Does Anyone Have Five Or Six Figures In Lending Club?

[mtnman]

...and continuing to reinvest? I'm asking because, while I learned a lot and honed the art note filtering, it's still barely semi passive and I have to log in once a week to prevent a total loss from delinquent notes. (Although this is more rare these days with strict filtering) I'd like to dump more money into it, but also don't want to create an ongoing headache for myself either.

Granted there is still a healthy return so I toyed around with some automation, but I don't trust the PRIME service since it's internal. Anyone using any automated api tools like steamroller, etc...?

 

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[SteveO]

What exactly are you working on? Are you lending money on short term notes? What is note filtering?

Thanks

 

[mtnman]

What exactly are you working on? Are you lending money on short term notes? What is note filtering?

Thanks

Hey Steve, how are the apartments going? Haven't seen you since my last trip to AZ.

I'm not sure I understand your questions?

A while back, I got tired of earning .85 % from some money just sitting in savings, and decided to learn how use the P2P lending platforms and put it to work. Essentially I knew nothing about lending, and when it comes to finance, my literacy is severely lacking.

• www.lendingclub.com
• 36-60/mo terms
• crowd lending - $25/min per note

I picked the Lending Club platform to learn with instead of Prosper, because Google made a minority stake which made me feel more comfortable. I followed some basic online guides to get going, but it led to a lot of charge offs. Note filtering is just the set of filters you use to filter loans, in order to pick whom you'd like to lend money to. In the end it all comes down to stability... For instance, a borrower with a credit score of 720 or greater, has a mortgage, solid employment of 4 plus years, no defaults in the last 24 months (according to Lending Clubs system, although I question the hardcore policing of applicants), and low debt to income is far, far less likely to default than a borrower with less appealing credentials. Probably common sense for most, it just took a while for me to see exactly what filters really impacted repayment longevity. And I learned a lot more by keeping separate portfolios separated by my lending criteria, instead of just relying on what I read on the internet.

I should note, most of my accounts are still in their infancy you might say, as most loan terms are 36-60 months.

Up until now, I've reinvested everything. Refining my strategy, returns have stabilized for almost a year now at 14% and change. I could be a little naive here, as the situation could could go south during the long haul, but what I do differently than most people is just get ultra aggressive at preserving my seed capital. (most notes I'm only invested up to a nominal amount, so charge offs are relatively minimized in proportion to my overall portfolio size.)

When most people have notes in the "grace period," they sit and hope that Lending Club's team will follow up and threaten collections or what have you. I do the opposite and sell it immediately for a partial loss. I don't F*ck around at all, I don't care what the borrowers credentials look like at this point, how many payments they've made, nothing. I want out. I want to minimize the hit and reinvest back into solid notes. (I have let them ride in the past, and there is a decent recovery rate once delinquent, I just don't have time to sit there and babysit hundreds and hundreds of notes for 14% on my money, it's just not worth my time.)

I think I'm just getting bored with it, although it's been a fun learning experience and beats any money market rates I've had. So I'm just wondering if anyone else has been in this position, and rolled this into something else, or developed an automated tool for setting sell criteria for the secondary network?

 

[pro]

mtnman: What is the secondary network? Is this where you can sell off loans that you've already agreed to?

How does the partial loss work -- how much do you lose when you agree to take one or is that negotiable on the secondary network?

The 90th percentile does less than 11%, so I'm guessing you're probably in the top 5% of performers if you made 14%

 

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[SteveO]

Thanks. You answered my questions plus a whole lot more.

I asked because I was just talking to RealOG about this topic. It seems that apartment deals are getting tough to come by these days. I am looking for something else to work on.

I was thinking about hard money investing on apartment deals. The problem is that in the last few years I have seen over 100% returns annually. Those are decent returns for the efforts that I put in to the program. I would like to make at least 25% to make it worth any effort at all.

Short term loans of 1-2 years would be the target.
2-4 points up front or on the back depending on the strength of the project.
12% interest rate.
Loan on 60% of value (value = what I would be willing to pay)

In order to achieve the 25%, I would need to count on a certain amount of defaults.

I would have a second part of this company as well that purchases non-performing notes at a discount. These would be foreclosed on and sold.

The biggest drawback that I see is that the profitablility of this would probably track with the straight apartment investing side. Meaning that the best time to make money on this would likely be while I would be able to achieve the large returns with the apartments. The plus side is the level of work would be much lower.

 

[Milkanic]

I've played around with the unofficial python API http://python-lendingclub.readthedocs.org/en/latest/

I'm not sure on the limits, but it looks pretty straight forward to check for loans every 10 min and order if they meet your filters.

I have too many projects going but may circle back to this in the future.

 

[mtnman]

mtnman: What is the secondary network? Is this where you can sell off loans that you've already agreed to?

How does the partial loss work -- how much do you lose when you agree to take one or is that negotiable on the secondary network?

The 90th percentile does less than 11%, so I'm guessing you're probably in the top 5% of performers if you made 14%

Yeah it's a secondary trading network: www.foliofn.com

Sure, you can sell notes at any time. There's a lot of things at play here, you have the large financial institutions that are running data centers buying notes as soon as they drop (hence the little guys complaining about lack of note volume), and you have the same crews utilizing the same technology buying delinquent notes in droves on the trading network... I speculate both for write offs, and to pursue collections. (some of what's going on behind the scenes I don't even understand, so I'm not really an authority on the subject)

Pricing your notes is completely up to you. I'm fairly aggressive because I wan't to move them quickly, so if I check the notes available for the day with payment history, in the grace period, I price mine a buck or two below that and they normally get snapped up within 24 hours. I'd rather keep 70% of my seed capital right now and reinvest it immediately, rather than sit around and "hope" they have a snappy follow up/collections team hounding borrowers in the grace period. (I have no control over this time period, that's why I'm so against it)

I'm not sure about the top 5%, I think it's like anything else: you get out what you put in. Most everyone I've seen that does portfolio reports, always mentions recalculating their actual returns to account for charge offs (they are correct, lending clubs internal NAR calculations are about the most deceiving thing I've seen), but I never see anyone doing anything about it other than letting them ride. This is probably because they don't actively nurture their accounts... basically what I'm getting tired of doing.

 

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[mtnman]

I've played around with the unofficial python API http://python-lendingclub.readthedocs.org/en/latest/

I'm not sure on the limits, but it looks pretty straight forward to check for loans every 10 min and order if they meet your filters.

I have too many projects going but may circle back to this in the future.

There are quite a few tools out there already like interest radar and p2p-picks. I haven't used either since they were in beta, they just didn't do what I needed during that time. On the flip side, now I'm a huge advocate of learning P2P lending manually... I would've never gained a decent understanding of the ecosystem if I would've started with automated tools.

www.lendingmemo.com and http://www.nickelsteamroller.com normally have some good info on current trends.

 

[NYCGoblin]

I know that this is a old thread but I wanted to ask a question about Prosper/Lending Club interest rates. If you bought a $25 note at 10% do you collect that interest monthly or is are you making a total of 10% over the life of the loan? Not sure if there is a obvious answer to this question but I wasn't sure at all.

 

[DeletedUser394]

I'm pretty amazed that most people aren't capable of using google. Is it laziness, or ignorance? This peer lending service isn't even available in this country and I found your information in 30 seconds.



https://www.lendingclub.com/public/how-peer-lending-works.action

 

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[Kak]

I know that this is a old thread but I wanted to ask a question about Prosper/Lending Club interest rates. If you bought a $25 note at 10% do you collect that interest monthly or is are you making a total of 10% over the life of the loan? Not sure if there is a obvious answer to this question but I wasn't sure at all.

The percentage refers to the annual yield.

 

[NYCGoblin]

The percentage refers to the annual yield.

Thanks! I am use to interest being applied on a monthly scale. Wanted to be more clear on how P2P return was going to look like. The math is still not adding up for me but I am more then likely doing something wrong in my calculations.

 

[MJ DeMarco]

Bump, @mtnman are you still deploying Lending Club as a tool?

 

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