TitoPuente
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Post by TitoPuente on Oct 4, 2018 12:21:43 GMT
My congratulations to all that knew. My interpretation of the previous updates was that the building was almost finished and little extra work was needed. It is acceptable to suffer delays and defaults. It is not acceptable to have capital loss on secured loans with a 30% safety margin.
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robski
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Post by robski on Oct 4, 2018 12:30:18 GMT
My congratulations to all that knew. My interpretation of the previous updates was that the building was almost finished and little extra work was needed. It is acceptable to suffer delays and defaults. It is not acceptable to have capital loss on secured loans with a 30% safety margin. Why do you think its paying the interest rate it is if there is no risk of capital loss?
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hazellend
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Post by hazellend on Oct 4, 2018 12:33:51 GMT
My congratulations to all that knew. My interpretation of the previous updates was that the building was almost finished and little extra work was needed. It is acceptable to suffer delays and defaults. It is not acceptable to have capital loss on secured loans with a 30% safety margin. It is acceptable. What is unacceptable is that a lot of people investing don’t seem to realise this
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Post by funkymonkey on Oct 4, 2018 14:55:27 GMT
Seems to be the same unhappy response everytime there is bad news on a P2P loan. These loans are paying 12% interest as they are a risky place to lend money, is it really a suprise to some people when there are defaults and potential losses? It's also worth remembering that none of the defaults on MT have been finished with, so no one knows how much, if any, final loss there has been on any defaulted loan on the platform.
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invester
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Post by invester on Oct 4, 2018 15:51:45 GMT
I think a lot of the disappointment is not the lost cash but rather that these type of projects were clearly not worth the risk for the reward. A lot of them got financed in part because of the naivety of lenders, assisted by ebullient platforms and generous valuers. Ultimately though it is the lenders that bear the loss, everyone else gets their fee. The odds were stacked against us in the first place as in many cases there was a hidden agenda.
A multi-million type development based on GDV and nothing else would not get the backing nowadays IMO, not at 12% anyway.
Personally I think the haircut here could be quite severe. There are a few studios on sale in competition for much less money, which have better location and better layout (kitchen not in front of the bed). They are slightly more dated but when did a student ever care about this? If there is to be a quick sale I do wonder what will be left after all the costs are taken out.
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elliotn
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Post by elliotn on Oct 4, 2018 16:55:56 GMT
My congratulations to all that knew. My interpretation of the previous updates was that the building was almost finished and little extra work was needed. It is acceptable to suffer delays and defaults. It is not acceptable to have capital loss on secured loans with a 30% safety margin. Was this the one where the pipe work was sabotaged and flooded the rooms?
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TitoPuente
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Post by TitoPuente on Oct 4, 2018 16:59:49 GMT
My congratulations to all that knew. My interpretation of the previous updates was that the building was almost finished and little extra work was needed. It is acceptable to suffer delays and defaults. It is not acceptable to have capital loss on secured loans with a 30% safety margin. Was this the one where the pipe work was sabotaged and flooded the rooms? Yes.
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Oct 4, 2018 18:00:10 GMT
The discrepancy in the realisation outcomes is because the MT debt is stated to be higher in the admin report than the capital amount actually outstanding ... extra 100k. Build costs also calculated as higher but based on the loan acquired.
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TitoPuente
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Post by TitoPuente on Oct 5, 2018 7:20:22 GMT
My congratulations to all that knew. My interpretation of the previous updates was that the building was almost finished and little extra work was needed. It is acceptable to suffer delays and defaults. It is not acceptable to have capital loss on secured loans with a 30% safety margin. It is acceptable. What is unacceptable is that a lot of people investing don’t seem to realise this Now I understand why these borrowers can get away with this. Lenders that accept that getting screwed is expected. In any professional investment environment a 30% safety margin means that markets need to fall 30% to be in the red. In this case it can be argued that the student housing market has been soft lately, but it is nowhere near a 30% crash situation. Capital is being lost here because development funds were poorly administrated by a mediocre (to say the least) developer.
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robski
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Post by robski on Oct 5, 2018 9:04:47 GMT
Nah i think you misrepresent. No one expects to be screwed, what we accept is that there is a risk of being screwed, so we each individually look and decide if the 12% (or whatever) is a balanced risk for what we see. No one forces you to invest, no one guarantees you, no one would pay 12% if you were guaranteed. P2P lending at 12% has to be considered highly risky, because simply anyone having to pay that is by default a risky prospect. When you add property into the mix you get a far more volatile and heady mixture of risk vs reward. If property prices leapt or plummeted it could have vastly changed the expected outcome of this. If anyone knows of any no risk investments, giving 12%, hell even 5% with no risk please let me know
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elliotn
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Post by elliotn on Oct 5, 2018 16:40:42 GMT
It is acceptable. What is unacceptable is that a lot of people investing don’t seem to realise this Now I understand why these borrowers can get away with this. Lenders that accept that getting screwed is expected. In any professional investment environment a 30% safety margin means that markets need to fall 30% to be in the red. In this case it can be argued that the student housing market has been soft lately, but it is nowhere near a 30% crash situation. Capital is being lost here because development funds were poorly administrated by a mediocre (to say the least) developer. The market may need to fall by 30% to make a loss. But this is not a sale at market value. This is the sale of an incomplete, sabotaged development, a distressed sale from a company in administration for which a capital loss should be expected to be a more than likely outcome (as indeed our borrower picked it up for a song). Or am I totally missing something here?
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TitoPuente
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Post by TitoPuente on Oct 5, 2018 17:22:09 GMT
Now I understand why these borrowers can get away with this. Lenders that accept that getting screwed is expected. In any professional investment environment a 30% safety margin means that markets need to fall 30% to be in the red. In this case it can be argued that the student housing market has been soft lately, but it is nowhere near a 30% crash situation. Capital is being lost here because development funds were poorly administrated by a mediocre (to say the least) developer. The market may need to fall by 30% to make a loss. But this is not a sale at market value. This is the sale of an incomplete, sabotaged development, a distressed sale from a company in administration for which a capital loss should be expected to be a more than likely outcome (as indeed our borrower picked it up for a song). Or am I totally missing something here? You got it totally right. If borrowers/developers were really professional and experienced as they are described in the borrowing proposals, these situations would be extremely rare. That is why this fiasco cannot be accepted as normality. Sadly, a majority of the borrowers that resort to P2P are cowboys and gamblers.
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agent69
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Post by agent69 on Oct 5, 2018 17:32:05 GMT
Sadly, a majority of the borrowers that resort to P2P are cowboys and gamblers. Hopefully you realised this before investing?
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Post by mattygroves on Oct 5, 2018 18:15:42 GMT
The market may need to fall by 30% to make a loss. But this is not a sale at market value. This is the sale of an incomplete, sabotaged development, a distressed sale from a company in administration for which a capital loss should be expected to be a more than likely outcome (as indeed our borrower picked it up for a song). Or am I totally missing something here? You got it totally right. If borrowers/developers were really professional and experienced as they are described in the borrowing proposals, these situations would be extremely rare. That is why this fiasco cannot be accepted as normality. Sadly, a majority of the borrowers that resort to P2P are cowboys and gamblers. There is a reason developers are using P2P to fund their projects - they aren't able to get normal commercial lending terms. They are effectively sub prime borrowers and as such aren't going to be the best developers around. Defaults aren't the norm but they will happen and capital will be lost.
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Post by GSV3MIaC on Oct 5, 2018 20:09:34 GMT
Especially when/if the developer has little or no skin in the game. Worst case negative skin .. i.e. they took cash out of the project .. many of those on FS, LY, and maybe here too.
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