We were in a brainstorming meeting today with some fellow property professionals and we were looking at future trends and talking points in property.

A number of things came up ... including peer to peer lending.

The BBC reported in June that lending by these companies had exceeded £250 million.

Lending via three websites that link savers with borrowers - bypassing the banking system - has topped £250m.

The "new age" finance carries no protection for deposits, but is being tipped as a serious threat to traditional banks.

The peer-to-peer sites are led by Zopa, which has lent more than £200m since it started in 2005.

Funding Circle, specialising in business loans, has topped £34m, and RateSetter has reached £24m.

The government said it would lend these sort of firms £100m to help expand their own lending to businesses.

The latest contender to enter the fray is BanktotheFuture.com which claims to be the ‘world’s first social network financial institution’. This lending website matches investors and start-up businesses but instead of relying on credit scores it evaluates potential customers on their social media ‘capital’ – basically online presence, number of friends and followers, plus good reviews equals a good credit score.

How can property professionals take advantage of peer to peer lending?

I do not believe that a loan can be used for a deposit, but it could be used to pay for a refurbishment, for instance.

Any other ideas?

Related reading: Bank of Dave

Absolutely, we now do Peer-to-Peer Business Loans at Bespoke Finance. A premature announcement for Property Tribes! as im still waiting for documentation .. We are using one of the larger Peer-to-Peer networks to offer it as an alternate to the Main Stream banks whom default answer is generally No.

I also contribute to Zopa on a larger scale and get good return on my investment! ... Against the odd's I have yet to have anyone default on a loan but since their spread out in £10 sections across many borrowers.. Egg's are not in one basket.

Then their is FundingCircle which I have invested a little and some decent returns.

Next Step, Peer to Peer Buy to Let Loans ?... I can hope.

I don’t think we will see Pear to Pear Buy to let loans any time soon, as the rates the banks charge on BLT mortgages are so low.

However I expect we will see a bridging version of Pear to Pear, as the rates are a lot more, as well as HMO etc that the bank don’t wish to touch.

Found Zopa and funding circle useless. No different than any other loan company. Sorry sir, you seem to have a lot of loans. You don’t say, I’m a property investor.
Proud to say met one of the founders of ratesetter for a few beers and to discuss my needs and was one of the early customers. Great company. They base it on your credit rating (hallelujah, a use for a top credit score) and managed to get £30k (£15k each for me and missus). Paid half back and reset loans for another deal. Now 1/3 way through repaying these. Probably won’t need another loan from them but wouldn’t hesitate to go back to them.
They charge a small fee on each loan that goes into a pot to cover bad loans. They don’t get many so the contingency fund has grown massively.
Was clear I was using for property investment and have earnt far higher returns on what I’ve lent than I’ve paid.
I believe this is a great way forward and hope they continue to grow.

There was a BBC radio programme about crowd source funding, think it was In Business or maybe Global Business.
Interesting concept to maybe consider.

@Paul C.

Could you explain exactly how you used your RateSetter loans in property?

@Ian

Pear to pear?



I am sure those would be very fruitful loans!!

Ever the wit Vanessa !!

I am a great advocate of the JV world but it would be great to see a website that dealt in specialised peer to peer property loans where projects could be pitched.

I came across this article for Algorithms for Investment and a company that determines VC investment based on success algorithms for previous projects. Would be interested to see the same work on property ventures

http://www.bbc.co.uk/news/business-19286426

[@Paul C.
Could you explain exactly how you used your RateSetter loans in property?

Yep, bought a nice new shiny BMW and I look great driving around. Thanks ratesetter. Only Joking.

Used £28,500 for a deposit on a project whereby I funded the refurb and purchase and mortgage costs. This was bought refurbed and sold in 5 months. Made a profit of £16k. Then recycled it to another BTS which made 15k profit. This sold day 1, but the cash buyers money was tied up in bonds so exchanged and delay completed 4 months later. So in 12 months this money and about the same amount of mine had generated 31k profit. So ratesetters loan had generated half again in 12 months, I had the loan over 3 years.

Have since recycled it to do BTL whereby buy cheap, refurb, get all money back out and leave £200 -£300 cashflow and about £15k equity. Have also refinanced it back to £30k last year to help on another BTS that needed a lot of cash due to retention and amount of work. This brought in another £25k profit and sold day 1 which was immediately recycled into another one we are doing exactly the same in same area.

As it’s just part of my pot, it’s hard to say exactly what it will generate over life of loan. But I think it will easily have doubled itself and more.

This is what is frustrating. Property is so cash intensive and good returns are to be had. But I’ve give up trying to get private investors on board, I value my time more and was sick of having it wasted.

I love the richest man in babylon’s idea of money. The returns are the children, then make money from the childrens children and so on and so forth. I want each of my gold coins to breed like a dss family . Even better when somebody lends you some of their children to go out and work for you, for a fee of course.

I really hope Ratesetter go the commercial route, and I know it’s something they are looking into.

(30-08-2012 10:57 AM)paul_cummings Wrote:  [@Paul C.
Could you explain exactly how you used your RateSetter loans in property?

Yep, bought a nice new shiny BMW and I look great driving around. Thanks ratesetter. Only Joking.

Used £28,500 for a deposit on a project whereby I funded the refurb and purchase and mortgage costs. This was bought refurbed and sold in 5 months. Made a profit of £16k. Then recycled it to another BTS which made 15k profit. This sold day 1, but the cash buyers money was tied up in bonds so exchanged and delay completed 4 months later. So in 12 months this money and about the same amount of mine had generated 31k profit. So ratesetters loan had generated half again in 12 months, I had the loan over 3 years.

Have since recycled it to do BTL whereby buy cheap, refurb, get all money back out and leave £200 -£300 cashflow and about £15k equity. Have also refinanced it back to £30k last year to help on another BTS that needed a lot of cash due to retention and amount of work. This brought in another £25k profit and sold day 1 which was immediately recycled into another one we are doing exactly the same in same area.

As it’s just part of my pot, it’s hard to say exactly what it will generate over life of loan. But I think it will easily have doubled itself and more.

This is what is frustrating. Property is so cash intensive and good returns are to be had. But I’ve give up trying to get private investors on board, I value my time more and was sick of having it wasted.

I love the richest man in babylon’s idea of money. The returns are the children, then make money from the childrens children and so on and so forth. I want each of my gold coins to breed like a dss family . Even better when somebody lends you some of their children to go out and work for you, for a fee of course.

I really hope Ratesetter go the commercial route, and I know it’s something they are looking into.

Nice one - A great example of poetry in motion

@Paul Cummings they are a lot different than other Loan Companies. Of course they look at your credit file and review it at the time, it sounds like your Credit Utilisation was too high. To a normal borrower that means your living out of your means, which is why Zopa would have probably said no.

They are lending out other members money, so they are not going to be loose on their criteria and take an objective view.

The best thing I find about these P2P lenders is they generally have no Early Repayment Charges, No Application Fees and they don't work by "quotas" like main street lenders. Simple, Quick and Flexible. Generally can be done over the internet with Competitive Rates.