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Post by timm2006 on Jan 19, 2017 11:34:48 GMT
Hello all
I've been investing in RBS for about a year now, and have around 30 loans. I'm struggling to make any positive returns at all, as my estimated return is -8% due to 3 defaults in the space of the last 6 months. After the second default I decided I would no longer invest in any C risk loans as the first two had been C risk and only invest in A and B, but have had my first (probable) A risk default. All of these have personal guarantees which judging by the the first default, seems to be worthless as security. Admittedly none of these have actually been declared as full loses (still in the attempted recovery stage) but I'm assuming they are lost. The default rate is published at 10% or so, which would mean I've had my 10% defaults already so hope there are no more. But for now I'm not going to put any more extra funds in to this platform for this next year to see how things pan out. Any tips for securing a above 0% return?
Thanks
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Post by captainconfident on Jan 19, 2017 12:47:11 GMT
Around 9%p.a. positive return over the last two years. I have a better return here than on FC. I have lots of small investments on REBS and about 5 really big bets. A bit of money gets caught in each of the problem loans, but so far with one exception, the big ones support the portfolio. So it's all highly geared and risky, and that is what I like about it.
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Post by kylierebsoc on Jan 19, 2017 13:32:19 GMT
Dear timm2006, How did you calculate the 8%? Would you kindly confirm you username? We’ve recently published the Net Returns on our stats page www.rebuildingsociety.com/stats/. This shows a comparative analysis of Net Returns across all active lenders. It is intended to assist lenders understand the distribution variance and to help existing lenders understand their performance, relative the achievements of others. As you continue to receive repayment from performing loans, your Net Return may recover. To maximise returns, you may compound your interest earnings into new loans, this will help boost your returns by keeping your capital employed. Your investment strategy is achieving a double digit gross return, albeit temporarily hampered by two defaults, which are still in the early stages of recovery. You are in a phase whereby you have yet to experience your first recovery, and may be affected by further defaults. So, your returns may further deteriorate before they improve. In the event of recovery, we attempt to recover the capital outstanding and unpaid, compounded interest. So successful recoveries can significantly boost your returns. If you continue to keep a diversified portfolio, then after 2-3 years, you may find that your Net Returns are in line with the modal. Currently most lenders are achieving 9%, nevertheless past or current returns are not always an indication of future returns.
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Post by dodgeydave on Jan 19, 2017 13:48:00 GMT
Dear timm2006, How did you calculate the 8%? Would you kindly confirm you username? We’ve recently published the Net Returns on our stats page www.rebuildingsociety.com/stats/. This shows a comparative analysis of Net Returns across all active lenders. It is intended to assist lenders understand the distribution variance and to help existing lenders understand their performance, relative the achievements of others. As you continue to receive repayment from performing loans, your Net Return may recover. To maximise returns, you may compound your interest earnings into new loans, this will help boost your returns by keeping your capital employed. Your investment strategy is achieving a double digit gross return, albeit temporarily hampered by two defaults, which are still in the early stages of recovery. You are in a phase whereby you have yet to experience your first recovery, and may be affected by further defaults. So, your returns may further deteriorate before they improve. In the event of recovery, we attempt to recover the capital outstanding and unpaid, compounded interest. So successful recoveries can significantly boost your returns. If you continue to keep a diversified portfolio, then after 2-3 years, you may find that your Net Returns are in line with the modal. Currently most lenders are achieving 9%, nevertheless past or current returns are not always an indication of future returns. kylierebsocCould i ask a simple question. Out of the very high number of defaulted loans , How many have been successfully been recovered. I only ask as you state ( Highlighted by me ). That timm2006 has yet to experience his first recovery. And i am also awaiting my first recovery .
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SteveT
Member of DD Central
Posts: 6,874
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Post by SteveT on Jan 19, 2017 14:00:59 GMT
Of 8 loans I owned (before I opted to exit ReBS) that defaulted, so far I've had 1 recovered in full via a long-awaited refinance (R******* HiFi). The rest are all in various states of bankruptcy / receivership and have yet to recover a penny. One was notified this week as a likely total write-off. I'd say at least 2-3 more will be the same in the end.
(Overall my IRR is a touch over 8%, ignoring any prospect for further recoveries)
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Post by kylierebsoc on Jan 19, 2017 14:04:30 GMT
Dear timm2006, How did you calculate the 8%? Would you kindly confirm you username? We’ve recently published the Net Returns on our stats page www.rebuildingsociety.com/stats/. This shows a comparative analysis of Net Returns across all active lenders. It is intended to assist lenders understand the distribution variance and to help existing lenders understand their performance, relative the achievements of others. As you continue to receive repayment from performing loans, your Net Return may recover. To maximise returns, you may compound your interest earnings into new loans, this will help boost your returns by keeping your capital employed. Your investment strategy is achieving a double digit gross return, albeit temporarily hampered by two defaults, which are still in the early stages of recovery. You are in a phase whereby you have yet to experience your first recovery, and may be affected by further defaults. So, your returns may further deteriorate before they improve. In the event of recovery, we attempt to recover the capital outstanding and unpaid, compounded interest. So successful recoveries can significantly boost your returns. If you continue to keep a diversified portfolio, then after 2-3 years, you may find that your Net Returns are in line with the modal. Currently most lenders are achieving 9%, nevertheless past or current returns are not always an indication of future returns. kylierebsoc Could i ask a simple question. Out of the very high number of defaulted loans , How many have been successfully been recovered. I only ask as you state ( Highlighted by me ). That timm2006 has yet to experience his first recovery. And i am also awaiting my first recovery . Hi dodgeydave, I have seen your message and want to put a detailed response together for you which will take a bit of time. I'll try and get a reply to you today, if not definitely tomorrow.
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Post by kylierebsoc on Jan 19, 2017 16:07:36 GMT
Hi dodgeydave, I have spoken with our debt recovery team to put together the following stats and figures for you. We have to date recovered 10.52% of the capital outstanding from loans in default. This figure represents capital received from loans that have been fully recovered, as well as capital that has been recovered on loans where a more long term repayment schedule is in place (including IVAs and CVAs) and our legal action is therefore still ongoing.We have received some level of recovery 50% of all loans in default. Our current forecast level of recovery is 51.50% this figure is calculated from the amount we expect to receive through the negotiated arrangements in the legal recovery process. Whilst I see that you may not have yet experienced a full recovery, I note that you have 6 loans in recovery 4 of which have progressed to point where you have either received some repayments, or already have formal agreements in place for repayment of the debt in the future. In terms of our total stats, at present exactly 50% of our total defaults have already secured some capital recovery. This has been received from sources such as a bankruptcy dividend, dividends from CVA/IVA proposals, refactored repayments or income payment plans. Whilst the legal debt recovery process is often complicated and lengthy, all being well you should currently expect to see a large proportion of your capital in these loans recovered. Lending to businesses is inherently risky. The risk can be mitigated somewhat by taking security on the loans. That is why we insist that all loans carry at least a Personal Guarantee or additional security where the loan requirement exceeds £50k.
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Post by oppsididitagain on Jan 20, 2017 11:50:12 GMT
Hello all I've been investing in RBS for about a year now, and have around 30 loans. I'm struggling to make any positive returns at all, as my estimated return is -8% due to 3 defaults in the space of the last 6 months. After the second default I decided I would no longer invest in any C risk loans as the first two had been C risk and only invest in A and B, but have had my first (probable) A risk default. All of these have personal guarantees which judging by the the first default, seems to be worthless as security. Admittedly none of these have actually been declared as full loses (still in the attempted recovery stage) but I'm assuming they are lost. The default rate is published at 10% or so, which would mean I've had my 10% defaults already so hope there are no more. But for now I'm not going to put any more extra funds in to this platform for this next year to see how things pan out. Any tips for securing a above 0% return? Thanks Hi Timm2006 I will give you the approx raw numbers for my account. All numbers are approx - however, I want to make this as transparent as possible and you must remember I didn't run all loans until maturity, so I have displayed the Profits from early sales/promo interest. I have been with ReBS for 4 years this Feb. I started with about 10K and invested/reinvested upto 40K at my peak. I invested in over 100 loans so I would say thats very a diversified portfolio The numbers below are approx numbers and you have to remember I have sold out of some of my loans To date my returns have been £13500 in interest Realised loss (deductions) £1000 Outstanding debt/Losses £8000 (However ReBS calculate this as estimated losses of £4000 - which I don't believe will be the final figure) Profit from Micro sales and promo's £450 So I am currently £4950 net net better off. Apparently, according to the site, this is a 13.5% return after defaults, I'm guessing thats means over 4 YEARS - so about 3% PA compounded?? I still have a balance/investment of apprx £14500 and this hopefully will bring me returns in the future of about 16% So if everything stays Equal, no more defaults, I don't sell any loans, I just sit and wait it out until all the loans mature, in about 3 years I will generate another £2200 in interest. (I think) So there you have it after 7 years I will have Approx £15700 in interest £9000 of default losses. £450 of sales/Promos This is presuming I just sit on my hands and let nature runs it thing, no recoveries, and no reinvestments. So you have my numbers - think about the effect of Inflation etc as well - What do you think about the my returns ? Still waiting for and answer on how the H*ly**D D**Velo***ent recovery has been calculated - on the relevant thread.
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Post by dodgeydave on Jan 20, 2017 12:45:48 GMT
Hi dodgeydave , I have spoken with our debt recovery team to put together the following stats and figures for you. We have to date recovered 10.52% of the capital outstanding from loans in default. This figure represents capital received from loans that have been fully recovered, as well as capital that has been recovered on loans where a more long term repayment schedule is in place (including IVAs and CVAs) and our legal action is therefore still ongoing.We have received some level of recovery 50% of all loans in default. Our current forecast level of recovery is 51.50% this figure is calculated from the amount we expect to receive through the negotiated arrangements in the legal recovery process. Whilst I see that you may not have yet experienced a full recovery, I note that you have 6 loans in recovery 4 of which have progressed to point where you have either received some repayments, or already have formal agreements in place for repayment of the debt in the future. In terms of our total stats, at present exactly 50% of our total defaults have already secured some capital recovery. This has been received from sources such as a bankruptcy dividend, dividends from CVA/IVA proposals, refactored repayments or income payment plans. Whilst the legal debt recovery process is often complicated and lengthy, all being well you should currently expect to see a large proportion of your capital in these loans recovered. Lending to businesses is inherently risky. The risk can be mitigated somewhat by taking security on the loans. That is why we insist that all loans carry at least a Personal Guarantee or additional security where the loan requirement exceeds £50k. kylierebsocI do thank you for a prompt reply. We will have to wait and see about the forecast level of 51.50 %. Only time will tell.
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Post by timm2006 on Jan 20, 2017 14:08:08 GMT
Hi all
Thanks for your replies. oppsididitagain thanks for the the detailed breakdown and figures from your experience, this is really interesting. Of those defaults that you had, did they occur in the first year or were scattered over the 4 years you have been investing? I think I have been with ReBs for less than a year, perhaps 9 months or so and suffered 3 defaults over that period - one in August 2016, one in December 2016 and one in Jan 2017. Admittedly, these haven't been realised and are in the process of recovery so don't know yet whether any of them will actually recover anything yet, but I assume they will all be lost. One however is not yet in default, but in financial difficulties, so is in arrears, and will probably go to default. I've got around 30 loans all with generally the same investment level (some a little more), each loan is currently approx 3% of the total investment level so I'm fairly well diversified I think. I've only been dipping my toes in the water so have just a tiny tiny amount invested (under £300) with £10 in each loan, so the defaults are hardly earth shattering but it's more of an experiment so see whether my initial concerns on the platform being high risk was justified, and whether it would warrant increasing the investment. So far, it seems my initial concern has become justified. I might just got unlucky having my expected 10% default rate happen right at the beginning before I have built up any interest return, and it might be okay for the next 3 years....
Kylie - my username is timm2006. My -8% calculation is based on my 2 existing defaults (and 1 likely to go into default) all having 100% loss, and also assuming I will continue to have further defaults over the next few years. The Estimated return is around -0.5% currently, but doesn't take into account the likely 3rd default and also it's optimistic recovery rate.
oppsididitagain - your calculated return of 3% per annum for me personally, wouldn't be high enough to justify investing in this high risk platform, I would would hope for at least 8% to make the effort worthwhile.
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Post by danraj on Jan 20, 2017 17:17:37 GMT
The Net Return of 13.5% quoted from @oopsididitagain is an annual rate of return on the capital employed (credits net of debits) to the platform. It is wrong to divide this over the 4 years. Don't forget that defaulted loans are also invested capital.
3 defaults in 9 months is somewhat unlucky. Since you have 30 loans, this is 10% which is commensurate (in number) with the overall platform default rate. You may find that your defaults increase before some recoveries come through. You may maximise returns by compounding the repayments with interest onto bids on new loans.
Typically, 50% of defaulted loans make some repayment or may recover. The enforcement process is a legal process using the courts to recover assets of the borrower or director, unfortunately its quite inefficient and doesn't blend well with the online world. However it would be overly pessimistic to expect that all loans which default will become a bad debt. The courts may be inefficient, but they are not completely ineffectual.
Some people like the transparency, others get anxious over any defaults, some learn to make risk adjusted lending decisions. Starting with a small portfolio to validate your investment strategies is wise. Just remember that when your first recovery does come through, if we are able to recover the compounded interest and capital owing, then your net returns will jump.
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baldpate
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Post by baldpate on Jan 20, 2017 18:57:11 GMT
... Don't forget that defaulted loans are also invested capital. .... If that is the case, Daniel, why is my defaulted capital excluded from the total amount shown in the "Investment" box in the MY OVERVIEW section of the Dashboard ? And this despite the fact the the pop-up information associated with the "Investment" box explicitly says : The value of your employed capital. This includes investments in loans which are in default.
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Post by dodgeydave on Jan 21, 2017 6:00:01 GMT
Hi dodgeydave , Our current forecast level of recovery is 51.50% this figure is calculated from the amount we expect to receive through the negotiated arrangements in the legal recovery process. kylierebsocJust for clarification. The forecast level of recovery 51.50% Will that be net of recovery costs ?
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Vero
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Post by Vero on Jan 22, 2017 17:07:47 GMT
Yes, positive returns.
I joined ReBS 16 January 2014.
So far I had one small default. It was my first ReBS loan & already in arrears; I felt sorry for the borrower & altruistically wanted to give him a chance... So partly my own fault. I'm Australian, we back the underdog... lesson learnt!
I have since been selective & a bit like captainconfident , rather than diversify I only pick loans I like & probably go in a bit big. So far so good.
My personal account dashboard shows average return for new loans 18.94%, and for secondary market loans 25.71%.
My pension fund account is very selective, due HMRC laws, and so far invests in one large, qualifying loan. Its dashboard shows average return for new loan 19.97%, and secondary market loan 20.36%
Dashboards aside, my pension account is basic; one deposit, no withdrawals, so annualised compound growth is simpler to compute:
September 2015 £12,000 paid in, January 2017 £15,644.73 invested, £0.24 available funds. So £3,644.97 increase over 16 months. I make the average compounded growth 22.781% [ ((£3,644.97 ÷ 16) x 12) ÷ £12,000 = 0.227810625 ].
I hope I calculated that correctly... regardless, I am very happy with returns on both accounts.
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Post by oppsididitagain on Jan 23, 2017 10:20:41 GMT
timm2006The main defaults happened mid to late 2015 from memory. Quite a few loans defaulted with in a very short period of time. There was a period when a certain commercial broker was bringing loans to the platform which can only be described as toxic. Some loans were defaulting before 6months, at least 1 defaulted after just 1 payment and it turns out the company was in trouble when the loan was presented to the community. IMHO no proper due dil was completed by the broker or ReBS. The loans had varied ratings, the loans that only made 1 payment was a B - (however you could argue what merits a loans rating.) I have said before on other threads, this is one of reasons why I don't invest on this platform anymore, due to this commercial broker and their attitude toward us, the community. However, I would say things have got better at ReBS from Mid 2016.
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