Join Australia's most dynamic and respected property investment community

Peer to peer lending

Discussion in 'Other Asset Classes' started by RumpledElf, 24th Jan, 2016.

  1. RumpledElf

    RumpledElf Well-Known Member

    Joined:
    21st Jan, 2016
    Posts:
    137
    Location:
    Sydney
    Anyone have any experience with peer to peer lending?

    I have a small amount in Ratesetter at 10% and haven't had the spare cash to look at the higher ones, e.g. 16-25% yield. I have this in an account under my company's name and am keeping it to a small amount because I confuse my accountant enough as is.

    Current thought is to diversify and have a little money in P2P lending, but not too much.
     
    Perthguy likes this.
  2. r3ckless

    r3ckless Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    62
    Location:
    Sydney 2219
    how is p2p/ratesetter for u?
     
  3. D.T.

    D.T. Adelaide Property Manager Business Member

    Joined:
    13th Jun, 2015
    Posts:
    5,569
    Location:
    Adelaide, SA
    Skip the middle man and lend directly to me if you like RE :p
     
    Cactus likes this.
  4. Heinz57

    Heinz57 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    493
    Location:
    Brisbane
    I set up for ratesetter but can't seem to navigate their website - says my account needs activation or something. It is all set up already. I need to ring them but don't want to get caught up in a sales pitch.

    How much investment do you need for 16 to 25%, please?
     
  5. wombat777

    wombat777 Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    1,412
    Location:
    33°41'24.7"S 150°55'34.3"E
    No experience using but have been following it's development for some time.

    Preferred model for me is investing in fund pools that group borrowers of specific credit ratings. I think it spreads risk better. I think liquidity is important too - i.e. being able to on sell your investment and exit.

    Interested if anyone here has been able to invest funds in that manner in Australia.
     
    Melbpositivegeared likes this.
  6. RumpledElf

    RumpledElf Well-Known Member

    Joined:
    21st Jan, 2016
    Posts:
    137
    Location:
    Sydney
    Really uninteresting. I have less than $1000 in there and I just get 10% interest on it, paid monthly along with principle - so your balance goes down unless you reinvest.

    For others, the higher rates I found that were within Australia were with Marketlend and came with more risk and is a lot more manual effort to invest. US market is completely different.
     
    Heinz57 likes this.
  7. Heinz57

    Heinz57 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    493
    Location:
    Brisbane
    10% is pretty good tho. Earning money doesn't have to be exciting!
     
    Tyler Durden likes this.
  8. r3ckless

    r3ckless Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    62
    Location:
    Sydney 2219
    i just put $500 to see how is!
     
  9. Ozzie in Texas

    Ozzie in Texas Well-Known Member

    Joined:
    3rd Nov, 2015
    Posts:
    497
    Location:
    San Antonio, TX
    Peer to peer funding is much like hard money loans in the US. They offer property investors as well as those with bad or no credit history an alternative venue for sourcing financing.

    Hard money loans attract higher interest rates to offset higher risks. The source of funding is often private investors - who can secure interest rate returns as high as 15-20%.

    Tighter banking regulations will always see alternative options spring up.

    However, higher returns most often means higher risk.
     
  10. D.T.

    D.T. Adelaide Property Manager Business Member

    Joined:
    13th Jun, 2015
    Posts:
    5,569
    Location:
    Adelaide, SA
    Do they still take a charge over title or unsecured?
     
    Ozzie in Texas likes this.
  11. Ozzie in Texas

    Ozzie in Texas Well-Known Member

    Joined:
    3rd Nov, 2015
    Posts:
    497
    Location:
    San Antonio, TX
    Usually title against borrowed funds. We went through the process of hard money loans last year because it was the only option available. Hard money lenders will usually focus on your ability to pay back and your debt/credit history......rather than focus on credit scores.

    So there are still checks/balances in place for the private investors.
     
  12. joel

    joel Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    783
    Location:
    Adelaide
    P2p is interesting but seems risky to me. Who regulates/assigns/manages the credit ratings that are used to judge the borrowers? And who chases up any unpaid debt owed to you?
     
    Elives likes this.
  13. wombat777

    wombat777 Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    1,412
    Location:
    33°41'24.7"S 150°55'34.3"E
  14. The Falcon

    The Falcon Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    957
    Location:
    Sydney
    ^ Not sure I understand the attraction at those rates, There are a lot of ASX listed hybrids that look like offering a better risk / return balance than this P2P stuff. Makes good money for the promoters though, no doubt.
     
    Terry_w likes this.
  15. wombat777

    wombat777 Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    1,412
    Location:
    33°41'24.7"S 150°55'34.3"E
    Some good examples? I'll soon be looking at a portfolio mix for debt-recycling. Need to broaden my mind as to the sorts of things to be looking at in addition to the ASX stocks in my current portfolio. Planning to select 6 stocks at $5k per trade. Will also do my own DD of course.
     
  16. The Falcon

    The Falcon Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    957
    Location:
    Sydney
    DYOR but top off the head, big 4 banks capital notes are around BBSW +5%, (say 7% gross) and that's just a start. Plenty more convertibles at 7-8% too. BUT, the underlying thing to remember, corporate debt is always issued to the benefit of Shareholders not debt holders. Something in that.........common stock dividends > all.
     
  17. sanj

    sanj Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,139
    Location:
    Perth

    Sounds like youre describing anoyher model entirely and i largely agree with you on that one.

    With some of these new fintech models ive looked at, its a case of the company (eg society one) connecting someone looking to borrow unsecured funds, rating their credit worthiness, working out an interest rate based on their internsl rating system and then sending it to pre-registered potential "funders" who then say yes or no, there can be as many as 10 or people each putting in 2k to lend someone 20k. If the deal goes ahead society one takes a clip of the loan.

    For the fintech business lending models i believe they take a charge over the business with pretty strict conditions and on a high interest rate of up to 30%.

    Not sure how that is structured to specifically suit the shareholders and not the debtholders since the debt holders are the ones srtting the terms and providing the non negotiable contracts. Btw who are the promoters youre referring to in this chain?

    We aren't talking big raisings for public listed or unlisted companies here, this is an entirely different space.
     
  18. The Falcon

    The Falcon Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    957
    Location:
    Sydney
    I am talking about corporate notes / convertibles.

    Re P2P - personally I cant understand the attraction when one runs the numbers. But that's OK. Just not for me.
     
  19. Newfast

    Newfast Well-Known Member

    Joined:
    24th Apr, 2016
    Posts:
    142
    Location:
    Syd
    Hi @D.T. I would like to know more, if possible