How To Evaluate The Risks In Peer To Peer Loan Investments

Prosper.com and The Lending Club make it possible for individuals to invest in private, unsecured loans taken out by individual borrowers. An unsecured loan is, by its very nature risky. Prosper investing and Lending Club investing take some of the risk out of the equation by allowing the investor to choose loans and risk levels. The purpose of this article is to address the exact nature of those risks.

If a borrower stops making payments on a loan in which you are invested, the bank will take action. If the borrower actually defaults, the bank will pursue collection action. This might or might not result in you recovering some or all of your investment. The smart money says that your investment will not be recovered. Your job, if you have done it well, is to make sure that this default is a bump in the road rather than a disaster.

Avoiding a disaster begins with taking a close look at the loans and borrowers you can choose from. A borrower’s loan will have a letter grade issued by Prosper or The Lending Company. Prosper investments are graded A-E, and then HR for high risk. The Lending Club investments have over 25 subgrades, namely A1-G5. Different interest rates are attached to each grade, and they range from 7% all the way up to over 30%. So why not just invest in the high interest loans?

The reason why that is a bad idea is because the higher interest rate loans carry much higher risks. Prosper, whose loans creep into the high ranges more readily than The Lending Club’s, attracts more borrowers who present a risk of default. This is especially true given that Lending Club fees and Prosper fees, as well as a 1% commission charged to investors, are not included in the face amount you are getting from the loan. The borrower is actually paying more than what you are being paid.

The truth is, though, very few Prosper and Lending Club loans can truly be said to be low interest. There is some default risk no matter what the interest rate. The only sure way to protect oneself from default risk is to diversify the loan portfolio.

This means spreading your money across as many different loans as possible. Even a single loan at a relatively low rate can pose a risk. What if the borrower loses his job? He may default and you will have lost not only future interest, but your investment as well. This could be avoided by spreading the same money across many other loans. Recall that the minimum Lending Company investment or Prosper investment is only $25.00. Both Prosper investing and Lending Club investing can be made easy by investing in the pooled noted above

Unless you can truly afford to lose money, it is very important to diversify. The real world risk of default can be drastic. Even as few as 15% of loans going into default can drop the return on an investment you thought would pay 25%, to one that might only pay 7%. Both companies publish projected default rates for any grade of loan, which can reduce expected performance rates anywhere from 2% to 10%. Check these figures carefully and read the prospectus before investing.

Lending Club investing and Prosper investing are excellent vehicles for a potentially high rate of return. However, a Lending Club investment or a Prosper investment can carry significant risks, especially when the investor is chasing higher returns. Always check with an investment advisor before deciding.

Use Your Home’s Equity With Equity Loans

Considering the huge investment you have made here, it is ideal that you use this asset when you need money to meet some large, unavoidable expenses such as home improvement or education. You can do this by taking out a homeowner loan.

There are different kinds of homeowner loans but the ones you commonly hear of are home equity loans and HELOCs. HELOCs are not actually loans although in common parlance they are referred to in this way. A HELOC is a line of credit that you avail of, with an upper limit that is based on the home’s value. Home equity loans are loans that you take based on your equity holding in the property. These are most often second mortgages taken out by the borrower.

How to Use Home Equity Loans

As homeowner loans make a substantial sum of money available, they can be used in many different ways as follows:

  • Debt consolidation- Home equity is often used to consolidate various smaller debts held by the borrower. By taking a home equity consolidation loan you can pay back all your smaller loans and end up with just one single large loan that is easier to manage and keep track of. By making tracking easy you also ensure that there are no missed payments or late payments on this loan.
  • Home improvements- It makes good sense to use the investment to make improvements to the asset’s current value. This why many borrowers take a home equity loan when they have renovations or additions to make to the house. Once these improvements are completed, the resale value of the property is higher than before. This means that the loan is now a smaller percentage of the home’s actual value.
  • To make up for bad credit- If you are a bad credit borrower you will find it difficult to get an unsecured loan at reasonable rates. Using your home as security to get a home equity loan lets you make up for the poor credit score. Since the house property has a high resale value, lenders will be quite willing to offer low interest loans based on house property.

Home Equity Loan vs. Unsecured Loan

Although a home equity loan creates a risk on your home, it is still a good option when you compare it with unsecured loans. The home equity loan may actually be processed faster than unsecured loans because the former does not require an extensive credit check.

Also, it is difficult to get access to a large sum of money when you are looking for unsecured loans. With a homeowner loan the total loan amount is based on the amount of equity you own in this expensive asset. Given that your largest investment has gone into your home, you can avail of a large loan against this source as collateral.

The Basics of Trust Deed Investing

If researched correctly, trust deed investments offer a great yield with relatively low risk. Trust deed investors often earn high single-digit annual returns, paid monthly. In lots of cases, returns above 10% are possible. These returns are very favorable relative to other investment choices with similar risk profiles. The risk of losing money in a trust deed investment is mitigated by a built in “margin of safety.”

In this economic climate professional real estate investors are buying properties at foreclosure sales for bargain basement prices, fixing-up these properties, and reselling them for a profit. Trust deed investing is investing in loans protected by real estate. Most trust deed investments are often short term loans (under five years, with most loans two years or less) made to real estate investors. Large financial institutions are reluctant to lend to this market not because the loans are particularly high risk, but because banks have a great deal of bad real estate loans on their balance sheets as a result of the loose lending practices of recent years. Presently, banks are unwilling to make real estate loans unless they fit a very strict set of criteria. They often do not want to lend to opportunistic real estate investors because the property which is security for the loan is not “move-in ready” at the time of loan funding-it usually needs some work. For this reason, real estate investors have limited financing options available to them, and lenders to this market are able to command relatively high interest rates.

These borrowers can often afford to pay lenders low double digit rates of return, even though the loan is well-secured, because the borrowers are typically aiming to make an annualized return of 20%-50% on their investment. Paying the lender a much lower return (relative to their projected returns) allows them to enhance the returns they earn on their cash investment.

By 2011, nearly 20% of the $2.6 trillion in mortgages on banks’ balance sheets were delinquent. The secondary market for non-conforming mortgage backed securities is a fraction of what it used to be. This is why banks have tightened their lending standards and are reluctant to lend to anyone with less than picture perfect credit. It is precisely the banks’ reluctance to participate in this market that has created the attractive investment opportunity in short term real estate loans. The fact that banks are not lending to this market has created a supply/demand imbalance that doesn’t have anything to do with the quality of the borrowers, but instead with the condition of banks’ balance sheets.

The margin of safety is the difference between the loan amount, and the value of the underlying property. The core concept of trust deed investing is that if the borrower does not perform, the lender can foreclose on the property and sell it to recoup the investment, plus any past due interest. If the loan is sufficiently conservative, i.e. the property value is high relative to the loan amount, then the investment should not lose money even if the borrower defaults on the loan. A well structured investment might have a loan-to-value of 65%.

These investments are not liquid. In other words, you cannot decide you want your money back one day and quickly convert your investment into cash, as you could with a municipal bond or shares in a blue chip company. You need to be willing to stick with your investment until the borrower pays off the loan, or, in case of default, until you have foreclosed and sold the underlying property.

With Trust Deed investing there is not much chance for capital appreciation. For the most part the only returns that the investor will be entitled to will come from interest income generated from the loan.

Directly investing in deeds of trust requires that the investor identify borrowers, assess deals on their merit, and conduct due diligence on the borrower and the property. This all requires a particular knowledge set that the investor must be acquire.

Trust deed investing is not without risk. A small flaw in the documentation or due diligence of a trust deed could mean that an otherwise very safe investment becomes very risky. For example, litigation or title problems could cause problems if the borrower or some other party can make a credible claim that your trust deed instruments are not valid, or that they have some interest in the underlying property that is equally or more valid, the trust deed investor might need to battle to protect the investment.

Trust deed investing is not for the faint of heart. Newbies need to take particular care, and seek guidance from trusted experienced investors. That being said, there are tens of millions of valid trust deeds owned by banks as well as hundreds of thousands owned by private investors. Creating a valid trust deed and accompanying note is not rocket science.

As of 2011, investors can receive returns of 9-12% on deeds with a solid margin of safety (loan-to-value of, say 65% or less). Even higher returns are possible for professional investors, because they invest frequently and have close relations with mortgage brokers and mortgage banks that create opportunities. Such professional investors can frequently negotiate to receive one or more points in addition to interest as part of their investment, increasing the overall yield.

How to Boost Your Business With the Right Kind of Digital Marketing

The scenario in business and marketing has undergone a remarkable amount of change over the years. Nowadays digital marketing has become a prominent feature of business development plans of all businesses. To make your online presence effective in your targeted market or globally, there are full suites of marketing services. For increasing revenue generation, enhancement of your online brand identity and to boost your market share, planning and formulating digital marketing techniques is the very first step. The digital marketing strategies should be planned in such a way, that they assist in driving impressive customer engagement and establish outstanding brand loyalty. The digital marketing services you are using should not only draw massive potential traffic to your website but should also have the capacity to convert the online visitors into prospects and customers. It should also focus on online marketing of your product. Social media can be used as a medium to create great hype for your product. Viral marketing and mobile marketing can be of immense help in circulating your business story. The digital platforms can be used for effective promotion, advertising and sales.

Online Marketing

Online marketing or digital marketing is a process in which you can promote your business and website through internet-connected services. Social media, search engine optimization, email marketing, search engine marketing, mobile advertising and online advertising are the discipline which helps you in promoting your business.

Among these, Facebook is the most popular medium and it directly connects you to maximum number of people and helps you to reach any specific market easily. However, while opting for digital marketing services you should always keep in mind that Facebook advertises should be targeted to your exact audience. It is also important to create and manage a functional Facebook page according to your business requirements.

Professional SEO services are very important to promote your business as they trigger the ranking of your website and help you get organic results for a set of specific keywords that your target audiences search on different search engines. Thus, the overall traffic of your website will get uplifted and you will have maximum online visibility.

The social media optimization services are also there to help your brand grab the attention of the target audience. By creating a profile page in the most popular social media sites like LinkedIn, Google+, Twitter, and Facebook, you will get attention of those who are interested in your product or services.

While opting for SEO services, check whether they are ethical or not. SEO helps you in connecting with your target audience and enhances the popularity of your brand. It helps you in getting acquainted with new markets and popularize your brand globally. However, this cannot be possible without ethical SEO techniques and standard web practices. Thus, it is very important to have a thorough knowledge of online marketing and its disciplines before taking help of a digital marketing agency.

Traditional German Christmas Markets

In Europe the Christmas Markets take over the town center, the market square, or the narrow, cobblestone streets and they all come alive in the dark of winter with festive decorated wooden stalls offering hot wine, regional food, Christmas decorations, sweet confections, toys, regional crafts and local entertainment.

Here we highlight some of the German Christmas markets, celebrating the magic of the season with holiday decorations and traditions such as Gingerbread, and Christmas Carols.

Winter is a wonderful time to visit the beautiful German Christmas markets. If you are looking for the best Christmas gifts, the wonderful smell of a Christmas tree or the sound of Christmas carols, check out the following with the whole family – the best Christmas markets in Germany.

AACHEN Christmas Market – 20th November – 23rd December

Just before Christmas the squares and streets round the Cathedral and the Aachen Town Hall are transformed into a paradise of lights, colors, festive sounds and seductive smells.. The fair offers an enormous choice of goodies big and small fascinating young and old alike.

Christkindelsmarkt – BADEN-BADEN – 23rd November – 31st December

Located in the world-famous green corridor “Lichtentaler Allee” at the start of Baden-Baden, visitors will encounter small streets of festive stalls, where thousands of shimmering lights create a romantic atmosphere. The entire experience is capped with wonderful entertainment catering to all ages.

BERLIN

One of the region’s largest and prettiest Christmas markets with around 100 stalls offering a selection of arts and crafts, Christmas decorations, handcrafted nativity scenes and more you are invited to marvel, browse and shop. Younger visitors enjoy Christmas treats, a children’s bakery, merry-go-rounds and a program of Christmas entertainment on the open-air stage.

The baroque Charlottenburg Palace in City West is a plush backdrop. Elaborate lights bathe the market, the palace, the trees and decorative fence of the palace in a romantic glow. The highlight is a pyramid in front of the palace’s main entrance.

Wood huts and tents, decorated with natural materials offer a wide range of crafts and impressive culinary choices. In addition to traditional stalls selling hot chestnuts, crepes or Hungarian langos, many hotels and restaurants from Berlin and Brandenburg offer fine dining in heated tents.

The Winterwald (winter forest) in front of the small orangery offers magical attractions for children, including a carousel, an air swing and a small railway. In the Märchenzelt (fairy tale tent) little ones can make their own arts and crafts. Combine a visit to the market with a palace tour or walk through its garden.

COLOGNE – 23 November – 23 December 2015

In Cologne the magic of Christmas can be felt throughout the festively decorated city. The scent of baked apples, cinnamon biscuits and mulled wine drifts through the alleys. You will be enchanted with Cologne’s Christmas Markets that draw millions of visitors from around the world. The larger markets in the downtown and the small markets throughout the town offer different themes and invite you to stroll, shop and explore.

DRESDEN – 26th November – 24th December

If you like Christmas, you’ll love Dresden with its eleven completely different Christmas markets, from traditional stalls to the charm of après ski alpine huts. Dresden’s churches brim with festive insider tips, from the many oratorios, Advent, organ and gospel concerts, holiday sounds fill the air throughout the city.

Christmas tales come to life in the city’s theatres, museums host special exhibitions and bejewelled, lighted boats glide along the Elbe. If only Christmas could last longer

DUSSEFDORF – 19th November – 23rd December

The city gears up for Christmas after the St Martins Parade.. The traditional Christmas market Is set up at various locations throughout the City centre. Elaborately designed theme worlds are set up around the Königsallee to lead visitors on a discovery tour.

More than 200 huts decorated in Christmas splendor transform the city into a winter wonderland for the whole family.. One of the most beautiful Christmas markets in Germany, Düsseldorf provides unique experiences for visitors.

LEIPZIG Christmas market – 24th November – 23rd December.

This market dates back to 1458 and is set up in 6 different areas in tune with the historical scenery of the Leipzig city centre. With more than 250 twinkling stalls set in the historic centre, the Christmas Market is one of the oldest and largest in Germany. Visitors enjoy a multitude of festive and culinary delights: or can explore the city’s traditional medieval market.

The main area is Marktplatz (market square) where a Saxon spruce Christmas tree as high as twenty meters stands and a wide variety of performances are offered on the market square stage. Seasonal views can be seen from the 38-metre-high ferris wheel on Augustusplatz square.

NUREMBURG – 27th November – 24th December

Enjoy the aroma of gingerbread, mulled wine and grilled sausage at the Nuremberg Christkindlesmarkt. First mentioned in 1628, its roots probably go back to the time of Luther, when giving children Christmas presents started. Since then the 180 stalls decorated in red and white offer a unique atmosphere with traditional wares such as handmade Christmas decorations and culinary treats.

The Market is opened on the Friday before the first Advent by the “Christkind” a blonde curly-haired lady wearing a golden crown and golden white gown. She proclaims “You men and women who once were children, be young again”, as she welcomes guests to the Nuremberg Market Square. Childish enthusiasm awaits as you explore Christmas tree decorations, tinsel angels, wooden nutcrackers, cribs and colored stars walking through the romantically lit market.

ROTHENBURG – 27th November – 23rd December

The medieval town of Rothenburg ob der Tauber transforms into a fairytale winter wonderland at Christmas time. Celebrated since the 15th century tradition has changed little over the last 500 years and the historical customs have been closely followed. Find your heart desires at this charming market, from traditional Christmas pastries, mulled wine, Gadgets and treasures as well as lovingly crafted Christmas decorations.

STUTTGART- 25th November – 23rd December

During the weeks of Advent the Stuttgart Region is bathed in a yuletide glow. With its 287 stalls and a tradition of more than 300 years, the Stuttgart Christmas Market is one of the loveliest in Germany and one of the oldest and largest of its kind in Europe. Ornately and lovingly decorated the stallholders compete for a jury awarded prize for the most beautiful stall. The town hall is transformed into a gigantic Advent calendar. Each day a “door” is opened, revealing by degrees the coats of arms of Stuttgart’s boroughs.