P2P Lending: An Assessment of the Risks and Opportunities

Peer-to-peer lending or P2P is the method of lending cash to people who are not related to the lender. This kind of lending usually takes place online and does not involve any financial institution.

There are several P2P lending websites and they use various credit checking tools to determine the borrower's eligibility for the loan.

What risks are involved?

P2P loans are 'unsecured personal loans' made to individuals who have not put up collateral.  Remember that the lender will not receive any government protection for his/her investments. However, they can reduce their risk by selecting the 'right' borrowers and diversifying their investment among different borrowers.

Aren't they risky?

Yes, these loans carry a high amount of risk as they are not secured. However, if you take a look at the default rates of these loans on P2P websites you can see that most borrowers repay.

Borrowers are expected to have a decent credit score to qualify for these loans. The interest rates usually depend on the borrower's credit history. Higher risk borrowers will have to pay higher interest rates. Borrowers who are considered low risk will be eligible for low interest rates.

These kinds of lending companies are now being watched by the Securities and Exchange Commission and many of them have obtained SEC's full approval.

Transparency

P2P websites conduct their business in a transparent way. The investor will have access to complete information on each loan prior to investing their money. It is true that these loans are unsecured, but the lender can reduce their risk by lending small amounts to many different borrowers. Credit card loans, too, are unsecured loans, but that hasn’t stopped banks from offering them. Just like credit card loans, P2P loans, too, are reported to credit agencies. So a borrower who fails to repay the loan will damage his/her credit score.

Who operates these loans?

P2P lending is a for profit online business. It generates income by collecting fees from borrowers on the funded loans. The website may also collect a fee from the investor. These websites are fully automated, so they don’t have to employee many people. This reduces their operating expenses. Consequently, they can pass some of these benefits on to the borrower by offering lower interest rates. While at the same time, they help lenders earn higher interest rates

Right now, P2P is a fast growing investment opportunity. Even investment bankers from traditional lending institutions are joining these P2P websites as lenders, investors and board members. This clearly indicates that the new lending platform is gaining credibility.

The bottom line

Even traditional banks find peer-to-peer lending attractive. That is a good reason for an investor to consider this lending platform. You can reduce your risk by investing small amounts. Also, instead of lending the whole amount to one borrower, you can divide the money into smaller sums and lend them to different borrowers. This reduces your risk because all of your borrowers are unlikely to default.

Traditional bank deposits offer lower interest rates and that is the reason investors are turning to alternative investment opportunities. While P2P lending has its own risks, the returns are good enough to attract many investors.

Get your share of the $1.5 trillion in Adjustable Rate Mortgages scheduled to reset this year! Imagine having up to a 20% funding rate at a low, cost effective price per lead! With our ARM plus leads, you can. Get in touch with ARM Source today!

Key Recommendations for a Homeowner to Maximize Appraisal Value

Home appraisals today are more important than ever when it comes to buying or refinancing a home. With housing prices starting to increase, many home sales and refinance deals are being cancelled due to low appraisals. In any market where housing prices are rising, obtaining appraisals that keep up with the increased sales prices is a challenge. Add the high level of foreclosures, the down market for the past several years and the problem grows exponentially.

There is nothing more frustrating that finding a buyer who can qualify for a loan, and then losing the deal to a low appraisal. There are steps that homeowners can take that will ensure the home appraises for the highest dollar amount possible. This will provide the loan closing the clients are looking for, whether it is a refinance or the sale of a home.

When a home is scheduled for an appraisal the first thing the homeowner needs to do is to take it seriously. Imagine they are showing the home to a potential buyer and ensure the home is presenting in its best light.

Here are a few simple things the homeowner can do to ensure the home appraises at its highest value:

Clean the house thoroughly. Make sure the home is clean, de-cluttered, carpets and windows are cleaned and the home is odor free. Appraisers will assess the condition of the home and if the home is clean, they will give you the benefit of the doubt when it comes to maintenance.

Curb appeal is as important to an appraiser as it is to a homebuyer. Make sure the lawn is mowed, the hedges trimmed and the home is neat and orderly. It is also good to have the flower beds in good condition and any needed repairs or paint completed so the home has the best curb appeal possible.

Make repairs as needed. Appraisers generally value a home in lots of $500. Things like a leaky faucet, peeling paint, broken windows and faulty light fixtures can add up quickly. This will affect how the appraiser rates value as well as the condition of the home and its affective age.

Make all areas of the home accessible, but don’t follow the appraiser around. When homeowners close off the garage, basement or attic, the appraiser cannot accurately assess the value of these spaces. Providing access will help the appraiser give an accurate assessment and will remove concerns that the homeowner is hiding something. When the appraiser is in the home, it is important to let them do their job. Ask questions at the beginning and/or end of the appraisal, but allow them to inspect the home without the homeowner in tow.

Gather information on home improvements. It is very important to support the condition of the home with evidence. Include upgrades to the home as well as structural upgrades. If the roof, electrical, or HVAC has been replaces, provide documentation so the appraiser can account those improvements into the home’s value. The same goes for improvements like kitchen and bath upgrades.   

Appraisers try to be objective as possible, but in the end the value is subjective. It is based on recent home sales in the area and the general condition of the home. The homeowner cannot impact neighboring home sales, but they can impact the condition of the home. Providing documentation, and presenting the home in the best possible light, is the most effective way to get the maximum value from the appraisal.  

LeadXL provides accurate, actionable information and analysis, resulting in increased conversion of leads from ALL sources. Lead XL was built for lenders following a clear path to success: Analyze. Revive. Enhance. Contact Lead XL today!

Brand Building Strategies for Real Estate Startups

At last you have decided to start your own real estate company! This is undoubtedly one of the most exciting moments in your life. You might also be feeling a little nervous.

When you start on your own, you get to explore new horizons and soar to greater heights. However, running a real estate business can be quite challenging. Since this is a highly competitive industry, you need a sound marketing plan to achieve the kind of success you were hoping for.

Yes, you read it right. You cannot survive in the real estate industry without a solid marketing strategy. Still, many people who start their own real estate company do not have a well-thought out marketing plan in place. They simply start out and then struggle for a long time before giving up.

But this isn't surprising. When you start a business, you have to take care of a lot of expenses. You need to buy or rent office space. You have to hire employees. You have to pay the utility bills. When there are so many expenses, very few people can set aside money for marketing. But this is a huge mistake. A marketing plan and a marketing budget are crucial to the success of a startup. Don't wait until you make your presence felt. If you don't have a marketing plan, nobody is going to realize your presence.

Convey your brand message through the right channels

Since the very beginning, you have to send out a clear brand message to your audience. As a company, you must have a unique selling proposition. There must be something that makes you different from other real estate companies in the neighborhood. Tell your potential clients why they should hire you. The answers to these questions will help you define your brand.

Brand building is an important strategy that will allow consumers to remember your company when they need a product or service you offer. At least 5 years of marketing are necessary to improve brand recall.

Startup owners often overlook the need to build a brand. That is probably because brand building is expensive. In addition, it doesn't always lead to immediate results. However, a branding strategy should be the foundation of your business.

Branding might take time, but it is usually the difference between a startup that merely gets by and the one that really makes it big in the real estate world.

Branding requires sending the right message to a targeted group of customers. Once you have decided what your brand message is, you need to find ways to communicate that message. Consistency is the key. Everyone including your top management executives and your employees should communicate the brand values in the exact same manner.

Make sure that your logo and other brand images are consistent in all marketing and advertising efforts. You should also communicate with your target audience through a variety of platforms, including social media, newspapers, magazines, television, radio, public relations and email. All of these platforms should work together to build your brand.

When you have got the right marketing strategy in place, your company can reach heights way beyond your wildest imagination.

LeadXL provides accurate, actionable information and analysis, resulting in increased conversion of leads from ALL sources. Lead XL was built for lenders following a clear path to success: Analyze. Revive. Enhance. Contact Lead XL today!

What You Need to Consider Before Launching Your Mortgage Business

Starting a mortgage business can be a rewarding experience both financially and emotionally. A mortgage broker helps people buy homes by connecting them with a lending institution. If you are familiar with or interested in the real estate industry, starting your mortgage business isn't all that difficult.

What does the job involve?

As a mortgage broker, your duty is to help clients get home loans. A mortgage agent can work from home or office. If you are a freelancer, you will be able to enjoy a flexible working schedule.

The advantages of starting your own mortgage business

One of the biggest advantages of launching your own mortgage business is that no major investment is required.

If you possess the right personal qualities and a basic understanding of the mortgage and real estate industry, you will not have much difficulty establishing yourself as a mortgage broker. In addition, you will be able to learn from proven business models.

When you start out, the commission you earn from successful referrals is likely to be your only source of income. After working in this industry for a few years, you will be hiring brokers. And then you will also get a certain percentage of their earnings.

In some states you may need a license to work as a mortgage broker. No licensing is required in some other states. You should find out the licensing requirements before starting your business.

The following are usually required to launch a mortgage business:

• License
• Educational qualifications
• Experience
• Insurance
• Escrow contacts
• Office space
• Mortgage processing software

How to attract clients

In order to be successful as a mortgage broker, you should establish your own business model. The goal is to attract clients. Decide what type of client you would like to serve. You can, for example, target people looking to buy affordable homes. Or you can help people with poor credit to get loans. By determining which niche you want to work in, you can design effective marketing campaigns.

Keep yourself up-to-date with the latest developments in the industry. Taking specific courses in mortgage may also help.

Launch your website. A large number of people now search for homes and home loans online. By launching your own website, you can increase your credibility as a mortgage broker. Update the website with fresh and useful content and optimize it for search engines so that it will pop up when people look for mortgage brokers in your area. You should also be active on the social media.

Offer free consultations. You can perhaps offer a free equity analysis. This is a highly competitive sector and your success often depends on your ability to differentiate yourself from other brokers in the area.

Network. Attend seminars attended by your targeted audience. You should also organize mortgage related seminars.

Provide great customer service. You should be easily accessible to your clients and should enjoy interacting with them. You should also have a pleasing personality. When new mortgage products arrive, you should be quick to offer them to your clients.

As a mortgage broker, your business involves targeting and retargeting your targeted audience. Show enough patience and perseverance and don't expect immediate results.

 

What a Million Dollars Will Buy in Real Estate

If you're a real estate professional who has wealthy clients, you may be interested to know what one million dollars can buy in real luxury real estate. It all depends on location, location, location!

We found an interesting infograph depicting just how much square feet of luxury property $1,000,000 US dollars could get:

Infograph courtesy of CNBC

 



In Monaco, you can get a bedroom-sized place for the cool price of one million! Talk about getting a little for your money...

According to CNBC's article, New York now ranks sixth in square footage that a million will buy. However, it is projected that New York will be #1 in the next ten years.