www.funding.com.au

Discussion in 'Investment Strategy' started by kingstreet75, 5th May, 2020.

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  1. kingstreet75

    kingstreet75 Well-Known Member

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    Just wondering if anyone here has invested in or been funded through this newish firm.
    According to them not a single default on a payment so far, 55million in transactions.
    An alternate model to bank lending.
    On one hand my friend told me to stay away. People who cannot get loans the ordinary way are a risk. On the other hand, being an expat, I can see the need for an alternate way or funding.
    The min amount is 5k. It seems a bit of a risk for just a 6% return.
     
  2. Lindsay_W

    Lindsay_W Well-Known Member

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    Pretty sure it's private lending, first mortgage over security
    Are you looking to invest or borrow?
     
  3. Trainee

    Trainee Well-Known Member

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    Whats so alternate about it? Basically because they are not a bank. This is no different from solicitors funds, mortgage funds, etc. Certainly not new.

    Dont let your own experiences or situation colour your view of the investment. Especially not when its sympathy.
     
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    Great domain name!
     
  5. Buynow

    Buynow Well-Known Member

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    If you get 6%, then with a margin on top they are charging at least 8%; what sort of borrowers would pay 8% for secured mortgage lending? At a guess high risk property development. Which would be particularly high risk right now.

    They may claim no defaults to date, but how long have they been operating? When the tide goes out......
     
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  6. kingstreet75

    kingstreet75 Well-Known Member

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    Invest I think. I have about 5-10k to invest and would otherwise be sitting in a bank. Doing not much at the moment.
     
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  7. kingstreet75

    kingstreet75 Well-Known Member

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    Target Return: 7%pa*net LVR: 48.7% Term: 6 months

    Beaumaris VIC 3192.
    Loan:
    $935,000
    Security: 1st Mortgage.
    Use of Funds: Refinance.
    Repayment Strategy: Sale of the Security Property.
    Property Description: The Security Property is a residential two-story house on a 790sqm lot with 4 bedrooms, 2 bathrooms, 2 dining rooms, attached double garage and in-ground heated swimming pool.
    Location: The Security Property is situated in an affluent bayside suburb of Melbourne and is 20kms south-east of Melbourne's CBD. The property is less than 1km away from Beaumaris Secondary College, Beaumaris and Stella Maris Primary Schools and within close proximity to multiple beaches and reserves, cafes/shops including IGA, Bayside Shopping Centre and Beaumaris bowls and tennis clubs. With railway stations generally within 2kms at Parkdale and Mentone.

    I don't know. It doesn't seem THAT high risk in terms of location. 48.7LVR means they have about 50% of their own money, correct? But in the current climate it they may sell at a loss. However the investor would still get their 7% as far as I see.
    The other one on the site for VIC anyway are for two town houses and they plan to sell one to pay off the loan.
     
    Last edited: 5th May, 2020
  8. Trainee

    Trainee Well-Known Member

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    The question is what is it about the borrower that they cant borrow at 3% from a bank?

    there are genuine uses for these loans, because bank loans arent flexible around cashouts for example. But you are relying on the expertise of the lending company because you have no control over this.
     
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  9. kingstreet75

    kingstreet75 Well-Known Member

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    My first thought and thanks for this. True. However, it's first mortgage backed. If they can't pay it back, the property is sold to recover investor funds.
    That is the risk in terms of time. If it had to be sold this process could take a year or more I guess.
     
  10. kingstreet75

    kingstreet75 Well-Known Member

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    Got it, thanks.
     
  11. Trainee

    Trainee Well-Known Member

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    For risk assessment, would still want to know why these people dont just go to a bank and borrow at 3% instead of probably 10%+.
     
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  12. kingstreet75

    kingstreet75 Well-Known Member

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    yes I did ask this. It's usually for people who are on a tight time frame. Applying for bank loans is a slow process.
     
  13. Trainee

    Trainee Well-Known Member

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    And why would someone with a 2m unencumbered property suddenly need a million dollars that urgently?

    again not saying there arent genuine reasons for these loans, but why pay 10+%? Do you understand the risks? Because there must be some.
     
  14. kingstreet75

    kingstreet75 Well-Known Member

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    Thanks for this. Yes they have a chat box on the site and the Chief executive is there to answer questions.
    The risk is that the person defaults and then the property has to be sold. It may then take some months or longer to recover your funds. They have a range of people seeking funding so part of the risk depends on the location and how quickly it could be sold.
    In the Queensland section they have some people seeking funding for rural properties and I say that's a bit risky. Something in Melbourne not too bad. If it's a residential property in a good area I say the chances of selling it are quite high.
     
  15. Buynow

    Buynow Well-Known Member

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    Could be second mortgages

    Could be overvalued

    Could be in poor condition

    Could be tenanted

    6 month term, so need to sell in current market. What sort of discount required?

    What security rights do you have if loan not repaid in 6 months? Does the company enforce security or leave it to you?
     
  16. Trainee

    Trainee Well-Known Member

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    Also concentration of risk. A bank makes many many loans. Some will go bad or have complications. But these will be a small % of loans.

    If you invest in a handful of loans, and those are the ones that go bad.........
     
  17. Peter_Tersteeg

    Peter_Tersteeg Well-Known Member Business Member

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    The people lending the money under these terms tend to be developers or business people wanting to get in and out of a deal within a short time frame.

    They likely don't have any financials, just a business plan showing how they can make money and a lot of security. Possibly a history of defaults or bankruptcies. They wouldn't qualify for a loan with a regular lender.
     
  18. kingstreet75

    kingstreet75 Well-Known Member

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    Yep all true. There are a range of investments on this site, and it's up to the investor to pick the one they are comfortable with.
    Or not. 6% is not a massive return for the risk over 1 year in my view. But I thought it's good to get some opinions.
    However if banks are not going to offer people credit, more of these types of services are going to come up. I see Tencent just bought 5% of Afterpay.....
     
  19. Lindsay_W

    Lindsay_W Well-Known Member

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    Usually result of poor planning/unexpected timing issue
    Example - Clients bought another property and need to settle in 2-3 weeks, expected they would have already sold the existing property and plan was to use the funds from sale to settle the new purchase, now they need cash to settle the new purchase in a short period of time, to be repaid once the existing property sells. It's not ideal and yes they didn't plan properly.
    Something like that, is usually the story when I see people requiring private funds.
     
  20. Car tart

    Car tart Well-Known Member

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    How does the company make money, seems no explanation on the website.