A Simple Guide to P2P Real Estate Lending

Have you ever imagined rather than walking into a bank for loan, you were lending out funds to borrowers? Through a reputable p2p marketplace lender, you can do just that.  A p2p lending club will allow you to invest your money by lending it to borrowers seeking investment property loans in exchange for attractive interest rates.

Some of the most reputable P2P companies will enable you get returns of over 9.6%, which is much higher than most investment options in the traditional markets.  In comparison to other investment types, you are able to manage your risks.  In this situation you are now the bank, lending out the money and the sole decision maker on the loans you wish to approve and reject.

To maximize your returns on commercial real estate investing, you need to have an investment strategy. Here is a checklist of things to keep an eye out for. Remember to do a thorough research prior to investing.

  • Credit Score — should be more than 678.
  • Debt Refinance — seek borrowers that will pay higher interest rates
  • Delinquencies in the previous 2 years— there should be none.
  • Government Job — preferred employment in the government
  • Interest Rate — all with preference to higher ones. Mix the loan grades to stabilize and increase returns.
  • Job Tenure — long record of employment, ideally 10 or more years.
  • Loan Purpose — you may want to seek a borrower going for a better rate and debt reduction
  • Loan Term — start with the 36 months and when you are conversant with the investment business, you can go for the longer 3-5.
  • Debt: Income ratio — preferably low
  • Several Small Loans — create a portfolio with a minimum of 200 notes. With more notes your portfolio will be more even and the performance will be better. You will spread the risk better in the event a default occurs. Hence, you will need a minimum amount of $ 5000 to invest and 800 notes which means $20,000 is an ideal amount to invest.
  • Minimum employment period: should be more than a year; the longer the period of employment, the better.
  • Reviewed by the P2P — It is preferable that you have the P2P check out the borrower and give their reviews. This will mean that there is a better chance of loan repayment.
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