Money360 may revolutionize "hard money" lending

Money360 may revolutionize "hard money" lending

Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes

On this other BP topic we discussed various ways an individual invest in real estate PASSIVELY, with minimal risk, and get 5-15% ROI. A post by Dionte G. came up (see the bottom of this post) that I think needed to be reintroduced in this forum as its own topic.

Money360, like prosper.com, provides a peer-to-peer lending platform to allow people to lend money to other people in an open transparent marketplace. As a prosper.com lender* for many years, my biggest disappointment with the P2P concept is that their lending has been unsecured lending. I still have a bunch of uncollected money that I'll probably never see. And I only lent to top tier borrowers (over 70% AA rated, the rest A rated)! With secured lending, at least there is collateral to go after.

Now from a business standpoint, a lot of people probably think man, they get a percentage (although small) of each payment and payment up front for 'originating' the loan. They must be making a killing!" Unfortunately, this is not the case. As a company, prosper has lost over $50M since inception and the losses continue. They originated (for their borrowing members) about $27M in loans last fiscal year and their net loss was $10M. With the cash they have, they won't survive long. Their plan calls for increasing transaction volume to increase revenue until they reach profitability and become cash-flow positive. They need a capital infusion.

Enter Money360. Different model. Different lender base (accredited investors vs. casual social lenders). Different borrowers (profit seeking RE projects vs. debt consolidation on declining value assets). And, key IMO, Money360 loan sizes will be 50 to 100 times bigger and I believe more profitable than prosper or lendingClub. Also Money360 doesn't have to educate the world on the concept of P2P lending, prosper and LendingCLub did that.

As I posted on 7/4/11 (I didn't know Money360 existed at that time) I think secured P2P real estate lending will change/revolutionize hard money lending. I also think this type of lending will be widely available in a year to 18 months. Money360 claims to be the first focused on real estate. I've not seen any others and I have looked... though not recently... so I believe this is true.

So I for one am highly encouraged. Outside CA, I believe the minimum investment ($50K in CA) and loan sizes ($200K in CA) will be a lot smaller. I'd like to hear what BP nation has to say. Would you be a lender? Borrower? Does anyone have experience with them already?

From the other post:

[i]I encourage all who have participated in this thread to visit WWW.MONEY360.COM

I want you guy's opinion since this seems to be like a good opportunity although not quite good enough.

I feel as though with their 50k minimum investment they price out a large number of those interested in investing on their platform.

Anyone know of any other similar opportunities being offered now?

Whats your take on this company's opportunity?[/i]

(*Prosper now allows lending in 28 states, NC is not one of them.)

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Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
14y

Chris Martin - that's one thing I like about your posts; you usually have done some digging for the facts, whether it is from public recorded info from some county or from legitimate internet sources. Thanks for your well-researched contributions.

See this reply in the discussion

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  • Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
    14y

    So, Chris M., you're saying that Money360 ad was yours?

  • Investor · Davie, FL · Member since 2010 · 66 posts · 8 votes
    14y

    @Chris Martin, that sounds like exactly my ad. As a lender, do you have any tips or additional information you like to see on initial lending requests?

  • Lender · Tyngsboro, MA · Member since 2009 · 3k+ posts · 2k+ votes
    14y

    Chris Martin, good thing you didn't pay the $39 bucks if it was just a test. I also signed up and received a request for an owner occupied loan, because there is no way to specify any sort of business loan or rehab loan. It seems to set by property type only.

  • Investor · Davie, FL · Member since 2010 · 66 posts · 8 votes
    14y

    Well when I say test, I mean that I'm feeling out how the system works. If an offer comes back thats doable, then I'll evaluate it as I would any other funding option.

  • Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    14y

    Now that the two of you have become acquainted, borrower and lender, you can turn this into a potential BP success story - without money360 being involved now.

  • Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
    14y

    Keep in mind that I think this should really be part of the Money360 system. They should provide enough detail (fields in their submitted forms) to lenders so that the lender can assess the opportunities in a uniform way.

    Other information needed, IMO:

    more information about the person
    Entity vs. Person - How is the property going to be held?
    High level detail on person's or company's finances - Money360 could improve upon financials because they provide none. Credit score, delinquencies, public records, credit lines, balances, stated income, etc. are important to lenders. Prosper does a reasonable job putting together information from credit reports and the details are available online and in SEC documents like this one.
    investment track record - If the money is for a flip... lenders would want to know your flip history details (address, dates, county records links, etc.) Are your flips really flops? If for a buy-hold, do you have any B-H history on comparable property? Are you providing tax returns or at least applicable schedules?
    confidence in information - Is any information verified? Money360 could provide a document upload so lenders could see pertinent docs supplied by borrowers, like repair estimates or even preliminary HUD-1s. Transparency should be a goal. Prosper, BTW, is big on this CYA: 'information ...displayed without having been verified.'

    more information about the property
    Use of Property - Like @Ann said, some of the borrowers are Owner-Occupied (OO). Money360 deals with both OO and Non Owner-Occupied (NOO). Most lenders on BP (me included) will not touch an OO deal because of SAFE. While they do provide a USE OF PROPERTY field, for NOO is this a flip or buy-hold? Money360 should make it clear to lenders for filtering.
    Simple property card information - All they provide is property type, square footage, city and state. I'd almost prefer to see a link to the property card, e.g. what you can find from county records.

    more information about the deal
    Terms? - they do provide a requested rate range and loan amount. Loan length (balloon), payment amounts, escrows/impounds are also important.
    Everything financial - everything needs to be there. Fix-up costs... what are rents? Taxes? Insurance? Etc. Is there an appraisal? Sorry, Zestimates don't cut it. For rentals, are there local, city or county rental restrictions? Are rentals required to be permitted?
    Exit strategy - How is the lender paid?

  • Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
    14y

    Steve Babiak - we'll see how it goes. Chris M. take a look at my post above, and send me some details. I would entertain funding via my SDIRA account.

  • Investor · Davie, FL · Member since 2010 · 66 posts · 8 votes
    14y

    Chris Martin, sure I'll send you some more info as well as confirm the address of the unit. I'm currently closing on a refi on my primary residence so once thats done I'll shoot you over everything you mentioned above.

  • Davenport , IA · Member since 2011 · 213 posts · 265 votes
    14y

    So has anyone successfully used money360.com to fund their deals? Are thier lenders looking to fund flips (purchase, fees, and rehabs costs)? Or, is it just mortgages? Thanks.

  • Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    14y
    Originally posted by Steve Babiak:
    Now that the two of you have become acquainted, borrower and lender, you can turn this into a potential BP success story - without money360 being involved now.

    Chris Martin and Chris M. - how did this turn out?

  • Real Estate Agent · Las Vegas · Member since 2012 · 38 posts · 9 votes
    14y

    It seems like the site has made significant progress since the OP. *signs up*

  • Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    14y
    Originally posted by Chris Martin:
    On this other BP topic we discussed various ways an individual invest in real estate PASSIVELY, with minimal risk, and get 5-15% ROI. A post by Dionte G. came up (see the bottom of this post) that I think needed to be reintroduced in this forum as its own topic.

    Money360, like prosper.com, provides a peer-to-peer lending platform to allow people to lend money to other people in an open transparent marketplace. As a prosper.com lender* for many years, my biggest disappointment with the P2P concept is that their lending has been unsecured lending. I still have a bunch of uncollected money that I'll probably never see. And I only lent to top tier borrowers (over 70% AA rated, the rest A rated)! With secured lending, at least there is collateral to go after.

    Now from a business standpoint, a lot of people probably think man, they get a percentage (although small) of each payment and payment up front for 'originating' the loan. They must be making a killing!" Unfortunately, this is not the case. As a company, prosper has lost over $50M since inception and the losses continue. They originated (for their borrowing members) about $27M in loans last fiscal year and their net loss was $10M. With the cash they have, they won't survive long. Their plan calls for increasing transaction volume to increase revenue until they reach profitability and become cash-flow positive. They need a capital infusion.

    Enter Money360. Different model. Different lender base (accredited investors vs. casual social lenders). Different borrowers (profit seeking RE projects vs. debt consolidation on declining value assets). And, key IMO, Money360 loan sizes will be 50 to 100 times bigger and I believe more profitable than prosper or lendingClub. Also Money360 doesn't have to educate the world on the concept of P2P lending, prosper and LendingCLub did that.

    As I posted on 7/4/11 (I didn't know Money360 existed at that time) I think secured P2P real estate lending will change/revolutionize hard money lending. I also think this type of lending will be widely available in a year to 18 months. Money360 claims to be the first focused on real estate. I've not seen any others and I have looked... though not recently... so I believe this is true.

    So I for one am highly encouraged. Outside CA, I believe the minimum investment ($50K in CA) and loan sizes ($200K in CA) will be a lot smaller. I'd like to hear what BP nation has to say. Would you be a lender? Borrower? Does anyone have experience with them already?

    From the other post:

    [i]I encourage all who have participated in this thread to visit WWW.MONEY360.COM

    I want you guy's opinion since this seems to be like a good opportunity although not quite good enough.

    I feel as though with their 50k minimum investment they price out a large number of those interested in investing on their platform.

    Anyone know of any other similar opportunities being offered now?

    Whats your take on this company's opportunity?[/i]

    (*Prosper now allows lending in 28 states, NC is not one of them.)

    First not enough info here. Secondly, p2p is know to you otherwise you are introduced and now you have a brokerage relationship even if implied.

    What I want to know is, how many circles does it take to get to a diamond status and get the good loans? LOL

    Good luck!

  • Realtor · Gallatin, TN · Member since 2009 · 292 posts · 164 votes
    14y

    IMO

    Money360 would be better served if the BORROWER pays to have a listing entered. Making the investor pay (the one ALREADY providing the service) is not the best idea IMO. What happens after an investor/lender pays to see 4-5 ad's and none happen to work out? Either the borrower backs out, the deal doesn't live up to deal spelled out previously, so on & so forth.

    By having the borrower pay, investors can see *Skin* in the game -- Must be a bit more serious than random solicitations for money. Points would still be claimed at closing for Money360.

    Just my $.02 cents :)

  • SFR Investor · Denver, CO · Member since 2009 · 184 posts · 55 votes
    14y

    The lowest interest rate shown on the website was 8%.
    I'm certainly not that desperate for a loan.

    I'm surprised, because I know private banks that would be pretty happy with 6% in first position and 50% LTV

  • Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
    14y
    Originally posted by Steve Babiak:
    Originally posted by Steve Babiak:
    Now that the two of you have become acquainted, borrower and lender, you can turn this into a potential BP success story - without money360 being involved now.

    Chris Martin and Chris M. - how did this turn out?

    Steve, I didn't hear back from him....

  • Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
    14y
    Originally posted by Nate Gelinas:
    It seems like the site has made significant progress since the OP. *signs up*

    Not in my opinion. Just try to 'login' after you sign up. Once you set up your lender profile, their site doesn't allow you to do anything. See my July 4 post. Same as now.

    As per my July 7 post, I get everything in the US under $250,000. Most posts are for owner occupied, many are 'refis', many are on money360 because they won't qualify anywhere else. Every once in a while, I see something interesting. But not enough to "buy" the lead. See also my July 8 post about what they should put in their system. I can't filter posts, etc., so for the moment this system is for entertainment. The last deal I funded (9/6/2012) was local. Money360 isn't currently a platform that will entice me to change my investing.

  • Real Estate Agent · Las Vegas · Member since 2012 · 38 posts · 9 votes
    14y
    Originally posted by Chris Martin:
    Originally posted by Nate Gelinas:
    It seems like the site has made significant progress since the OP. *signs up*

    Not in my opinion. Just try to 'login' after you sign up. Once you set up your lender profile, their site doesn't allow you to do anything. See my July 4 post. Same as now.

    As per my July 7 post, I get everything in the US under $250,000. Most posts are for owner occupied, many are 'refis', many are on money360 because they won't qualify anywhere else. Every once in a while, I see something interesting. But not enough to "buy" the lead. See also my July 8 post about what they should put in their system. I can't filter posts, etc., so for the moment this system is for entertainment. The last deal I funded (9/6/2012) was local. Money360 isn't currently a platform that will entice me to change my investing.

    Hmm, thanks for the info.

    What about for borrowers, have you had any feedback on that?

  • Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    14y
    Originally posted by Steve McVey:
    IMO

    Money360 would be better served if the BORROWER pays to have a listing entered. Making the investor pay (the one ALREADY providing the service) is not the best idea IMO. What happens after an investor/lender pays to see 4-5 ad's and none happen to work out? Either the borrower backs out, the deal doesn't live up to deal spelled out previously, so on & so forth.

    By having the borrower pay, investors can see *Skin* in the game -- Must be a bit more serious than random solicitations for money. Points would still be claimed at closing for Money360.

    Just my $.02 cents :)

    Good idea, but there is one way to make it better perhaps. Borrower pays to list; lender re-pays the borrower the amount of the listing expense once they agree on loan terms, or maybe upon completion of final payment (by reducing final payment even).

  • Realtor · Gallatin, TN · Member since 2009 · 292 posts · 164 votes
    14y
    Originally posted by Steve Babiak:
    Originally posted by Steve McVey:
    IMO

    Money360 would be better served if the BORROWER pays to have a listing entered. Making the investor pay (the one ALREADY providing the service) is not the best idea IMO. What happens after an investor/lender pays to see 4-5 ad's and none happen to work out? Either the borrower backs out, the deal doesn't live up to deal spelled out previously, so on & so forth.

    By having the borrower pay, investors can see *Skin* in the game -- Must be a bit more serious than random solicitations for money. Points would still be claimed at closing for Money360.

    Just my $.02 cents :)

    Good idea, but there is one way to make it better perhaps. Borrower pays to list; lender re-pays the borrower the amount of the listing expense once they agree on loan terms, or maybe upon completion of final payment (by reducing final payment even).

    That's a good idea... I'd be ok with that.

    I joined as a "lender" yesterday. I have all options open -- So far = I see (2) listings. Neither look any good.

    Some serious $$$ needs to be put in the advertising/marketing if Money360 will ever be any good. I never knew about it prior to seeing it on BP. Most of the REI's I know, don't seem to spend much time online.

    It will be interesting to see where Money360 12/24/36 months from now.

    For now -- I don't really see it taking off without some major modifications/marketing/interest.

  • Investor · Davie, FL · Member since 2010 · 66 posts · 8 votes
    13y
    Originally posted by Chris Martin:
    Originally posted by Steve Babiak:
    Originally posted by Steve Babiak:
    Now that the two of you have become acquainted, borrower and lender, you can turn this into a potential BP success story - without money360 being involved now.

    Chris Martin and Chris M. - how did this turn out?

    Steve, I didn't hear back from him....

    Sorry about that, when I inspected the unit it had some plumbing and electrical issues and some leins that needed to be brought current. That killed the deal.

    I took a break from active investing to enjoy my daughter's first year with us. Now that she's turning 1 this year, its time to get back out there.

  • Real Estate Professional · Baltimore, MD · Member since 2012 · 30 posts · 4 votes
    13y

    I've invested in the prosper.com platform as a lender for a few months now. It's not a bad place to pickup 4-25k (depending on your credit), origination fee is 1% I think, and no pre-payment penalty. Borrowing rates range from 6-30% depending on your credit rating etc.

    As a lender I've been getting great returns (small test fund, only 3 months). I think the platform is maturing enough to use to tap some liquid funding for investors. Lending club is the bigger p2p loan platform, their rates are a little lower but a bit pickier on underwriting (640+ credit).

    Conceivably one could get loans on both platforms and circulate up to 50k in funds, pay back soon and re-borrow like a credit line.

    Been a lurker on the forum a while now (good place to hang out and sponge info).

  • Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
    13y

    Money360 and Prosper (LendingClub) are really different animals. Regarding your 3 month test... a few months isn't long enough to comare true return.

    I was a lender many years before the SEC shut these sites down. Before the "re-launch", default rates were a lot worse. I still get a laugh out of some of the atrocious statistics as presented by prosper in their SEC filings. For instance, the graph on page 18 of the year end 2011 (latest 10-K available). The graph shows 31-120 day delinquency rates for loans originated prior to July 13, 2009 by quarter, as of 12/31/2011, was 75%.

    Indeed LendingClub is now way bigger than Prosper by lending volume. See also http://lendstats.com/ for to-the-dollar statistics based on SEC filings. Tons of interesting stuff there... like the return for one lender who has lent $36,662,274...

  • Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
    13y

    Maybe we can get the $36 million guy to join BP.

  • Dawn AnastasiPro Member
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    13y

    I have used Prosper and LendingClub for loans to buy single-family homes because I have been frustrated that no bank will seem to lend to me even though I have excellent credit (775), long-term employment (15 years) and almost $1m in assets. All because of the "4 mortgage" limit.

    However, the loans are short term (3 years) and I have no issues paying them off because the rental income covers the payment. They have been great for me in that respect however I have seen that my credit score, which used to be over 800, took a hit each time I took on one of their loans (have 3 loans for 3 single family homes).

  • Milwaukee, WI · Member since 2012 · 26 posts · 1 vote
    13y

    Dawn Anastasi when did you complete your most recent loan with them? What is the rate? Can you share any other details regarding your recent experiences with them?

    What did you think about their appraised value? How long did it take?

    thanks.

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