Investing 102

[XLexusTech]

Originally Posted by SSLance

I don't have any insight into peer to peer lending, but I do have a good friend that has dabbled in high risk loans for a long time.

He is now also a Bed and Breakfast operator in Colorado...and not by choice either.

Yeah that was my 20s bit to old for that now

[GregWeld]

Originally Posted by SSLance

I don't have any insight into peer to peer lending, but I do have a good friend that has dabbled in high risk loans for a long time.

He is now also a Bed and Breakfast operator in Colorado...and not by choice either.

My next door neighbor managed to hoover thru 250 MILLION dollars doing "mezzanine" loans to builders and developers that all went bust in the housing downturn. He lost his entire families fortune -- to the point that they repossessed his Mother in Laws car and his kids houses... and chained his 69' yacht to the dock.

My response to his face when I saw him after the news broke.... "dumb-ass everyone knows you don't put all your eggs in one basket".

But... you know... the "returns" were so good! When you accept high returns - you accept high risk. It's all a whole lot of fun -- right up until you loose your family fortune.

The loss turned out to be larger than originally anticipated....

http://www.bizjournals.com/seattle/s....html?page=all



A later article.... either way -- all amazing -- and even more amazing to me -- is to blame someone else because you were a stupid ass.... LOL



http://www.seattlepi.com/local/sound...in-2140363.php

[GregWeld]

Just to be clear --- I understand the OP question about Peer to Peer lending -- and Micro loans and all of that... I just thought it was a fun place to insert some information about lending... and it's perils. I'm a lender in a couple of instances and they've worked out well for all so far. Just make sure to keep it very very small.

[XLexusTech]

Originally Posted by GregWeld

Just to be clear --- I understand the OP question about Peer to Peer lending -- and Micro loans and all of that... I just thought it was a fun place to insert some information about lending... and it's perils. I'm a lender in a couple of instances and they've worked out well for all so far. Just make sure to keep it very very small.

Yep that's the nature of the query .. Read through the article and it's not at all like peer to peer lending.

[GregWeld]

When I lend money --- I'm taking collateral. A title or secured creditor. First in line with hard assets. Otherwise I can just buy some more MO or T -- and collect a dividend.

While I like to help out -- I'm in it to make my money make money.

The problem with "lending" is that it's not liquid. I like / prefer liquidity. I want a premium return for giving up liquidity (think LLC apartment investing - where returns are 7% or so plus the upside).


Peer to Peer (P2P) lending typically is unsecured...

[XLexusTech]

Originally Posted by GregWeld

When I lend money --- I'm taking collateral. A title or secured creditor. First in line with hard assets. Otherwise I can just buy some more MO or T -- and collect a dividend.

While I like to help out -- I'm in it to make my money make money.

The problem with "lending" is that it's not liquid. I like / prefer liquidity. I want a premium return for giving up liquidity (think LLC apartment investing - where returns are 7% or so plus the upside).


Peer to Peer (P2P) lending typically is unsecured...

Ok no disrespect but I believe your making a lot of assumptions. For example although your notes may have 36 month durations they are both callable and can be sold at anytime .. Since what your doing here is taking fractional percentages of thousands of loans it not as locked in as one might think. In fact that's one of the things I want advice on, assuming existing accounts which have solid history from someone oh wants to cash out

[GregWeld]

Originally Posted by XLexusTech

Ok no disrespect but I believe your making a lot of assumptions. For example although your notes may have 36 month durations they are both callable and can be sold at anytime .. Since what your doing here is taking fractional percentages of thousands of loans it not as locked in as one might think. In fact that's one of the things I want advice on, assuming existing accounts which have solid history from someone oh wants to cash out

Ah ha... so you're not making a direct P2P loan. A third party is bundling.

[SSLance]

Originally Posted by GregWeld

My next door neighbor managed to hoover thru 250 MILLION dollars doing "mezzanine" loans to builders and developers that all went bust in the housing downturn. He lost his entire families fortune -- to the point that they repossessed his Mother in Laws car and his kids houses... and chained his 69' yacht to the dock.

My response to his face when I saw him after the news broke.... "dumb-ass everyone knows you don't put all your eggs in one basket".

But... you know... the "returns" were so good! When you accept high returns - you accept high risk. It's all a whole lot of fun -- right up until you loose your family fortune.

The loss turned out to be larger than originally anticipated....

http://www.bizjournals.com/seattle/s....html?page=all



A later article.... either way -- all amazing -- and even more amazing to me -- is to blame someone else because you were a stupid ass.... LOL



http://www.seattlepi.com/local/sound...in-2140363.php

Sounds like they borrowed money to make "hard money" loans with...

It doesn't get much dumber than that...

[GregWeld]

Originally Posted by SSLance

Sounds like they borrowed money to make "hard money" loans with...

It doesn't get much dumber than that...

Here's the part that gets to me Lance. And he's not the first dumb ass to lose it all...


If a guy has 100 million... and makes a 5% annual return.. That's making 5 Million annually pre tax. Everything SHOULD BE paid for. No debt what-so-ever. Why would you need debt if you have 100MM dollars?

So 5MM per year is all disposable income. How much more does someone need to make to support their lifestyle? You're retired - You're worth 100MM - you earn 5MM per year - you have zero debt...

Call me old fashioned... but I think that's a pretty good life and lifestyle.... and I personally wouldn't be inclined to gamble that lifestyle/life to make a little bit more. I think my Jet and my Yacht and my waterfront house... and all my Ferraris and race cars would be enough to keep me busy and worry free.

[glassman]

Originally Posted by GregWeld

Here's the part that gets to me Lance. And he's not the first dumb ass to lose it all...


If a guy has 100 million... and makes a 5% annual return.. That's making 5 Million annually pre tax. Everything SHOULD BE paid for. No debt what-so-ever. Why would you need debt if you have 100MM dollars?

So 5MM per year is all disposable income. How much more does someone need to make to support their lifestyle? You're retired - You're worth 100MM - you earn 5MM per year - you have zero debt...

Call me old fashioned... but I think that's a pretty good life and lifestyle.... and I personally wouldn't be inclined to gamble that lifestyle/life to make a little bit more. I think my Jet and my Yacht and my waterfront house... and all my Ferraris and race cars would be enough to keep me busy and worry free.

Its always the "tail" that runs you over....lol (ya know what i meen about "tail" right ) JK of course, but i've seen many a man spend waaaaaay to much on their "girls". Like you said, "dumbass".....greedy bastards imo