Author Topic: Strategy of buying notes 1/2 way during their term  (Read 2663 times)

EmilyFoxSeaton

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Strategy of buying notes 1/2 way during their term
« on: August 01, 2017, 08:04:31 PM »
I have been buying notes that are 1/2 done off the folio site. So far so good. The thinking is that if you have paid 1/2 the loan you will pay the whole thing and also.. these notes are generally offered at a discount. So you buy a note that is worth more than you paid for it.  So far so good. Also, there is no wait time to "fund" a new loan. If one note pays in full.. the next day you just buy a new one.

Anyone do this? Thoughts?

Rob L

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Re: Strategy of buying notes 1/2 way during their term
« Reply #1 on: August 01, 2017, 08:22:30 PM »
When I was selling notes (36 month term only) I was always able to sell "Neverlate" notes with 22-18 months to go at a premium (typically 5%). It's really a sweet spot. Finding them at discounts is surprising for the reason you said. Bet they don't hang around long on Folio before they are gone. You must be using some type of automation to pick them up before others do. Of course if they are not "Neverlate" that's a different story.

EmilyFoxSeaton

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Re: Strategy of buying notes 1/2 way during their term
« Reply #2 on: August 01, 2017, 08:47:12 PM »
When I was selling notes (36 month term only) I was always able to sell "Neverlate" notes with 22-18 months to go at a premium (typically 5%). It's really a sweet spot. Finding them at discounts is surprising for the reason you said. Bet they don't hang around long on Folio before they are gone. You must be using some type of automation to pick them up before others do. Of course if they are not "Neverlate" that's a different story.

Odd because I find it a completely different thing. I have no trouble finding notes at 17 payments left with a 5% discount. I am hand picking them but using the sort features to find notes and then sort by discount and then look at the notes. On the other hand I am having a hard time selling notes that I previously purchased. None have been late and are in the 22 to 18 payments left area. I am marking them up only slightly 3% or so.   

Rob L

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Re: Strategy of buying notes 1/2 way during their term
« Reply #3 on: August 01, 2017, 08:55:03 PM »
When I was selling notes (36 month term only) I was always able to sell "Neverlate" notes with 22-18 months to go at a premium (typically 5%). It's really a sweet spot. Finding them at discounts is surprising for the reason you said. Bet they don't hang around long on Folio before they are gone. You must be using some type of automation to pick them up before others do. Of course if they are not "Neverlate" that's a different story.

Odd because I find it a completely different thing. I have no trouble finding notes at 17 payments left with a 5% discount. I am hand picking them but using the sort features to find notes and then sort by discount and then look at the notes. On the other hand I am having a hard time selling notes that I previously purchased. None have been late and are in the 22 to 18 payments left area. I am marking them up only slightly 3% or so.

Can you comment on the "Neverlate" status of these notes?
That seemed to make all the difference (and perhaps rightfully so).

Modification: missed your comment on neverlate (your note purchases are neverlate).
Can't explain, but not my experience for sure.
Why try to sell these winners? Just hold and profit.

« Last Edit: August 01, 2017, 08:59:13 PM by Rob L »

nonattender

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Re: Strategy of buying notes 1/2 way during their term
« Reply #4 on: August 01, 2017, 10:05:53 PM »
When I was selling notes (36 month term only) I was always able to sell "Neverlate" notes with 22-18 months to go at a premium (typically 5%). It's really a sweet spot. Finding them at discounts is surprising for the reason you said. Bet they don't hang around long on Folio before they are gone. You must be using some type of automation to pick them up before others do. Of course if they are not "Neverlate" that's a different story.

Odd because I find it a completely different thing. I have no trouble finding notes at 17 payments left with a 5% discount. I am hand picking them but using the sort features to find notes and then sort by discount and then look at the notes. On the other hand I am having a hard time selling notes that I previously purchased. None have been late and are in the 22 to 18 payments left area. I am marking them up only slightly 3% or so.

Neverlate is a technical term of art.  If you are truly finding "Neverlate" notes, then you are as lucky as your chosen name would suggest.  I suspect, however, that you are just confused about the attribute to which Rob is referring - I'll leave you two to talk.

If it turns out that you're indeed finding Neverlates, half-seasoned, at 5% discounts, well, you and I need to go to the casinos...
A little nonsense now and then is relished by the wisest men.

AnilG

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Re: Strategy of buying notes 1/2 way during their term
« Reply #5 on: August 02, 2017, 01:04:26 AM »
She might be right. Attached screenshot is from Lending Club FOLIOfn Pricing Overview https://www.peercube.com/folionotes/index. The minimum markup on Current Never Late notes available right now is -22.39%. To further check, I ran the queries in my database for Current Never Late notes that are listed at 5% or more discount.

Remaining Payments, Loan Term, Number of Notes
< 18, 36 mos, 15
< 18,  60 mos, 1
< 30, 36 mos, 1,624
< 30, 60 mos, 70


Neverlate is a technical term of art.  If you are truly finding "Neverlate" notes, then you are as lucky as your chosen name would suggest.  I suspect, however, that you are just confused about the attribute to which Rob is referring - I'll leave you two to talk.

If it turns out that you're indeed finding Neverlates, half-seasoned, at 5% discounts, well, you and I need to go to the casinos...
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Anil Gupta
PeerCube Thoughts blog https://www.peercube.com/blog
PeerCube https://www.peercube.com

EmilyFoxSeaton

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Re: Strategy of buying notes 1/2 way during their term
« Reply #6 on: August 02, 2017, 08:26:40 AM »

Quote
Neverlate is a technical term of art.  If you are truly finding "Neverlate" notes, then you are as lucky as your chosen name would suggest.  I suspect, however, that you are just confused about the attribute to which Rob is referring - I'll leave you two to talk.

I just know that when I search on Folio I select the "never late option" so I am assuming I am getting those notes. But perhaps those notes are not the ones that are highly discounted.  I am a newbie to the process.

I also target notes that perhaps are not highly discounted (2% or so) but have a high interest rate. Or aren't highly discounted but have a high interest rate and not a lot of time left.  (10 payments or less)  But you can by all kinds of discounted notes as long as you have less than the full term. To me this seems the way to go to cut risk.

I am working on my strategy for sales and so far have just put random notes up with a small mark up. But weirdly none have sold. So... maybe they aren't great notes.

jpildis

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Re: Strategy of buying notes 1/2 way during their term
« Reply #7 on: August 02, 2017, 08:53:19 AM »
When I was selling notes (36 month term only) I was always able to sell "Neverlate" notes with 22-18 months to go at a premium (typically 5%). It's really a sweet spot. Finding them at discounts is surprising for the reason you said. Bet they don't hang around long on Folio before they are gone. You must be using some type of automation to pick them up before others do. Of course if they are not "Neverlate" that's a different story.

Odd because I find it a completely different thing. I have no trouble finding notes at 17 payments left with a 5% discount. I am hand picking them but using the sort features to find notes and then sort by discount and then look at the notes. On the other hand I am having a hard time selling notes that I previously purchased. None have been late and are in the 22 to 18 payments left area. I am marking them up only slightly 3% or so.

I guess that works if you don't care about FICO scores or direction

EmilyFoxSeaton

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Re: Strategy of buying notes 1/2 way during their term
« Reply #8 on: August 06, 2017, 07:07:12 AM »
I guess that works if you don't care about FICO scores or direction

Perhaps it is just me but have you noticed that sometimes the "direction" of the score is misleading? If it says down... sometimes you go in and find out it wasn't that far down (like it could have been one credit card inquiry). Or even that it has come up. I don't know how they assign that. 

I have decided this strategy isn't great. I bought 30 notes and already two have gone into grace period. The thinking was that wasn't going to happen with notes that didn't have a lot of time left. I was willing to give up the interest but not so I could just get the same problems I get with the more profitable regular notes.

Rob L

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Re: Strategy of buying notes 1/2 way during their term
« Reply #9 on: August 06, 2017, 10:59:01 AM »
When I was selling notes (36 month term only) I was always able to sell "Neverlate" notes with 22-18 months to go at a premium (typically 5%). It's really a sweet spot. Finding them at discounts is surprising for the reason you said. Bet they don't hang around long on Folio before they are gone. You must be using some type of automation to pick them up before others do. Of course if they are not "Neverlate" that's a different story.

Odd because I find it a completely different thing. I have no trouble finding notes at 17 payments left with a 5% discount. I am hand picking them but using the sort features to find notes and then sort by discount and then look at the notes. On the other hand I am having a hard time selling notes that I previously purchased. None have been late and are in the 22 to 18 payments left area. I am marking them up only slightly 3% or so.

I guess that works if you don't care about FICO scores or direction

Guess I should have mentioned that the pricing algo in my Folio selling software incorporated neverlate, fico change (from original score at time of origination) and number of payments left. Since the "direction" arrow references current fico to original fico its use was implicit in the algo. Once a neverlate loan got to the 22 to 18 months to go point the algo did not discount it much (if at all) even when fico had dropped very substantially. Conversely the algo progressively increased the premium asked for loans with increased ficos and sales at markups of 5% - 7% were not uncommon. Over the time I was selling I tweaked the pricing algo every few days based on market response.

« Last Edit: August 06, 2017, 11:06:25 AM by Rob L »

fliphusker

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Re: Strategy of buying notes 1/2 way during their term
« Reply #10 on: August 06, 2017, 04:46:27 PM »
I ran a strategy for a number of months with something similar to you Emily. Was a high-risk high reward strategy where I really did not care about the FICO score as long as it was stable for 8 months. 16 YTM min and notes could not be more than $12. These notes, of course, were never late, but definitely did not stop them from going late or defaulting. :( The strategy ran well for awhile then a big rash of BKs really sucked a lot of the profits out of it.
Been going with a new strat the last four+ months that is way less risky. Only buy about 50 notes per month. So I am just small time so I can be very picky. Two notes just popped up in IGP out of the blue that has not made their first payment to me. So I am seriously contemplating my future with FOLIO. The time involved with handpicking can be frustrating. Ending up with buying multiples of the same notes from NSR is excruciatingly frustrating.
Emily what you mentioned about the FICO score not telling the whole picture in regards the FICO direction is the main reason I could never go automated in buying FOLIO.