Larger notes on FolioFn

[SeanMcD]

I'd like to hear from someone who carries notes larger than the $25 default and who regularly uses FolioFn for buying or selling notes. 

I started with Lending Club in March 2012, and currently have about 700 notes, all initially $25.  I'm preparing to set up a couple IRA accounts with LC, and based on the amount of time it took to fully fund my original account, I'm considering moving to higher-denomination notes.  One of my biggest concerns with that (other than the obvious reduction in diversity) is my ability to sell notes on FolioFn if I change my critera or don't like the way the loan's going.  I do this fairly often on my main account - about 150 notes sold in the last 6 months. 

Since FolioFn doesn't have any way to see notes that have been purchased (or almost anything else of interest), I'd like to hear whether $50-$100 notes are easier or more difficult to sell in general.

Thanks,
Sean

[Peter]

Sean, I haven't used the Folio platform a great deal but I have heard from others that larger notes of $100 or more are more difficult to sell. From what I have seen $50 notes are not that much harder but once you get to $100 it really starts to make a difference.

[flyp52]

I've sold many notes on Folio, a fair number of them into the $100-$200+ range.  They will sell if they're priced right.

[SeanMcD]

I've sold many notes on Folio, a fair number of them into the $100-$200+ range.  They will sell if they're priced right.

Do they generally need to be priced at a lower markup/greater discount than a $25 note from the same loan?

[flyp52]

I think the pricing depends a lot more on the particulars of the note rather than the size of the note.  My experience has been that a well-performing note of any amount can sell at a 2%-4% premium (this is for notes in the 12%+ range).  Similar thing on the other side - if a note is showing weakness, but not too weak, I can usually sell at a 1%-6% discount.

[yojoakak]

Part of the reason people don't like high value notes is that LendingClub will issue you a 1099 for any single note that pays you more than $10 in interest in a calendar year. Now I assume everyone is paying his or her taxes, but this 1099 is still kind of a hassle to figure out where it goes on your tax return. (Not something you'd have to worry about in a IRA, but not everybody's account is in an IRA.)

And since the actual interest paid on a note will depend on the principal, interest rate, and even the actual payments that get made, figuring out if you're going to hit that limit can be a bit of a gamble.

Be aware that for a new loan you can invest in as many $25 notes as you want. You just have to submit them in separate orders, which is a bit of a hassle but entirely do-able.

[P2P_CT]

I don't have a ton of experience selling $100+ notes, but would be most concerned about being able to sell late notes of this size (current notes can be sold easily in my experience). 

[AnilG]

I don't use foliofn and don't have any experience in secondary market.

i am wondering what will be pros and cons of buying 4x$25 notes versus 1x$100 note in same loan. I think this may be able to work around issue of difficulty selling larger notes on foliofn plus investor can be more granular in their strategy in offloading trouble loans. For example, selling 1 out of 4 notes if loan goes in grace, selling 2 notes when loan becomes late, etc.

[yojoakak]

I haven't been able to think of any reasons large value notes are better.

Back before they added the ability to sell notes, I guess it didn't make any difference.

But times have changed.

And I suspect someone trying to sell a $2,500 note on FolioFn would have a lot better luck if they had 100 $25 notes.

[lender_john]

I don't use foliofn and don't have any experience in secondary market.

i am wondering what will be pros and cons of buying 4x$25 notes versus 1x$100 note in same loan. I think this may be able to work around issue of difficulty selling larger notes on foliofn plus investor can be more granular in their strategy in offloading trouble loans. For example, selling 1 out of 4 notes if loan goes in grace, selling 2 notes when loan becomes late, etc.

I have some experience buying and selling so I wanted to chime in.
It does take longer to sell a larger note at the same discount.  I would say that $50 notes sell reasonably well, $100 is slower and I wouldn't expect to sell anything over 200 to sell without a big discount.

Why would anyone want to have larger notes? Well that depends on how closely you want to manage your account and what your personal strategy is.
Lets say you have $2500 invested, all at 25/note. Its pretty easy to keep track of everything, sell any notes that you don't like and so on.
What about someone with an investment of $50000...  (more than most, less than many)
At 25/note that is well over 2000 notes.

Now you can make a decent return if you do nearly nothing to manage those notes. However if you want to try to sell notes that are late, or in grace period or ones that no longer fit with your investment strategy, it will take a while.
At a certain point, if you plan to actively manage your notes and buy/invest and sell often, a larger note size will make sense.
Also, keep in mind that with each payment there is less principal left. So after a few payments on your $25 notes, the average principal will be $20.   Buying/Investing at $50 for a while may simply bring the average amount per note back to 25.

I hope this helps.

[flyp52]

If you have a note with a clean payment record, you should definitely offer it at a premium.  You will be leaving money on the table otherwise.  This might not apply to notes in the $1000+ dollar range, but I've sold lots of notes in the $200+ range at a premium.

[thezinfan]

flyp52...good to know...i just started transitioning to $200 notes.