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Archives for June 2013

New P2P Lending Company - GROUNDFLOOR

June 26, 2013 by Ryan Lichtenwald Leave a Comment

The P2P lending industry is certainly starting to heat up.  I’ve discovered a lot of companies in the P2P lending industry and gained some insight into these companies by watching some of LendIt 2013 .

Recently, I found out about a new company called GROUNDFLOOR .  The idea intrigued me, so I decided to reach out to the founders: Brian Dally & Nick Bhargava.  In short, it is a P2P lending company tailored to real estate development projects.  After you’ve checked out their website, read the Q&A session below for some of the details we were able to gather from them.  Brian and I have both signed up for the private beta and are excited to put our benjamins to work!

Q: We would first like to know how and why you got interested in the p2p
lending industry. Was it an extension of seeing companies like
Prosper/LendingClub remove the banks from the equation in lending?

A: Actually, we were not aware of LendingClub or Prosper when the concept for Groundfloor first took shape. It was really the financial crisis of 2008-09 that motivated us to build a new kind of finance. We are interested in returning to the roots of what finance was before there were 800-pound gorillas who are “too big to fail” yet fail the rest of us regularly. 

Q: What is the biggest obstacle that GROUNDFLOOR faces or has faced?

A: The banks have a sophisticated, heavily engineered process for originating, underwriting and managing loans for real estate. Replacing that with a peer-to-peer model is hard. We think we understand the obstacles well enough and have designed ways to handle them. The toughest thing in making any market is to make sure that the deals we put forward have the maximum appeal to investors. That’s why we’re starting off with a beta, to test and make sure we’re dialing that in correctly. 

Q: Any information on what rates lenders/borrowers can expect to
earn/pay? Will it be similar to LendingClub in note grades etc?

A: The rates vary based on the project and deal structure, but lenders can expect to earn interest from 5% and up, perhaps as high as 10%. Loans are secured by the property and we have some innovative twists to share that lenders are really going to like.

Q: How will projects be selected and what types of projects do you anticipate financing?  Are there any in the pipeline you can share details on?

A: Developers and lenders who are interested in what we’re doing should visit GROUNDFLOOR.us and sign up to get involved now. We’re putting together a range of projects for feedback from potential lenders. We’ve identified a handful of initial prospects, and are continuing to add more. Lender feedback will ultimately shape which projects are part of our beta and which ones will need to wait until our commercial launch. 

Q: How big of loans do you anticipate to be servicing?

A: We’d rather not speculate about that right now.

Q: Finally, do you have an anticipated launch date of the first project and when the beta will begin?

A: Not that we can announce yet, no.

 

Filed Under: News Tagged With: GROUNDFLOOR, Interviews, Real Estate

LendIt 2013 Starts Tomorrow

June 19, 2013 by Brian Lohr Leave a Comment

LendIt is the first conference devoted completely to peer-to-peer and online lending. It will begin tomorrow (June 20th, 2013) in New York. Like most conferences there will be tons of keynote presentations, interactive panels, and educational workshops.

[Read more…]

Filed Under: News

Average Investment Amount

June 17, 2013 by Ryan Lichtenwald Leave a Comment

When I first invested, I decided to use a pre-determined filter that Brian provided me with.  I have both a starter portfolio which includes these notes and a riskier portfolio so I can compare the results over time.  I enjoyed combing through the notes and deciding who I would lend $25 to mainly because I think it’s interesting to peer into someone else’s financial life.  I don’t think hand picking each note is necessary to make money in LendingClub.  However, I highly recommend only putting the minimum $25 investment per note.  It spreads out your risk in your LendingClub investments.  I look at it as having a diversified portfolio, much like one should do in the stock market.  All note grades default and putting all of your eggs in one basket is not a good strategy.

A look at my two highest grade loans (D2 18.49%) show average investments per person of ~$40 and ~$60.  I’ve seen many of my loans with over $100 invested per person.  I have started to read about hedge funds getting in on the action.  My thought (and hope) is that this is why I am seeing the high average investments.  There are only so many notes to be invested in which forces them to invest more money per loan.  If hedge funds start investing more into LendingClub it will be less and less about ‘peer-to-peer’ lending.  In my opinion it changes the whole idea of what the peer-to-peer lending and crowd funding sites like Kickstarter are all about.  Time will tell if institutional investors will have any effect on LendingClub, but in the meantime - please invest the minimum amount into loans unless you really know something I don’t.

Filed Under: Investing Tagged With: Average Investment, Diversification, Hedge Funds

Entering Lending Club’s Grace Period

June 12, 2013 by Brian Lohr 5 Comments

A few days ago I had my first Lending Club note hit the “Grace Period” which is a term I’m not familiar with. After doing some research it became clear that the automatic withdrawal from the borrower’s account had failed and therefore I had not received my P&I payment. I continued to watch this note for the next few days patiently waiting until today when the payment was made and I received my money. [Read more…]

Filed Under: Uncategorized

Ryan’s Initial Portfolio (June, 2013)

June 6, 2013 by Ryan Lichtenwald Leave a Comment

I began my investment into Lending Club in March 2013. At that time I had anticipated funding my account with $2500 to take advantage of the refer a friend credit (which I highly recommend).  I have started to set up automatic payments of $50 per month and may continue to increase my contributions.  I currently have two portfolios, one to track riskier notes and the other to track mostly A,B and C grade notes.  It will be interesting to compare both of our portfolios and see where the most cents can be made.

My current breakout is as follows as of June 5th, 2013:
Available Cash: $0.39
In Funding Notes: $75.00
Outstanding Principal: $1,212.91
Accrued Interest: $10.29
Account Total: $1,298.59

My Payments as of June 5th, 2013:
Principal: $62.09
Interest: $14.19
Total Payments: $76.28

Net Annualized Return: 11.41%

My Notes at-a-Glance:
In Funding: 3
Issued & Current: 50
Fully Paid: 1 (Someone paid off their grade E loan (21.49% interest rate) after one payment)
Late 16 – 30 Days: 0
Late 31 – 120 Days: 0
Default: 0
Charged Off: 0

All of my notes are at $25.

A Notes: 10
B Notes: 29
C Notes: 8
D Notes: 3
E Notes: 0

Filed Under: Portfolio, Ryan's Portfolio

Brian’s Initial Portfolio (June, 2013)

June 2, 2013 by admin Leave a Comment

I should start off by posting the current statistics for my portfolio so that we can appropriately see the growth over the coming months. I’ll tell you now that there’s relatively not much in there (less than $1,000) but that just makes it all the more relevant to you, a normal working person. If you came here to learn about Lending Club and how to make some decent returns then you’re probably not going to invest more than $1,000 right off the bat anyways. You’re a hard working individual who doesn’t want to throw money into something they’re not sure of… that’s something we here completely understand.
[Read more…]

Filed Under: Brian's Portfolio, Portfolio

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