Author Topic: Is it really worth .25?  (Read 13168 times)

OptionsTraderFL

  • Newbie
  • *
  • Posts: 26
    • View Profile
    • Email
Is it really worth .25?
« on: January 23, 2014, 05:33:24 PM »
Looks like loans get originated, then listed for .99 markup. The seller clears .25 cents in the transaction. Is it really worth it?

Joleran

  • Full Member
  • ***
  • Posts: 151
    • View Profile
Re: Is it really worth .25?
« Reply #1 on: January 23, 2014, 06:37:01 PM »
For who?  It really depends on the note.

core

  • Hero Member
  • *****
  • Posts: 1790
  • Your loss is my gain
    • View Profile
Re: Is it really worth .25?
« Reply #2 on: January 23, 2014, 06:42:55 PM »
A $25 note listed for $25.25 (+1.00%) yields the seller $0.00 profit after the 1% Folio fee, not $0.25.  So no, it's not really worth it.  I have to believe all these sellers know they are just breaking even, and are just trying to get rid of those notes.  On the other hand I've seen plenty of activity on Folio with no intelligence behind it.

New Jersey Guy

  • Hero Member
  • *****
  • Posts: 914
  • Hell Yea it's a Hemi!
    • View Profile
    • Email
Re: Is it really worth .25?
« Reply #3 on: January 23, 2014, 07:13:11 PM »
Quote
On the other hand I've seen plenty of activity on Folio with no intelligence behind it.

So have I.

Even if the guy was making 25-cents, it's a piss-poor return on a $25 investment regardless how fast he sells it. 
Return over deposits:   66.82%
IRR:   86.54%
As of April 30, 2014

OptionsTraderFL

  • Newbie
  • *
  • Posts: 26
    • View Profile
    • Email
Re: Is it really worth .25?
« Reply #4 on: January 23, 2014, 07:17:15 PM »
I have seen a decent amount priced at 25.99 so I guess they are clearing .75 and it makes it a little more worth it.

core

  • Hero Member
  • *****
  • Posts: 1790
  • Your loss is my gain
    • View Profile
Re: Is it really worth .25?
« Reply #5 on: January 23, 2014, 07:51:58 PM »
I have seen a decent amount priced at 25.99 so I guess they are clearing .75 and it makes it a little more worth it.

Yes, at 4% markup that's definitely worth it.  I'd sure do it _if_ I could consistently sell many of them for that price and if I was able to sell all of them (at any reasonable price) before the payment was due.  A single hit and run would cut into your profits quite a bit.  And keep in mind all the cash you tied up in notes, possibly for weeks, that aren't going to be approved.  If your filters were rock solid you could probably beat the buy and hold return.  But the difference is it's essentially risk free, once you have everything adjusted.  Worst case you give up a few pennies on a hard-to-sell note once in a while.

Bohb Daishi

  • Sr. Member
  • ****
  • Posts: 481
  • I eat free lunches
    • View Profile
Re: Is it really worth .25?
« Reply #6 on: January 24, 2014, 03:05:00 AM »
I have seen a decent amount priced at 25.99 so I guess they are clearing .75 and it makes it a little more worth it.

Yes, at 4% markup that's definitely worth it.  I'd sure do it _if_ I could consistently sell many of them for that price and if I was able to sell all of them (at any reasonable price) before the payment was due.  A single hit and run would cut into your profits quite a bit.  And keep in mind all the cash you tied up in notes, possibly for weeks, that aren't going to be approved.  If your filters were rock solid you could probably beat the buy and hold return.  But the difference is it's essentially risk free, once you have everything adjusted.  Worst case you give up a few pennies on a hard-to-sell note once in a while.

Even if it worked consistently, you would have to sell very large quantities of notes just to make it worth your while. Otherwise, it goes back to the idea of being better off getting a part-time job at McDonalds.
There are three ways to make a living in this business: be first, be smarter, or cheat.

New Jersey Guy

  • Hero Member
  • *****
  • Posts: 914
  • Hell Yea it's a Hemi!
    • View Profile
    • Email
Re: Is it really worth .25?
« Reply #7 on: January 24, 2014, 09:43:01 AM »
Quote
Even if it worked consistently, you would have to sell very large quantities of notes just to make it worth your while. Otherwise, it goes back to the idea of being better off getting a part-time job at McDonalds.

Didn't I read at some point that somebody keeps all of their notes up for sale?  If they sell, they sell.  If they don't, that's OK, too.  Core, was that you?

If your portfolio consisted of say 500 decent, current notes, what would be the harm of keeping them listed at a 4% mark-up if your original intent was Buy/Hold?  Hell, mark them up 5% for that matter.

I agree you wouldn't make a ton of money, but it's not about how much you make.  It's about raising your overall ROI and IRR. 

I truly believe some investors purchase off the LC platform with the intent of resale at a markup and work that system.  However, a smart investor would also shop Folio for good, current notes.  With the ability to purchase notes at a possible discount, that would help offset the 1% Folio fee.  Slightly less cash outlay, too.

This may not be the most profitable system available.  And it's certainly not the cheapest.  But it is certainly one of the most conservative.
Return over deposits:   66.82%
IRR:   86.54%
As of April 30, 2014

core

  • Hero Member
  • *****
  • Posts: 1790
  • Your loss is my gain
    • View Profile
Re: Is it really worth .25?
« Reply #8 on: January 24, 2014, 09:52:38 AM »
Yes, I've always kept 100% of my notes up for sale, and I know a lot of other people here do so too.  Before the payment in progress restriction was added, it really was simply easier to keep track of your notes from the Folio screen where they were all in one place.  After the change, it's a lot more trouble to keep on top of but I still do it because I get occasional sales.  I mark them up a helluva lot higher than 5% as long as I don't need the cash soon.  There's no harm in letting people pick over your notes as long as your markup is high enough.  But don't ask me what that magic number is because I don't know.  Certainly 4-5% seems safe.

RaymondG

  • Full Member
  • ***
  • Posts: 247
    • View Profile
    • Email
Re: Is it really worth .25?
« Reply #9 on: January 26, 2014, 06:36:14 PM »
Saw a bunch of issued notes being sold by 0% markup and a lot with below 1% markup a few minutes ago. Not sure about the quality of these loans. Might LendingClub do it to make Foliofn-only clients happy?

ggnoob1337

  • Full Member
  • ***
  • Posts: 107
    • View Profile
    • Keep Living While Saving
Re: Is it really worth .25?
« Reply #10 on: January 26, 2014, 07:34:10 PM »
Saw a bunch of issued notes being sold by 0% markup and a lot with below 1% markup a few minutes ago. Not sure about the quality of these loans. Might LendingClub do it to make Foliofn-only clients happy?

I'd guess somebody was liquidating their LC account and trying to do it quickly.

Bohb Daishi

  • Sr. Member
  • ****
  • Posts: 481
  • I eat free lunches
    • View Profile
Re: Is it really worth .25?
« Reply #11 on: January 27, 2014, 01:40:56 AM »
Saw a bunch of issued notes being sold by 0% markup and a lot with below 1% markup a few minutes ago. Not sure about the quality of these loans. Might LendingClub do it to make Foliofn-only clients happy?

I'd guess somebody was liquidating their LC account and trying to do it quickly.

This happens all the time. Remember, LendingClub claims to have over 50,000 investors. If just 1% of them liquidate their account each year, that amounts to 1-2 people per day.
There are three ways to make a living in this business: be first, be smarter, or cheat.

Brian

  • Newbie
  • *
  • Posts: 7
    • View Profile
    • All Day Ruckoff
    • Email
Re: Is it really worth .25?
« Reply #12 on: January 27, 2014, 12:36:56 PM »
Yes, I've always kept 100% of my notes up for sale, and I know a lot of other people here do so too.  Before the payment in progress restriction was added, it really was simply easier to keep track of your notes from the Folio screen where they were all in one place.  After the change, it's a lot more trouble to keep on top of but I still do it because I get occasional sales.  I mark them up a helluva lot higher than 5% as long as I don't need the cash soon.  There's no harm in letting people pick over your notes as long as your markup is high enough.  But don't ask me what that magic number is because I don't know.  Certainly 4-5% seems safe.
I would keep all of my notes for sale at around 6.5% markup and would sell at least a few a month. I figured if someone wanted to pay me 6.5% markup on a note go right ahead I'll just re-invest that in a new note or pick up some deals on Folio.
The second half of Peer Social Lending
Owner of All Day Ruckoff

RaymondG

  • Full Member
  • ***
  • Posts: 247
    • View Profile
    • Email
Re: Is it really worth .25?
« Reply #13 on: January 28, 2014, 09:28:52 AM »
Saw a bunch of issued notes being sold by 0% markup and a lot with below 1% markup a few minutes ago. Not sure about the quality of these loans. Might LendingClub do it to make Foliofn-only clients happy?

I'd guess somebody was liquidating their LC account and trying to do it quickly.

This happens all the time. Remember, LendingClub claims to have over 50,000 investors. If just 1% of them liquidate their account each year, that amounts to 1-2 people per day.

But these are loans that are *issued*. They were just purchased, and then sell for a lose? Really bad timing.

core

  • Hero Member
  • *****
  • Posts: 1790
  • Your loss is my gain
    • View Profile
Re: Is it really worth .25?
« Reply #14 on: January 28, 2014, 10:09:17 AM »
But these are loans that are *issued*. They were just purchased, and then sell for a lose? Really bad timing.

It could be that somebody found out the hard way how their automatic tool of choice really works.  Or doesn't work, as the case may be.  But people do have unexpected financial issues come up.  If they knew 'it' was coming they surely wouldn't have purchased the notes.  Maybe they had more pressing things to deal with than turning off their auto-invest.  Could be lender deceased, and estate is liquidating the notes fast-like so the surviving wife can run off with Pedro.

Or maybe the person just got home from a meeting with their tax guy for TY2013 and realized how much trouble all this was going to be for them.  Check, please.