Monday, August 27, 2007

Early Prosper Payoff!

When I logged in to my account over the weekend to check things out, I was surprised to see that one of my loans was being paid off early. This was a nice contrast to my two loans that have defaulted. Once this loan has been paid off, which should be in a day or two as the transaction settles, I will be left with one remaining loan, which is at 8.85%.


ryanhegs said...

What is your overall impression of as an investment/profit making tool? It is something I have considered but not jumped into yet. Would you recommend it?

-Ryan - Investing, Business, & More

Shaun said...

I would not recommend it for the reasons I write about here. But others have had better experiences than I have. I will also note that I started with Prosper long before they had the evaluation tools available that they do now, so lenders now have more information to use to make their decisions. Two of my 4 loans have defaulted and perhaps if I had those analysis tools, I would not have made those loans. Still, it's not for me.

I've written many posts about Prosper. Use the search box here to search for "" and you'll find them. (Most were made before I started using labels on posts, so the "Prosper" label won't display all of them.)

Anonymous said...

Hi Shaun,
First the kudos...then a question (or two)

You have an awesome blog...a daily must-read for me. I've managed to read each and everyone of your posts starting with 2004. I find them very informative and true to the blog's mission.

Now the questions...
What do you think of investing in a strip mall store with an excellent location. Have you considered it ? researched it ? Just looking for your thoughts.

Also, given the glut on homes on the market- do u think its a good time to jump in for bargains or does the market get worse before it gets better.

Thanks and keep up the good work.

Shaun said...

Thanks for the kind words!

I've only indirectly invested in a strip mall. One of the new properties that became part of my Louisiana deal is a strip mall in Texas. But I'm just a hard money lender in that and it's part of a larger package of properties, so I didn't really analyze it at all. I do have a write up on it though that goes into detail about the tenants, future possibilities, etc. I think Trisha at Building An Empire looked at / is looking at a strip mall purchase. A link to her is in my blogroll on the left. Personally, I think it could be a good deal. As always, it depends on what your due diligence turns up and what you can buy it for.

As for houses, I'm of the opinion that if the cashflow meets your needs and your other due diligence doesn't turn up any red flags, it's a good deal. I don't buy houses solely based on potential appreciation or depreciation. If I can find one that is a good deal and cashflows positive with an ROI that is acceptable to me, I'll take it.

Anonymous said...

Shaun, Thanks for the quick response. Appreciate your insights. A quick word on the last part of your comment "...cashflow meets your needs": cashflow can be manipulated based on how much you put down/finance. Is there is rule-of-them for how much/little to put as down payment ? Is is better to put down as much as possible or should one leverage to the max ?

Once again, thanks.

Shaun said...

What ROI you want will help you determine how much to put down. ROI is your yearly cashflow divided by the amount of money you invested. So if you put down $10,000 and you get $100 cash flow a month, your ROI is 12%. But if you put down $20,000 and your cash flow is $150 a month (because your mortgage payment will be less each month), your ROI is 9%. So it all depends on what ROI you want to earn on your money. Maximum leverage might give you a higher ROI, but you have less room for error. For example, if you put no money down, you might be able to cashflow $25 a month. Your ROI in this case is infinite because you have none of your own money in the deal. However, if a water heater breaks, or the tenant moves out or some other unforeseen event happens, your $25 a month cashflow doesn't give you much cushion to handle such emergencies. So it's all a trade between different variables. You have to come up with a combination you are comfortable with.

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