Building My $25K P2P lending Portfolio On LendingClub & Beating the Lending Club Average

ING Direct $25 Saving account openning referral Bonus

2011-02-28T19:37:00.004-10:00

First Open an Orange Savings Account
with a Referral Bonus Link for an extra $25 using the Links Below.

This is an ongoing promotion. Be sure to check for the following message after you click any link below, if you
see this at the top of the page then it means the referral has already been used, so try another one after clearing your cookies/cache and restarting your browser.

Try an "Open Now" Button Until you find one without the above message.

Don't forget to fund your account
with $250 or you won't get the bonus

Finally a lendingclub gain to brag about...

2010-03-04T21:33:00.003-10:00

After months and months buying and selling on FOLIOfn I've finally got some nice gain. I am not talking about some chump change like my other post a few months ago. This time, an awesome 281% GAIN from buying 4 notes with investments of $78.45 and returning $220.73 in 3 months (see pic above).
I decided to purchase these notes because I was able to see the borrower's payment history. This borrower was able to demonstrate the willingness to pay, but was having hard time in the beginning. Another factor was that this borrower had a total loan amount of only $1750.00 making it easy for him/her to refinance. This borrower also kept in-touch with Lendingclub even when payments wasn't available. To see details of what I am talking about login to your account and pull up the Loan/Note ID. If you don't have an account, signup for one and use "debtcollector" as your referral code. Good luck trading!

A wild ride on lendingclub

2010-02-10T20:52:00.003-10:00

Its been a long time since I had my last post and reason is that I wanted to get a longer testing period before I provided some results.

This time around, I tried a new strategy that many are afraid of trying... So I took a risk (and a risk it was) and decided to turn profits by actively trading via FOLIOfn.
I kept accurate records totaling investments of $1190.25 in 35 notes and sold/earned in payments for a total of $1437.87 and after 1% fees($14.38) I've realized 19.6%($233.24) in returns within 3 months.

A few things I've notice while actively trading on FOLIOfn, is that your Net Annual Return will no longer be accurate. In fact, my NAR has dropped from what was 13.85% in November to 8.49% now in February.

Anyways, heres my stats after 1 yr in LendingClub
Funded my account with a total of $3400.00
Earn a total of $296.83 in interest and late fees
Earn a return of $233.24 via FOLIOfn
loss ($151.86) in charge-offs and notes sold at a loss.
paid (12.18) in service fees.

$296.83
$233.24
($151.86)
($ 12.18)
----------
$366.03

Anyone had success trading on FOLIOfn? like to know your experiences.

Another Foliofn Sucess.

2009-11-03T18:38:00.005-10:00

Foliofn has been great with returns lately. I got another fine return today. Of course I am talking about percentage wise only. Today, I sold a note that I've purchased from "bed wetters" (as my friend FANAFI blogger would call it).
This time was quite nice, I purchased this note for $16.00. Since the purchase this borrower made one payment of $0.98 and today it was sold at par. With that being said, heres the gain numbers.
$ 0.98(pmt received) +$18.97(sold at par) - $16.00(investment) - $0.19(trade fees) = $3.76
I know $3.76 sounds like pocket change, but this is a 23.5% Gain!!! Imagine if I got a bigger fraction...

November Lending Club Stats

2009-11-02T19:23:00.004-10:00

For those of you who actually read my LendingClub blog.
I thought I update you with my stats on a monthly basis.
Heres November's number: UP FROM LAST MONTH :)

Keep Track of your Foliofn Transactions

2009-11-02T14:37:00.003-10:00

This was very frustrating. I purchased a note recently from Foliofn via LendingClub. The note was pending for 3 days. Suddenly, my money was returned when I logged back in and the note was never transferred. I called LC regarding the transaction and they told me that if a payment was made, the note get pulled and money is return. Which I am fine with, but there was NO NOTICES, NO EMAILS. In fact, the record gets deleted from Foliofn and you'll never know what happened. Hopefully they can work on this issue, since this type of poor tracking makes investors hesitate to make future investments.

Did this happen to you? Let me know.

Loss Mitigation Thanks to Foliofn!

2009-10-22T17:14:00.003-10:00

Wow I have thank Foliofn today! Who saved me from a $129 loss. I got a note that the borrower recently filed for CH 7 Bankruptcy. However I was lucky enough to catch it while it was still in "CURRENT" status and sold it on Foliofn for $100. It sold fast too. Less than an hour.
I regularly maintain my portfolio by keeping an eye on notes that are due for payments. This way I able to liquidate if I suspect any up coming losses. I also make sure I keep track of collection logs, although they are vague, they are very useful.
P.S. sorry in advance, if you are the one who purchased my note that's about to go delinquent.

Don't be mislead by fancy Loan Titles

2009-10-19T14:13:00.003-10:00

When I was searching for notes on Foliofn today, I came across a note labeled "Title: Always on time, always responsible. (Loan id: 379357)" What a bunch of BULL! I am glad I NEVER invested on this note. This borrower was a self employed "webdeveloper" who thinks he has "perfect credit". But what I see is a borrower looking to rob Peter to pay Paul. 23% DTI, $35K in debt, unverified and unstable income these are the signs you should watched for before making an investment and forget promising title!!!
https://www.lendingclub.com/browse/loanDetail.action?loan_id=379357

Buying notes on Hopes and Promises

2009-10-18T20:18:00.002-10:00

Purchased another note today. This one(loan id 363367) at a near 50% discount of $9.99 with a principle balance of $19.72. When reviewing the collection log on this borrower I notice that he was late a few time before but still made payment towards the loan. Although this note is 30 days late at this point, I feel that this borrower is collectible and is willing to continue future payments even though he is behind. What convinced me to purchasing this note is that he is in contact with LendingCLub and "promised to pay". Hope I don't get burn on this purchase.
~Debt Collector

Why would anyone pay a premium to take a lost on Foliofn?

2009-10-17T20:49:00.005-10:00

This came to my attention more and more recently. I've started to notice people listing notes on Foliofn at some ridiculous premiums...
I mean who in the right mind would purchase a $22 note for $233? It's like donating money. Click here to donate if you want
I can see someone paying a 1 - 5% premium if you are holding some A paper notes who has made perfect payments but these(refer to photo) are just too ridiculous.
Please, if you have some success stories in selling a note which had a negative yield to maturity please advise.

Nice Gain off of an foliofn today

2009-10-16T20:21:00.005-10:00

Nothing much... but a pretty nice gain today(% wise). My $21.95 note I've purchased from foliofn at a 24% discount ($16.69) paid in full today... Man if only I was able to purchase a larger fraction...

So far I've gotten lucky with Foliofn, but I just hope I don't get burned from greed haha...

Leave a comment if you got any success story with LendingClub's Secondary Market. I would love to read about it...

Discounted Notes On the Secondary Market

2009-10-13T13:54:00.004-10:00

Hand picked 2 discounted notes from the secondary market a few weeks ago, and they are now current.
I was able to pick them up at a discount of 26% for one and 16% discount on the other.
My trick was to carefully review collection notes from seller who has neglected their portfolio and looking only clean their portfolio. Have a look your self. both notes purchased at $16.00

Beating the LendingClub Average 13.72% NAR

2009-10-10T16:41:00.004-10:00

So It's been about 9 Months in, my YTD average is pretty well I would say. Although my portfolio is relatively small ($3191.28) I am still beating the Lending Club average. I do it by continuing my believes in lending/underwriting pledges I made in earlier blogs...

I also started investing delinquent note that are now current some at some substantial discounts yielding 30%+. Investing in delinquent note allowed me to purchase notes at pennies on the dollars off of nervous investor trying to clean their accounts. However the strategies involve are still unclear as the collection log provided by Lending Club is still some what vague. Hopefully they start providing more informative collection logs to attract more investors looking to make these purchases.

Wish me luck, still got about $21,800 til' I hit the $25K goal.

Starting a New Lending Club Talk...

2009-10-08T20:03:00.002-10:00

Hi everyone,
I am thinking for starting a new Lending Club talk/P2P Lending Forum.
Is anyone still interested in having a similar site up and running?
Let me know... I'll most likely fund the site myself if I can get enough replies/comments and getting some low cost hosting...

What happened to Lending Club Talk?

2009-10-01T13:20:00.002-10:00

Does any one know what happened to lendingclub talk?
I keep getting some advertisement that pops up...

New Strategy that might help you liquidate in the future

2009-09-22T14:54:00.003-10:00

I've recently started a new strategy and since you can sell your note on the trading platform, I figure this would help in when in need of a liquidation of your account.
When purchasing notes in excess of the minimum $25 fraction ($50, $100, etc.)
I've started to buy four $25 fractions on one borrower rather then one $100 fraction. (my average note purchase)
This way I can always sell a portion for immediate profit, or liquidate it easier in small fractions rather than in bulk.

Lending Club Talk

2009-07-24T18:30:00.004-10:00

Alright, found a LC forum today, got a chance to see how others are doing. Nice to see others are on the positive at times like today. Highly recommend joining this forum to see how others are doing and getting ideas of how others feel about LC.

Students should Stick w/ Student Loans

2009-07-22T19:30:00.003-10:00

Logged on to my account today to look for some potential borrowers. Generally I don't like to lend to borrowers with greater than $6000 loan request. So I pull a query for lower amount borrowers and wow! a third of them were students. No offense to students(I was one before) but they are really irresponsible when it comes to repayment. Most of them just spend mommy and daddy's money, have maxed out credit cards, waste money on alcohol, once they graduate they'll be obligated to thousands in student loans, and the worst part of all they have no income. Sorry students, but good luck on getting funded...

Funded 10% of my Account So Far

2009-07-20T02:28:00.003-10:00

Well I've finally funded a little over 10% of my $25K ($2,541) account goal. I would have to say, I did a pretty good job with underwriting the borrowers. So far only 1 delinquent note and yielding a 13.72% annualized return. Looking at payment to-date I've gotten over $69 in interest. If it was in a bank savings account, I would have only gotten about $12. So I say this was a pretty good investment.
Of course you need to lend wisely. So good luck lending.

Payment Process at Lendingclub

2009-03-23T22:14:00.004-10:00

Finally, received my first payment from one of my borrower. The payment took about 5 days to process and credit to my account.(see photo on the right) you can see my 03/18 due date payment wasn't paid til' today(03/28) and other accounts due 03/21 are not paid but pending.
While it would be nice to get paid on the date that payments are due, 5 days process time isn't that bad considering a normal ACH payment take about 3 days.
When payment are made, lendingclub takes a 1% fee which only about $0.01 per payment (assuming you invested $25 per borrower). Anyways investing here has been so good so far. So give it a try by using my link.

tough call.

2009-03-10T21:49:00.008-10:00

This was a tough one, but ultimately I had to pass on this one. I have to admit this person is an excellent borrower, but the budget is just a bit too tight. This particular borrower is looking to cover taxes and fee incurred by taking out his 401K(which I have to say was the best thing that this person did since he/she pulled his money out in the beginning of 2008 and avoided the market crashes if it was not put back in stocks). This was a tough decision especially because this borrower has a detail list of expenses showing a true picture of the borrower's disposable income, over 15yrs of established credit, and was able to continue making payments while he was unemployed(which he/she stated in the description of the loan). So why did I pass this responsible borrower?
1. Depleted savings.
2. Employment is short with current employer.
3. If loses income again, nothing to back the loan(Secured loans will have priority)
4. Budget does not leave borrower with any disposable income.
Heres How I see it:
Net Income : $3250 (1500*26/12)
Monthly Expenses: $2370 (stated in the description)
New Loan Pmts : $192
Credit card pmts: $717 (Borrower claims paid monthly)
As you can see not much room for savings which the borrower says he can save $700 a month. sorry gotta pass...

Using Paypal to Fund LendingClub

2009-03-04T00:04:00.002-10:00

LendingClub.com offers you the option to fund your account with paypal with no fees to the lender. And looks like LendingClub is the ones covering the fees. This feature is great, funding your account instantly (takes 15mins to update your acct) allowing you to start lending right away. However, the option to fund your account with paypal is only available before you verify your bank account, then the option will be removed. Well, heres the trick if want to continue to make future funding using your paypal (with paypal you could use your credit card to fund account and collect points, miles, or cash back rewards from your credit card company). You would need to change your bank account and NOT verify it. you will then be given back the option to reuse paypal.

Porfolio Mix

2009-02-26T01:24:00.003-10:00

Funded my first thousand on LendingClub today(well $975 to be exact). I spread my portfolio over 10 different borrowers with an average weighted rate of 14.63% with expected payments of $33.58. This gives me with total receivables of $1208.88(36x$33.58) over the next 3 years assuming no defaults.
The website offers a very nice layout of your portfolio. On the left, this page offer an easy to read status of your portfolio showing you a break down of pending notes, funded loans, delinquents, defaults, charge offs, and paid in fulls. In the center, is the details showing your weighted average base on your portfolio mix and expected/actual monthly payments received. On the right, is a nice looking pie chart showing you your portfolio mix based on funded loans. Finally the bottom half is your portfolio content with a simple click on the status button that lets you see the original loan request.

Common Mistake with P2P lending

2009-02-23T00:11:00.004-10:00

When making a P2P lending decision, a common mistake I noticed, is investors do not look at the total loan amount but only their part of the investment (which could be as little as $25 or 1/10th % of the total loan amount). When evaluating a borrower I believe we need to look at the whole picture and not only your portion of the investment.
An example would be bidding $25 on a $15,000 loan applicant. Even though you only invested $25, you still need to see if the borrower is worth the whole $15,000 loan. Remember $25 is still money..

A scary economy!

2009-02-19T23:31:00.003-10:00

Times are getting people all shaken-up about thier jobs. Imagine turning on your computer at work day after day only seeing your company stock dropping another 10% week after week. Your boss is pushing for production goals that are impossible to meet just to survive the financial storm. Even worse, your clients calls you and tell you that they can't pay you because they lost their job. In addition to decrease in New Business, you are losing your clientele in a rapid rate.

With the way things are going it makes it really hard to make lending decisions on lendingclub. I mean you are constantly worried and don't know if you are going to have a job tomorrow (Employers are good at telling you only on the day you are layoff). So how do you know if someone you lend to will have a job to repay you?

Well, I am going to pledge an extra step to research the borrower's employer a bit and find out if the financial stability of each applicant (commission or salary based).

Sorry Self-employed unless you got a reputable firm, I gotta pass.

Is This a Good Investment?

2009-02-18T21:50:00.003-10:00

Found a pretty good applicant today. Offering a Yield of 18.84% with fairly low risk. This borrower has a been on his job for a pretty long time. He started his credit around the same time as his employment, with no delinquencies. While most people find this to be a risky because he has maxed out credit cards, I find it good that he can't increase them anymore in case he decides not to pay off his debt. Another positive note about this applicant he is applying for a small amount of $3000 with manageable repayments of only $109/month. Lets take a look at his disposable income.
Net income............ $1625 (65% of gross)
Debt Payments.......$ 584
New Loan pmt........$ 109
Rent/utilities...........$ 450
Disposible income... $ 482
482 divided by 30 days = $16 a day for gas and food.
Note: this borrower also seems to have a higher income than the stated amount on the profile. His actual gross income should be closer to $2964/month based on his income of $17.10/hr
not bad!!! lets see how he preforms...

Don't get greedy!!!

2009-02-17T21:20:00.007-10:00

Had to pass on an applicant I reviewed today on Lendingclub. This borrower's spending habit looks like a disaster about to happen. As you can easily read from the info in the photo on the right, This "renter" has over $16,000 in unsecured debt and borrowing an amount not even enough to cover the 1/3 of the outstanding revolving balance. From what I can see this borrower is robbing Peter to pay Paul (borrowing more to maintain payments). Lets take a closer look at the loan request.
Net Income.......... $ 1,516 (70% of gross income)
Debt payments.... - $ 513 (23.68% of gross income)
new loan pmts...... - $ 182
Rent....................... - $ 650
Phone....................... - $ 45
Remaining is $126 a month or about $4 a day for everyday expense.. Sorry teacher this is a lesson I am gonna pass. but looks like over 100 people is willing to lend and learn from you. Good luck!!!

LendingClub.com

2009-02-16T21:55:00.000-10:00

In case you're interested, Lending Club offers a $50 welcome bonus to new lenders just for getting started. In addition, each time someone you invite borrows through Lending Club, you earn an additional financial reward that you can choose to keep or donate to a non-profit organization.

Lending Club has been in the Wall Street Journal, CBS News, CNN, NPR and the New York Times. To check it out, go to: https://www.lendingclub.com/refer.action?referrer=DebtCollector

Underwriting on Lendingclub

2009-02-16T18:49:00.002-10:00

As you probably already know, Lendingclub automatically turns down applicants who has < 660 FICO. But nowadays, FICO is just a number that no longer determines much. So underwriting and reviewing every applicant is very important. After funding my first loan I would very much like to see more details for each applicant from lendingclub. As you can see from the photo, Lendingclub provide you with very limited information to make a lending decision based on the profile provided.
1. Although you can see this applicant rents, you can't see what the rent payments are.
2. What position is the applicant with its employer(determines salary averages)
3. Net income would be a better figure than Gross income.
4. As far as the history, It would be much easier to see the applicant's actual credit history.(less lender's names and dates for privacy reasons.)
5. Would also be nice to have a list of the applicants' on going expenses not listed on credit reports (insurance, garnishments, utility bills, etc.)
Of course some things are not verifiable so you are just going to need to take the borrower's word for it.

First Loan Funded

2009-02-15T23:47:00.002-10:00

Funded my very first loan today, this particular applicant is looking for a debt consolidation loan. Based of the applicant, We can see that this per has gross income of $2917 which I like to go off of Net(65% of gross or $1896) 16.76% Debt Payments ($489) Rent (which was $750 when I asked) New Loan Payment ($205). Leaving this person a with a Disposable income of $425 Which I think is enough for a single person with no dependents. Good deal for a 14.11% yield? let me know what you think.

LendingClub Goals

2009-02-15T00:01:00.003-10:00

Before I being my lending online I Set a few guidelines.
1. Lending only to qualified Borrowers. (Lending club turns down borrowers who has less than 660 FICO)
2. Don't get lazy and review every applicant. (Lendingclub gives you an option to auto invest based on your ROI expectation.)
3. Don't end up like the banks over greed. (don't get me started)
4. Make sure Borrowers have the capacity to repay debt regardless of credit rating. (income is very important)
5. Make money.

LendingClub Fit and Function

2009-02-14T23:35:00.007-10:00

The website seems to be very user friendly. Tabs and layout are easy to navigate thru and understand. The Funding Part was great you can fund your account with via your Bank Account, Wire Transfer, send them a check, and best of you can fund your account in minutes using paypal without any fees pass on to you. So I decided to skip the verification process with my bank and go directly with paypal funding. This way I can save about 2 months of interest(billing cycle end a month from now and my card offers a 1 month grace period) and also gain cashback/points from my Credit card as purchase. On the right is a screen shot of the funding page. I funded my acct, and looks like my acct was credited in about 10 minutes. Alrighty, let make some loans.

Day One Joining LendingClub

2009-02-12T23:46:00.002-10:00

Joined lendingclub.com today. Very Simple process, just enter your info and, your account is opened. Registration process was simple and site appears user friendly. Next add bank account info, and wait for a withdraw to verify account(Make sure you have $$ in it). Most account verification make a deposit while lendingclub.com does a withdraw.
Before I start lending I thought I get familiar with account and website navigation, lender policies, and check out fit and function of the site.