Investing

Lending Loop - peer to peer lending - do due diligence

  • Last Updated:
  • Nov 15th, 2017 3:41 am
Newbie
User avatar
Feb 28, 2012
66 posts
8 upvotes
Vaughan
porticoman wrote:
Sep 5th, 2017 10:29 am
Good points & good discussion on alternative lending

What do you see is the downside to that type of bridge financing, I'm thinking risk vs reward since there are also zero guarantees on that type of [private lending] $10k bridge financing unless the borrower can come up with minimum $10k of collateral...gold, jewellery etc

Do you know what sort of return folks are getting on the bridge financing/private lending?

Would it also be a single or pooled investment with no upper limit amount?

On US real estate investing in Ohio, couldn't find anything for $10k. Closer to the GTA are properties in Niagara Falls New York. A triplex in fact for $15k, property taxes reasonable for the area

http://www.realtor.com/realestateandhom ... 0847-60246
For Ohio I believe I said 100k. There are plenty of properties available in the 80-100k range.

For private lending, you can pick and choose. My preference is to bridge loan someone who is going through a divorce and is buying a new home but does not have the money to close until the divorce is settled. I prefer this scenario because the money is coming in. Often times they have a relationship with the real estate agent so you can get a picture of the person you're dealing with. You can be second in line to the bank on a lien (meaning if they default you still will have a hard time collecting) but at least you hold some type of paper position.
Member
Jul 27, 2017
489 posts
138 upvotes
GTA
jb10071 @ post # 256

$100k in Ohio, OMG & I said $10k, I'm such a dumb a a$$

So 'private lending/investing' through a RE broker is working for you, great - that is something for me to look into & follow up on....thanks
Newbie
Dec 22, 2014
80 posts
45 upvotes
Peterborough, ON
Hi everyone,

I was reading a blog on passive income and the author recommended the P2P lending site Lending Loop. Interested to hear if anyone has experience with this. The website estimates lofty returns. Pros? Cons?

TIA
Member
Nov 6, 2013
492 posts
210 upvotes
Winnipeg
No loans on the marketplace for a little while.. did something happen with regulators again? I'm starting to wonder.
Sr. Member
Aug 19, 2016
740 posts
256 upvotes
Anyone can just take your money and run, especially the company. Just one bad apple can do significant damage.
Member
Nov 6, 2013
492 posts
210 upvotes
Winnipeg
CollegeGraduate wrote:
Oct 1st, 2017 4:03 pm
Anyone can just take your money and run, especially the company. Just one bad apple can do significant damage.
How likely is that? They have established their business for a number of years (minimum requirement), they have a minimum amount of revenue (minimum requirement) so they are dedicated to their business. Plus, by up and running they are going to screw up their credit rating. The possibility of this happening seems very very low.
Deal Addict
Sep 23, 2009
3899 posts
1102 upvotes
CollegeGraduate wrote:
Oct 1st, 2017 4:03 pm
Anyone can just take your money and run, especially the company. Just one bad apple can do significant damage.
Yes, this is why you should not have all your wealth in one investment/asset.

I am of the opinion that someone can obtain better than average (that is simply buy everything) through research and analysis.

However, if your investments are less than $25,000, it is probably better to just buy an index fund and accept average returns.

Why?

Because to properly research and to invest smartly (that is, don't use 10% of your assets on one single investment) the above average return is not worth the time put in to get it.

Spending 10 hours on deciding how to invest $1,250 to get a return that is say 10% while the average is 5% means that you value 10 hours (the amount of research you did) as being worth $62.50 (that is the increased return over and above the average return based on investing $1,250)

For most, time would be better spent flipping hamburgers at McDonald's.

This is why I think it is funny seeing someone demand answers about a company's finances and then they decide whether or not to invest $50 or even $25

With only a $50 investment (per investment), your time is better spend just investing for the average rate than to try and beat the average.

This is why for small investors (less than $25K to invest), the best investment choice is low costing index funds.

Again, I think through research and analysis and proper diversification, you can beat the average return. But for those with a small portfolio and still being properly diversified, the time spent researching is not worth the added return.
Member
Jul 27, 2017
489 posts
138 upvotes
GTA
CollegeGraduate wrote:
Oct 1st, 2017 4:03 pm
Anyone can just take your money and run, especially the company. Just one bad apple can do significant damage.
edit:
post #262 covered that, also in post #263

My response is lenders to lending loop are usually doing it $50 or $100 per loan to the basket for a 5%, 8% or 12% risk.

In multiples of say total invested $1000, what is the downside since the $50 to $100 increments are spread across several loans. And as it would appear from posters in this thread close to 100% success.

$1000 in Lending Loop or $1000 into a stock that could go in any direction
Deal Addict
Sep 23, 2009
3899 posts
1102 upvotes
porticoman wrote:
Oct 1st, 2017 4:46 pm
edit:
post #262 covered that, also in post #263

My response is lenders to lending loop are usually doing it $50 or $100 per loan to the basket for a 5%, 8% or 12% risk.

In multiples of say total invested $1000, what is the downside since the $50 to $100 increments are spread across several loans. And as it would appear from posters in this thread close to 100% success.

$1000 in Lending Loop or $1000 into a stock that could go in any direction
Well, let's say you had 20 loans ... if 5 or 10% of loans went bad, that's only 1 or 2 of 20.

Yes, losing 5% or even 10% of your total investment would be bad, but considering most loans are earning 10%+, what have you really lost? A year's worth of interest?

With normal market conditions, I think someone who is properly diversified will not be severely impacted by a bad apple.

I do understand that there is a chance that everything goes bad and that 20/20 investments are completely worthless .... but if that were to happen and someone was properly diversified, I think we would probably have bigger issues to worry about.
Deal Addict
Sep 23, 2009
3899 posts
1102 upvotes
In addition, what is the likelihood that all 20 of 20 would go bad at the same time?

I think when you invest you start to make basic assumptions such as the "zombie apocalypse" and the "black plague" are not likely.

It is possible that they do happen, but is there more than 1% chance that the zombie apocalypse happens tomorrow?

Yes, I am saying that their is a chance. But it's not something I am going to rate as highly likely and I doubt that anyone else rational does either.

Planning for the zombie apocalypse and saving all my resources for that inevitable time seems irrational to me.

If you can show me how the likelihood of a zombie apocalypse is higher, perhaps I will change my investment allocation.

LOL.
Member
User avatar
Apr 7, 2007
300 posts
32 upvotes
Calgary, AB
Just opened a lending loop account with $1k and funded two loans at 500 per.
Nice platform and impressed with how seemless and easy it has been so far.
I'll add another 11k over the next 11 months.
Doing it for fun really and to learn about peer 2 peer lending.
Is it a good investment? Not if you have any TFSA room.
Deal Addict
User avatar
Mar 16, 2010
1538 posts
671 upvotes
Hamilton
cheapmother wrote:
Oct 9th, 2017 11:13 pm
Just opened a lending loop account with $1k and funded two loans at 500 per.
Nice platform and impressed with how seemless and easy it has been so far.
I'll add another 11k over the next 11 months.
Doing it for fun really and to learn about peer 2 peer lending.
Is it a good investment? Not if you have any TFSA room.
I've dropped around $600 into it and just spread 25-50 around all sorts of different loans. My TFSA/RRSP is maxed so this is a fun avenue.

I feel like if i wanted to drop larger sums I would do a lot more DD, but $50 won't cause me to lose sleep if it defaults.

What I like the most is how damn easy this site is. Getting set up was a breeze and the UI is very intuitive. I thought it would be more complicated but they've surprised me at each step.
Newbie
Sep 18, 2017
29 posts
34 upvotes
Just signed up yesterday and transferring in $1,500 initially to give it a shot. I like the idea and have read about it in the US so hopefully they grow and proper here in Canada.
Newbie
Dec 7, 2016
15 posts
3 upvotes
I think being extremely diversified and aiming for the maximum exposure of 1% per loan is a pretty decent way to invest in lending loop. I have $5.5K in over 80 loans and my maximum exposure is sitting at 3%. I just add to the account every once in a while and have auto lending turned on so I at least have money in every loan. I add to individual loans if I like the company. I don't take that much time on it though, I just glance through the business and financials and make a quick decision. I never put more than $200 per loan.

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