enough information, knowledge and expertise to do meaningful and reliable DD. Doing DD and then thinking it's safe to take your eye off the ball and hold to term end or near term end is very high risk. Grab some 12% for a few months and then sell out. Why take the risk. The risk of every loan increases as it ages. The risk is lowest in the first 3 months and highest in the last 3 months. It's true SS was a great liquidity trading platform between 2015 and early 2017. Buy-and-hold was clearly sub-optimal. It allowed us to hold a few million in loans, strip 1% a month, safe in the knowledge that the interest had been taken upfront and, well before redemption, we had a par SM to sell them through to. No nasty price haircut on exit. An algo could easily predict the most favoured loans against factors such as LTV, loan size, residual term (and later coupon). So we could rank all the loans and execute pair trades (sell the least attractive, buy the most attractive loans) vs. a target weighted average term (say 180 days). Frankly, SS was utterly bonkers but basically free cash. The "Greater Fool Theory" in action. Nonetheless, once INPL was terminated and the NPLs started to really accelerate it was pretty clear liquidity would deteriorate. We started an orderly dumping. The free lunch has been eaten. Time to get out of Dodge etc. In smalls you can probably still run a good liquidity strategy but in scale I'd argue against it. Moreover, SS likes to change the rules at short notice, investors are wising up and platform risk is rising. So buy-and-hold might make a comeback and so might DD (albeit I think the current obsession with poor valuations misses the real issue). The problem is that we've always viewed SS as highly risky for a host of reasons. So I'm not clear we'd want more than a small exposure to them.
|
|
fp
Posts: 1,008 
Likes: 853
|
Post by fp on Oct 14, 2017 21:09:41 GMT
I think I've invested in every single 12% loan that has defaulted or been suspended. I was in the garden centre, Somerset, Glos, Gateside, IOW etc etc. But I sold out before the brown stuff hit the fan. In my opinion this is a sounder investment strategy than pretending to yourself that you have enough information, knowledge and expertise to do meaningful and reliable DD. Doing DD and then thinking it's safe to take your eye off the ball and hold to term end or near term end is very high risk. Grab some 12% for a few months and then sell out. Why take the risk. The risk of every loan increases as it ages. The risk is lowest in the first 3 months and highest in the last 3 months. I don't have any money tied up at present, you know, in suspended trading loans, defaulted etc etc, do you?
|
|
GeorgeT
Member of DD Central
Posts: 1,322
Likes: 1,576
|
Post by GeorgeT on Oct 14, 2017 21:23:43 GMT
No it doesn't, in general, for amortising loans the risk decreases as the loan ages. The risk on many development loans and refurbishment style loans can also decrease as the project advances. Especially if additional loans that rank behind your loan are issued. To me, the biggest risks in DFLs are that a) the developer goes bust before the project is finished; b) the market deteriorates/changes such that the hypothetical GDV at the outset is non realisable upon completion. Both of those risks can be reduced by selling out early. In addition, if you start works, do demolition etc, you can reduce the value before you get to the point where you start adding value. A half finished bespoke scheme may be much less attractive to purchasers than a 'clean sheet' site/property. Also if build costs rise and GDV does not, the funds required to complete the project may be unavailable. Therefore I don't agree that the risk on many devt. loans decreases over time - I think it's at its lowest in the early months of the loan before there's been time for much to go wrong. In plain simple terms - how many LY loans have run into problems (defaulted, been suspended or whatever) in the first 3 or 4 months? I think the answer is none. How many older loans have run into problems? The answer is many. Also, what type of loan is easier to sell on the SM? One with a long unexpired term or one with a shorter unexpired term? The longer dated loan. Is that not in itself evidence of how the market perceives the risk.
|
|
GeorgeT
Member of DD Central
Posts: 1,322
Likes: 1,576
|
Post by GeorgeT on Oct 14, 2017 21:28:30 GMT
re:12% loans: i would rather take a 10% low LTV, over a high LTV 12% loan of equal quality security. I don't see the obsession with rate! I even took some 9% loan with uber low LTV. I couldn't agree more  . But there's no reliable way of predicting what loans will default - so I say go for the top rate and avoid the lower rates. Also platform failure does not discriminate between loans on a % rate basis. And we all know it would be messy and protracted. More importantly, it's easier to sell 12% loans than, say, 9% loans. Not to mention that the LTVs are often a pile of manipulated junk, especially on the DFLs where they are based on hypothetical GDVs.
|
|
dermot
Member of DD Central
Posts: 863
Likes: 517
|
Post by dermot on Oct 14, 2017 21:33:54 GMT
Many many moons ago, I used to provide a PA system for the annual RICS meeting in Oxford.
They seemed rather a stodgy, unimaginative bunch back then (~40 years ago).
I wonder if the RICS needs a nudge to let them know the antics that some of their members are getting up to with regard to P2P valuations?
A flood of complaints from forum members - naming names - about dodgy valuations might be a good start.
|
|
|
|
Post by martin44 on Oct 14, 2017 21:52:14 GMT
Many many moons ago, I used to provide a PA system for the annual RICS meeting in Oxford. They seemed rather a stodgy, unimaginative bunch back then (~40 years ago). I wonder if the RICS needs a nudge to let them know the antics that some of their members are getting up to with regard to P2P valuations? A flood of complaints from forum members - naming names - about dodgy valuations might be a good start. Mmm. yes. The vast gulf that exist's at the moment between a RICS valuation and an actual sale price is at best 'a little dubious' 
|
|
Liz
Member of DD Central
Posts: 2,426
Likes: 1,297
|
Post by Liz on Oct 14, 2017 21:58:18 GMT
I couldn't agree more . But there's no reliable way of predicting what loans will default - so I say go for the top rate and avoid the lower rates. Also platform failure does not discriminate between loans on a % rate basis. And we all know it would be messy and protracted. More importantly, it's easier to sell 12% loans than, say, 9% loans. Not to mention that the LTVs are often a pile of manipulated junk, especially on the DFLs where they are based on hypothetical GDVs. You do realise you are deluded and talk utter nonsense, don't you? And you do know that you promote a high risk and flawed strategy, right? You must be highly sought after by the 60!
|
|
ozboy
Member of DD Central
Mine's a Large One! (Snigger, snigger .......)
Posts: 3,168
Likes: 4,859
|
Post by ozboy on Oct 14, 2017 21:59:36 GMT
Many many moons ago, I used to provide a PA system for the annual RICS meeting in Oxford. They seemed rather a stodgy, unimaginative bunch back then (~40 years ago). I wonder if the RICS needs a nudge to let them know the antics that some of their members are getting up to with regard to P2P valuations? A flood of complaints from forum members - naming names - about dodgy valuations might be a good start. Mmm. yes. The vast gulf that exist's at the moment between a RICS valuation and an actual sale price is at best 'a little dubious' I have absolutely no doubt whatsoever and I'm sure you all agree that everyone within RICS, especially its "management", knows exactly what's going on, and have known for yonks, and they deliberately choose to do nothing about it. Vested interests within a very cosy and VERY lucrative Club, which must be protected at all costs. All costs to be borne by Investors, naturally. Yes folks, I'm back from my travels!
|
|
|
|
Post by martin44 on Oct 14, 2017 22:00:44 GMT
But there's no reliable way of predicting what loans will default - so I say go for the top rate and avoid the lower rates. Also platform failure does not discriminate between loans on a % rate basis. And we all know it would be messy and protracted. More importantly, it's easier to sell 12% loans than, say, 9% loans. Not to mention that the LTVs are often a pile of manipulated junk, especially on the DFLs where they are based on hypothetical GDVs. You do realise you are deluded and talk utter nonsense, don't you? And you do know that you promote a high risk and flawed strategy, right? You must be highly sought after by the 60! steady on.  edit.
|
|
|
|
Post by martin44 on Oct 14, 2017 22:02:45 GMT
Mmm. yes. The vast gulf that exist's at the moment between a RICS valuation and an actual sale price is at best 'a little dubious' I have absolutely no doubt whatsoever and I'm sure you all agree that everyone within RICS, especially its "management", knows exactly what's going on, and have known for yonks, and they deliberately choose to do nothing about it. Vested interests within a very cosy and VERY lucrative Club, which must be protected at all costs. All costs to be borne by Investors, naturally. Yes folks, I'm back from my travels! I hear you've been in tower hamlets?.  yorkshireman
|
|
ozboy
Member of DD Central
Mine's a Large One! (Snigger, snigger .......)
Posts: 3,168
Likes: 4,859
|
Post by ozboy on Oct 14, 2017 22:19:52 GMT
<SNIP> I am becoming a little disappointed by others harking on about due diligence. Due diligence does not reveal all. Most particularly it does not reveal intention. Whilst Due Diligence may not reveal intention, it may well reveal a number of things that can help you draw your own conclusion about the worthiness of the borrower, the credibility of the exit plan or any number of other factors that will sway your mind as to whether to invest or not. I'm sorry to hear you or others may have money trapped in this investment, but I rest well at night knowing I didn't invest based on my findings about the borrower, associated people/companies, the viability of the development and my overall gut feeling of the loan. Platforms rarely provide the information you need to make an informed decision on the viability of a loan, and while ever people don't carry out DD, they will fill. Yep, had " Monumentally Humungous Barge Pole" written all over it, and if you broke it in half was also written in the middle (as in a piece of rock) this one - DD, whilst not perfect, is the closest you're gonna get.
|
|
ozboy
Member of DD Central
Mine's a Large One! (Snigger, snigger .......)
Posts: 3,168
Likes: 4,859
|
Post by ozboy on Oct 14, 2017 22:22:54 GMT
I have absolutely no doubt whatsoever and I'm sure you all agree that everyone within RICS, especially its "management", knows exactly what's going on, and have known for yonks, and they deliberately choose to do nothing about it. Vested interests within a very cosy and VERY lucrative Club, which must be protected at all costs. All costs to be borne by Investors, naturally. Yes folks, I'm back from my travels! I hear you've been in tower hamlets?. yorkshireman yorkshireman, you're blowing my International Traveler of Intrigue cover .......... EDIT - Been away too long and forgotten much, apologies yorkshireman, seems martin44 exposed me!
|
|
GeorgeT
Member of DD Central
Posts: 1,322
Likes: 1,576
|
Post by GeorgeT on Oct 14, 2017 22:54:43 GMT
But there's no reliable way of predicting what loans will default - so I say go for the top rate and avoid the lower rates. Also platform failure does not discriminate between loans on a % rate basis. And we all know it would be messy and protracted. More importantly, it's easier to sell 12% loans than, say, 9% loans. Not to mention that the LTVs are often a pile of manipulated junk, especially on the DFLs where they are based on hypothetical GDVs. You do realise you are deluded and talk utter nonsense, don't you? And you do know that you promote a high risk and flawed strategy, right? You must be highly sought after by the 60! I don't know what the 60 is but I can assure you my deluded nonsense and flawed strategy has worked. I would also add that I do not promote anything, I merely express my personal opinions. I have been with SS/LY for nearly 4 years and all my loans were 12% except for 1 x 11%. I have earned £22k in interest and cashback over that period on this platform and my last £9k invested in LY is being withdrawn on Monday. It's too scary for me now. By disagreeing with me it sort of suggests you think the quoted LTV ratios on LY loans are accurate and have never exceeded 70%; that higher rate loans aren't more popular than lower rate loans and that platform failure wouldn't be messy. Because those are the only points I made and you said I was talking utter nonsense  If I'm deluded and my strategy is utter nonsense, why have I done so well on this platform. My successful outcome has proved my strategy worked and was the right strategy. I fail to see how anyone could have done better. I must either have been very lucky or my strategy was a smart one. And I wouldn't say I am very lucky! I will be left with £1,800 in 3 loans I can't sell (a minor strategic error). But in each case I have earned more in interest from those loans than the amount I have stuck in them. Therefore even if I suffered a 100% capital loss in those I would still have made a profit from those loans. On the Welsh property I had £16k in it between Jan and May this year and had sold down to a few hundred when it became unsellable. In Exeter I had less but still quite large 5 figure sums earning me 12% for 9 months+. This is another reason why I recommend only going for top rate loans. If a loan does go bad, you have a bigger interest cushion. On DFLs, I await the day when a big LY DFL loan repays in full. I'm sure that will happen but I don't think it's happened yet. Not that it will affect me. I will be no more than a LY voyeur from next week. It was too good to last forever and I think timing is key in most things. For me, at least, now is the time.
|
|
|
|
Post by robberbaron on Oct 15, 2017 6:24:43 GMT
Georget, there is nothing special or clever about your strategy. All early investors in Lendy, myself included, have made a lot of money. They just don't boast about it every time they get a chance because they know it is not a proof that their strategy was particularly savvy. All of Madoff early investors made out like bandits and so did those who invested early in subprime mortgages. Does that mean they were smart or merely lucky?
Claiming that all loans are equal and therefore you should just go for the highest rate ignoring everything else is indeed nonsense. Would you swap Swiss bonds for Venezuelan bonds because the rate is much better and after all nobody knows which one will default?
|
|
|
|
Post by brightspark on Oct 15, 2017 8:49:58 GMT
Your comment and others like it are relevant to a thread on strategies. They do not have much to do with Marylebone where investors have a large investment which is going sour. Some will be beside themselves with worry. Information that can shed light on how this problem may resolve would I suggest be useful.
|
|
.
steady on. 
