Money360 may revolutionize "hard money" lending

[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.)

[Chris Martin]

After a few days, setting my "Lending Preferences" to basically everything in the US under $250,000, I have received a half dozen borrower matches. If you like the lender's summary you can click on the match and see more details, but not enough to make a lending decision. The way the site works is you pay (from $19.99 to $39.99) to get the borrower's name, contact info and property address.

On one of the loan requests, I could speculate where the property was located from the square footage and city/state. In this case, a 891 square foot condo in Miramar, Florida. Using realtor.com, I can see a handful of condos that match these fields closely, and one matches exactly. The match happens to be an REO at an offered price that matches the 'Current Value Estimate' field on the loan request. The requested loan amount is $25,000 on this property theoretically valued at $42,900.

Using Broward county records, I looked up the address and can see "qualified sales"(1) in 2012 at and above the listing price, giving me some confidence that this deal is probably legit. The other information in the lender's description is that this owner claims to own two other units F&C in the same complex. The claim is that they rent quickly. Craigslist has what seems to be comparable property in the same complex at $1190.

What's my point? I guess I am driven to dig and find details first, rather than pay $20-$40 for opportunities not worth pursuing. I think they need to provide a lot more information about the person (lender), property, and the deal to make this concept compelling.

(1) Per the county: A "qualified sale" means a legitimate, arm’s length, open market sale under normal financial conditions