I put 2 million into 20 crowd fund deals. Posting performance:

166 Replies

I am also investing at these sites: POL,RS, EquailtyMultiple and LendingHome. A little concerned about what would happen to my investments if a site where to file bankruptcy.  Mathew have you looked into LendingHome?  They have the least information about the properties but are the best capitalized (70mil from Renren)

I didn't see you mention are you doing anything about the one in default? Curious how that plays out? If you are in a secure enough position or not!?  Good luck.

Originally posted by @Account Closed :

Saul L.

Hi Saul,
Why is it that people are lead into leveraging, construction, and areas that are about to implode? It's extremely risky, and you most of the time, lose everything. I've been in real estate for 30 years, in all aspects of it. The one part that you don't lose, and always make profit in is the free and clear ownership of land, bought right, and in the best locations. This secures our investment, and allows us with many different options, to hit the jackpot. My wife, and I are in Las Vegas, and doing exactly that. Timing, and opportunity is extremely important. We have that here now, and for many more years to come. If you're interested, please private message me, so we can talk.

Sincerely,
Jeremy

 Jeremy, you have got to be kidding me with this.  Seriously! "One place you don't lose and always make profit"?  Let me guess - your way!  Vacant sand, I mean land, in Vegas.  Sure...

Thanks for the laugh this morning.  Blanket statements like yours are a joke and extremely distasteful. Thumbs down to you.

Hi @John P.

Well, I think I, and maybe PoL have learned form that non-performing deal. 

I probably won't do multi-pack deals anymore unless they are priced more aggressively, especially ones so geographically spread out,  because  I don't think they are properly risk adjusted and cost adjusted for the addition efforts involved in asset protection. 

Further, I talked to PoL. I think they were erring on the kind side making a lot of calls and trying to work it out with the borrower. My recommendation was to be much quicker on initiating foreclosure steps to mitigate risk. I tend to be a softy on this kind of thing, but by starting the process sooner you are more likely to me able to mitigate loss wishing 120 days or so... should you really have to. If the borrower is making efforts, you can always delay or stop the process. But if the borrower is not following through on commitments and not providing reasonable guidance, you can get where you need to be faster. 

If a borrower has made 6 to 11 payments and has come across a legitimate problem, I would likely be the first to work around it... I would just start the process sooner. In this case, th borrower seems to have made two payments and then was betting on a quick sale to cover it. I doubt PoL would have made a loan on that understanding. 

The problem with not being a bit more aggressive is that you impact the investors, making them more apprehensive about funding deals. This in turn simply hurts other borrows looking to source funds, makes investors want higher interest rates, etc..so non-performers have a recursive/self-perpetuating negative effect on the community. Taking too much time could also simply compound the costs for the borrower in some cases. (declining market, more opportunity to damage to properties, etc)

So unfortunately... I would be more of a hard-***... but if the foreclosure steps are successful and the investor can do OK, I would want to make the borrower as whole as possible too. 

Lastly, (hopefully) I am getting a bit smarter on vetting these deals out for LTV, recoverability of investments, history and credit of borrowers, and the other stuff we should all be looking at. Your not doing anyone a favor giving them a loan they cannot manage.

To sum up PoL's response... I think its been good. They are definitely communicating with me, they are definitely listening to me, and I think they are making structural, staffing and process changes to improve their ability to manage these situations. 

Not sure I stumbled through a clear enough answer to you simple questions... but I think they will be successful in recovering the investments. I am not sure who bears the associated costs of the process, but I will share. 

Matt

Originally posted by @Matthew R. :

Did I miss some fun banter? looks like a bunch of deleted posts...

 Nothing big.  Some guy posted the same message a bunch of times thinking he was sending private messages to people it appeared.

Again, thank you so much for the information you have provided. Amazingly helpful.

I apologize for the mis-spellings... I tried to edit, but I was too late. My browser spell check is constantly over-riding me... Hopefully the message comes through...Matt

Reminds me of the early days of Prosper.com. People called it growing pains back then, but ultimately the pain will find its way down to the person who put down the $. I consider it part of the process when you are dealing with a new market segment that is, to a large degree, unproven and unregulated. I am largely in favor of the unregulated (wrt bank/SEC/finance) part, BTW, other than the project requiring full disclosures, conflicts of interest, etc. I think the market will determine if the sponsor will survive long term.

How can you get around the rule if you live in a state where you're not allowed to invest? I'm in PA and it won't let me fund anything.

I will be talking to PoL and see if I can get answers to these questions... 

@Max T. I will add your question. 

@Chris Martin I agree that there is risk. I try to make it clear that I am sharing an experience, NOT making a recommendation. Even if I was making a recommendation, hopefully people would not blindly follow it given that I watch the surf reports more than I watch market reports. 

I think people need to consider it a riskier investment and allocate appropriately..  I like the concept. I think it has legs. Im happy to jump in and support it. 

For me, I just don't know what other investment types are any better, (risk/reward/certainty/etc) and people who claim to know scare me off. 

[email protected]

@Matthew R. - It will be great when your investments mature and that excel sheet becomes more sensical. At the moment, your calculations are off (i.e., bridge loans int earned is not 1.5 million, LC annualized return is not 122%, etc.)

@Max T. same is true in NC. I can no longer participate. It's State law...

@Matthew R. I agree. And my hat's off to you for sharing. When "my" loans defaulted on prosper, there was nothing I could do. Their collections early on (and their, what they called, "due diligence") were pathetic. That was very early on. But I'll use your words that summed up how I felt at the time... "I like the concept. I think it has legs. Im happy to jump in and support it." That's the great thing about our collective capitalist system, and it's the people who blaze the trails to make new ideas... well, prosper;)

I several debt investments on Lendinghome and one is 75 days late.  I am watching how well they do resolving the problem.  Loans with high yield will have problems but it is how they recover that allow me to continue investing with them.  I agree with Matt that they need to act fast and have a strict plan they follow in resolving problems.

Bryan     

Hi @Bryan Mee

I'm guessing you have done most of this, but if not, I suggest:

1) Call and ask about their loss mitigation process.

2) Ask where this specific investment is in that process timeline.

3) Ask if they have a dedicated officer or team that manages non-performing loans. 

4) Ask about their credentials & experience. 

5) Advise that you expect weekly updates on status of non-performing loans.. 

6) Ask some deep dive questions to test their expertise. Ask the length of time to foreclose in that state, Ask them do describe all the failure points and if they have solid processes wrapped around them all. Ask how many properties they have foreclosed on. Ask what they might have done different to better vet this borrower. etc. 

I think that this community can really help ensure we are treated well in these situations by keeping the community aware of any such situations. Would you mind advising on which specific property this is?

Good luck. 

Matt 

I asked PoL for same general answers to the questions about where they operate, under what regulations they operate, and what to expect in terms of taxes. Here is the response: ( I removed all phone numbers and email addresses, but I suspect thats all easy to find on their site:

1. What States do they lend in? What States can investors be in? Are there States where investors cannot invest from?

Patch of Land can lend in 46 States, with the exception of Arizona, Nevada, South Dakota and Minnesota. So far they've lent in 34 States.

As far as investors, Patch of Land can accept investors from any state aside from Maryland and the Maryland limitation will likely be eliminated within the next month. The consistent requirement for investors has to do with the 'accredited' status of that investor. That's defined by the SEC and it means that as an investor you have to have made $200K the past two years, with expectation to make the same in the current year. If you're a couple, the limit is $300K. Or, you must have a net worth of over $1MM excluding the value of your primary residence.

Patch of Land will verify this status once you've made an investment, and they are very diligent about this, so expect to send in W2s, tax returns or letters from your tax accountant to prove out your accredited investor status.

Anyone can view their investments, browse, click into them, etc. But once you decide to invest, you should be prepared for the accredited investor verification, which is painless and quick, but it is a MUST.

2. What tax treatment should I expect with a Patch of Land investment?

Based on my experience, and my understanding, you’re investing in a BPDN (borrower payment dependent note) issued by Patch of Land and not directly in a property. You'll receive a 1099-INT summarizing your monthly interest payments. If you invest with various entities, i.e. a trust and individually, you'll get a 1099-INT for each entity you invest with, so in this example, you'd get a 1099-INT for your trust and a 1099-INT for yourself.

3. How is Patch of Land regulated?

Patch of Land’s issuance of BPDNs (borrower payment dependent notes) is regulated by the SEC under the Reg D, section 506(c) exemption of Title II of the JOBS Act. There are great and long-running threads here on Bigger Pockets about this topic and how companies like Patch of Land built their businesses with these regulations.

Since Patch of Land doesn't take deposits (like a bank) they aren't regulated like a bank, but I'm neither a lawyer nor a regulatory expert. I'd recommend talking to them about this and their legal department and investor relations department are always very responsive and forthcoming with information.