Review of P2P lending Sites, BP Style

[Kenneth E.]

Hey all.

In another discussion on peer to peer lending I came up with an idea. I am willing to identify a multi-family property nearby that is listed on the MLS and will post the particulars on a few of the most popular 'peer to peer' lending (crowdsourcing, crowdfunding, or whatever you want to call it) websites to see if it is possible to get funding for the purchase real estate through these sites. Then I can review them all in one post here on BP. We can call it a BP Social Experiment! I am open to comments, suggestions, etc. if anyone wants to chime in to see what options are out there…

Though I have already tried two of them:

Money360.com: Already posted on there for a reasonably priced property and requested 75% loan to value (recommended by the site) and got no hits, emails, notices or anything at all. It was a simple and free process to enter my data (though it took three tries before the information finally got submitted-website glitch). But, nothing came of it so I cant recommend it or say its legit.

Lendingclub.com: I requested a business loan for $18k (thinking of using it as a down payment…but never gave that detail). I was tentatively ‘approved’ for $18k at around 12% though I didn’t pursue it. Once you do pursue the loan you are approved for, then it is posted on their site and investors can review your request, credit, etc. and offer to contribute an amount towards your loan. Once enough investors have agreed to contribute and their money collectively equals the $18k you requested then the loan is green-lit. I have a coworker who lends through this site so I know it is legit (for his lending purposes, anyway). He tested the waters by agreeing to lend $2,500 altogether, but broken up into smaller chunks of several hundred dollars that he lends on different loans. His $2,500 is currently yielding a return of 26%. This is because he is lending on risky loans to people who are in credit card debt and are being charged 29% by the credit card companies—so they are more than happy to accept my coworkers loan at 26%.

MyHousedeals.com (Offers to connect you to private lenders): I have not tried but may be willing to open an account and then post a review here on BP.

Kickstarter.com: This is a hugely popular lending site but I don’t think the lending parameters allow for real estate loans.

Prosper.com: Popular site, but again, not sure real estate loans are possible.

Any other site suggestions? Kiva.com? Microplace? Kabbage.com? Ill review a few of them (we can set a limit of, say, five sites) and I am willing to pay small registration fees if any of the sites require it.

Any specific data/review points you want me to consider? I am thinking of identifying a multi-family property that offers high cash on cash returns and then post the details here on BP as well as on those sites to see if any of them would be legit in assisting the funding of a deal.

Could be interesting…

[Prashant P.]

So there are some things to watch out for when using Lending club but it is a great tool for someone starting out which is why I used it.

Before using P2P lending make sure you have a solid deal or plan. Also make sure you have a good credit score so you get a lower rate.

In my case, I found a house for $17,500 and I knew I could rent it for $800 a month. I punched in my information and found out that I could get a loan for $25000 at 10% for five years. So I chose this option. I did this option because I knew I would have to make some repairs to the house.

Anyways my loan is for $25,000 at 10% for 5 years and my payment is around $570 a month.

After pruchasing the house, the tenant did not want any repiars so I had an extra $7000 in my bank account and his rent was paying the payment on the loan.

Before going the P2P route, make sure you can cover the loan payment amount if you have a vacancy or your tenant does not pay the rent.

As far as listing the loan, it is pretty easy. You cannot say certain things in the loan posting like how much money you will be making or how you are going to pay off the loan. Lending Club will send you an email telling you if something is wrong.

The loan funding is pretty easy too. It takes a week or two to fund the loan. The whole loan does not have to be funded for you to get the money. I think 60% has to be funded and Lending club will fund the rest.

You can have two loans using Lending Club. Each has to have a differnent email address.

The whole process is pretty painless. I would recommend it to others but just remember you are paying 10%+ interest. So you have to have a solid deal.