Author Topic: Speed of New Funds Deployment  (Read 7777 times)

jheizer

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Speed of New Funds Deployment
« on: March 19, 2015, 09:31:52 AM »
I am pretty new to the P2P world, but have done my research.  After lots of research, back testing, and programming I have a API buyer running purchasing loans for me.  I started off with 1 strict set of conditions and that has slowly evolved to 7 of differing strictness fulling in 7 portfolios so I can track each.  It grew to that because after the first week I realized it was going to take a year to deploy funds.  That led to calculating how much of my total account each strategy would be allowed to be, etc, etc.  And it's not that the additional filters are bad, just will have greater variance.

So my question finally, how long would it take you to deploy $10k?  Just picking a nice even number.  I'm trying to decide if once my looser strategies reach their current allocation limit if I should be increasing that or not.  Once full invested they are ranked so it will no longer be an issue.  This place seems to have by far the most experienced P2P investors so I'd appreciate your advice/comments.
« Last Edit: March 19, 2015, 09:48:27 AM by jheizer »
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lascott

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Re: Speed of New Funds Deployment
« Reply #1 on: March 19, 2015, 09:52:51 AM »
I've been doing this a year and that answer would vary almost every month.  I have many portfolios because I use different filter criteria based on loan grade.

To answer your generalized question I'd say 1-1.5 months @ $50 or 1.5-3 @ $25.  Keep in mind the stricter you are on your criteria not only will you obviously pick up less notes but X% of those will not be issued. Smarter borrowers with good credit may have found other places to get the money cheaper.

Example of an email I got this morning.
Quote
2 Note(s) issued and $100.00 was invested.
2 Note(s) did not issue.
« Last Edit: March 19, 2015, 09:54:28 AM by lascott »
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Kombinator

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Re: Speed of New Funds Deployment
« Reply #2 on: March 19, 2015, 09:58:55 AM »
Broadly speaking your notes invested but not issued will hover at about 35% for higher grades.  So keep that in mind when planning your deployment.  also take into account that there is pre-payment going on on loans you already funded, as well as regular CF, so that will add to your funds idle build up as well.

If your system is fast enough to grab all the loans you want in time, you can expect to see about 200 decent loans in a month out of which 140 will fund, so at $50 clip, the estimate above is correct.

rawraw

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Re: Speed of New Funds Deployment
« Reply #3 on: March 19, 2015, 10:06:48 AM »
My reinvestment alone are $1,000 a month in payments in $1,000 or so a month in sales.  It really depends the type of notes you are buying.  Are you buying A/B paper?  You can deploy quickly.  Are you buying G paper?  It will be a slow process.  I normally buy my low rate notes during time of quality high rate note scarcity.   But sometimes deploying $2,000 can take a few weeks.  Just depends

jheizer

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Re: Speed of New Funds Deployment
« Reply #4 on: March 19, 2015, 10:15:46 AM »
Thanks.  It appears I am on about the same track now you guys as I am buying about 10 notes/day before I put in my last loosest filter.  That took it to about 15.  I think once it's allocation is up I'll let it hold for the time being.  Maybe I'll bump my best filter to $50 each.

I keep waiting for a significant number of not issued notes, but it hasn't happened yet.  I have 49 issued so far and received my first rejecting this morning actually.  I was starting to wonder if I would get an active notification when it happened for a bit there.  Guess I need to get ready for the disappointment.  haha

So far getting what I want has not been a problem.  I've only got an error on two and I am fairly sure it was a bug with their API as I was then able to buy them via the website (LC).

Thanks for the replies.  Just a bit discouraging at first after waiting a week to get money transfers, waiting to buy, waiting on first payment.  The last money ends up uninvested for weeks.  I did transfer in 3 chunks so it could remain invested other places longer.

« Last Edit: March 19, 2015, 10:20:51 AM by jheizer »
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lascott

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Re: Speed of New Funds Deployment
« Reply #5 on: March 19, 2015, 11:23:41 AM »
Thanks for the replies.  Just a bit discouraging at first after waiting a week to get money transfers, waiting to buy, waiting on first payment.  The last money ends up uninvested for weeks.  I did transfer in 3 chunks so it could remain invested other places longer.
True that. It takes a while to build up steam. Especially nerve racking when you are new and trying to understand/learn. Personally, I think patience is critical (not my strong point) because you don't want to be in a hurry to get loans that are borderline just so you can be invested. Charge offs/defaults hurt the performance but you need to expect some that happen even on "perfect" loans.  Consider keeping $25 until you are comfortable with your criteria. I think I did $25 for over 6 months.
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jheizer

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Re: Speed of New Funds Deployment
« Reply #6 on: March 19, 2015, 11:40:47 AM »
True that. It takes a while to build up steam. Especially nerve racking when you are new and trying to understand/learn. Personally, I think patience is critical (not my strong point) because you don't want to be in a hurry to get loans that are borderline just so you can be invested. Charge offs/defaults hurt the performance but you need to expect some that happen even on "perfect" loans.  Consider keeping $25 until you are comfortable with your criteria. I think I did $25 for over 6 months.

Patience, that is the right word for the thread topic.  Gauging my patience vs others.  Good to know I am "on track".  To be honest I am not sure I have the balls to do $50 any time soon.  Part of it comes down to I am not sure how much money I'll eventually move here.  Initially I am working with $15k where $25/note seems key still.  I don't think I'd feel good with $50/ until I decided to have > 1k notes.
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rawraw

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Re: Speed of New Funds Deployment
« Reply #7 on: March 19, 2015, 11:42:40 AM »
Trust me, you would rather a slow deployment than accumulating bad credits

Fred93

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Re: Speed of New Funds Deployment
« Reply #8 on: March 19, 2015, 12:04:50 PM »
So my question finally, how long would it take you to deploy $10k?  Just picking a nice even number.

Depends on how picky your filter is and how much money you put in each loan.

LC posts 300 to 1000 loans every day (roughly).  Lets say 600.  If your filter picks 1% of those, you will bid on 6 loans/day on the average.

If you are bidding $25/loan, then deploying $10k requires that you acquire notes in 400 loans.

400 notes @ 6/day = 67 days.

Then, as others have noted, not all bids result in real notes.  Some fraction, maybe as high as 40% are cancelled before they fund (either by LC when a borrower fails verification, or by the borrower).  So that 67 days becomes 100 days or so.

The important thing is to pick reasonable parameters.  If you are in a hurry, a filter that picks only 1% of loans and $25/loan might not be the best choices.  If you prefer a picky filter and low $/loan, then you need to be patient.

LC posts a lot of loans!  With reasonable choices, you can deploy large amounts of money easily.

jheizer

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Re: Speed of New Funds Deployment
« Reply #9 on: March 19, 2015, 04:05:42 PM »
Yeah basically what I have been expecting, 2-3 months.  Though I had not actually been thinking about the drag from the not issued really making it 30% longer.  Either way I went ahead and tightened up my 2 loosest filters so I should be back around 8-10 per day.  Thanks again everyone.
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Fred

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Re: Speed of New Funds Deployment
« Reply #10 on: March 20, 2015, 12:16:37 AM »
You should also consider buying notes from Folio.  It's faster because you don't have to wait for the loan to be fully funded and reviewed.  There is no case of "rejected" loans (all are already approved).

Some additional benefits:
- you don't have to participate in the 4-daily races
- more notes are available in Folio than in LC platform
- notes are seasoned
- some notes are discounted

jheizer

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Re: Speed of New Funds Deployment
« Reply #11 on: March 20, 2015, 12:51:12 AM »
I've actually spent most the night finally diving into Folio.  My initial conclusion is it appears that the premium I'd have to pay to fulfill my same set of criteria is too high for my liking.  It'd be nice if I could run the same code over them.  I may have to code up something to do that so I can get better numbers.
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Fred

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Re: Speed of New Funds Deployment
« Reply #12 on: March 20, 2015, 02:04:58 AM »
It'd be nice if I could run the same code over them.  I may have to code up something to do that so I can get better numbers.

Coding will give you non-trivial advantages.

Fred

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Re: Speed of New Funds Deployment
« Reply #13 on: March 20, 2015, 02:10:10 AM »
My initial conclusion is it appears that the premium I'd have to pay to fulfill my same set of criteria is too high for my liking.

It has happened in the past that you could get an A-grade, Current status, Up FICO trend, 36-mo note at a 10% discount.

Kombinator

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Re: Speed of New Funds Deployment
« Reply #14 on: March 20, 2015, 10:05:45 AM »
Secondary markets are interesting, but does require additional coding indeed, which is a bit different that the one used for the main API.  There is not too much really great stuff there, but you should be able to pick up possibly 3-5 loans daily that are decent.