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Get Higher Interest Rates: Learn P2P Lending from an Expert

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When I started this blog in May of 2006, I was pursuing all kinds of interesting investment opportunities. One of them was condohotels, which fortunately I didn't pull the trigger on. (If you haven't heard of condohotels there's a good reason.) Another opportunity was P2P Lending. I had been one of the first people to jump in and invest in Prosper. I had a little money to play with and my theory was, "It's likely to be an inefficient market and if I'm one of the smarter people there, I have a chance to leverage the inefficiencies to my advantage."

Turns out that nearly everyone investing in Prosper at the beginning lost money or just made a percent or two. I was no exception. The Prosper system didn't really seem set up very well. I believe they allowed borrowers who shouldn't have qualified to receive loans on the platform - without their being a pay day type interest rate attached. They've since tightened their system up and people seem to make double digit returns on average. Lending Club, in my opinion, used Prosper's initial growing pains to "get it right" from the start and it seems like a vast majority of their lenders make over 8%. In a world of CDs that lock up your money for years and give you about a 1.5% interest, it very well might be worth taking a little risk to get a lot more of a return.

At the beginning of this year, I decided I'd spend more time looking into P2P Lending. I was making something like 3-4% in Lending Club, and the average was around 9%. I was clearly doing something wrong. I wrote a post about what it Revisiting Lending Club about a few of the changes I've made and now I'm making more than 7% (and that has a lot of those 3-4% loans dragging down my average). It became clear to me that there's a right way and wrong way to invest in P2P Lending.

Enter Peter Renton of SocialLending.net

Peter Renton, runs Social Lending, left his first comment on my site on that previous post. I could tell that he definitely knew his stuff. However it wasn't until the middle of September, that he left a series of comments showing his expertise.

Two weeks later, at the Financial Blogger Conference, I happened to meet Peter in the most bizarre speed networking things I've been a part of. You had literally less than two minutes to talk to the person before the buzzer sounded and had to move on. You can barely exchange a hello and get an explanation of one website out in that time, much less have any meaningful dialog. At the very least I was able to put a face to the name. Six weeks later, I found myself at dinner with him thanks to Prosper who was sponsoring a get-together about creating an industry standardization for P2P rate of return. It was at that point that Peter told me what he was making interest rates of around 23% at Prosper and that he's been doing it for over a year. (Please don't hold me to those numbers, I could have misheard him, but I was amazed.) He was quick to mention that anything like that can't, and won't, continue long term. He's right. If that's your expectation in investing, you will have a very disappointing life (well as far as the investment aspect goes). However, I'd take half that all day. After all, if you take the rule of 72 of around 12%, you'd be doubling your money every 6 years. That's not too shabby.

Learn from the Expert

Today, Peter Renton is sharing all his secrets in his P2P Lending Wealth System. Personally, the name comes off a little Tom Vu-ish to me. The system consists of nearly 3.5 hours of video spread across 8 modules. The first module is short introduction and history of P2P Lending. So if you are new, you can hit the ground running. Then he details the risks and tells you what you need before you get started. There are two extensive modules on Lending Club and Prosper. Each of these modules actually are two separate videos, because there's just a lot of information to cover. The 6th module is the one I'm most interested in. It's over 42 minutes of maximizing your ROI. This is the kind of thing that I did when I increased my Lending Club interest from 3% to 7% in a few months. I just scratched the surface. The 7th module is on the trading platform (you can sell your loans for liquidity purposes). I've never looked into that area of P2P lending. Finally the 8th module is what Peter himself is doing with his money, including his Lending Club and Prosper filters - so you can find the same loans he finds. All the videos are available as MP3s, so you could add them to your portable music player and listen to them in the car or on the treadmill the gym (nothing like multitasking!)

I'd like to say that I've gone through the entire system and tested it, but it is 3.5 hours long and it just launched a few hours ago. I hope to carve aside some time this weekend to look it over.

Everything is puppies and sunshine, right? Well, there's a catch. And I'm guessing you know what it is. Peter clearly put a lot of work into this and there's a lot of value to be had here. So he's looking to make some money for his efforts. His price: $97. In true salesman form, Peter tells me that it is a limited time launch, it will be available for just a few days and he's limiting signups so that he can give a high level of support.

Does this sound like a fit for you? Let's say that you invest $1000 and you think that you can earn 6% (which is nothing to sneeze at). That's $60 a year in interest. If Peter's tips can help you get that up to 11%, you'll bring in $110 of interest - a gain of $50 in the first year. At the end of the second year you'll be ahead of the game (especially with compounding). The rewards would get bigger the more you have invest.

Click here to get the P2P Lending Wealth System.

Posted on December 8, 2011.

This post deals with:

... and focuses on:

P2P Lending

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20 Responses to “Get Higher Interest Rates: Learn P2P Lending from an Expert”

  1. Sun says:

    Investment is still a nicer word for gambling. Used or pre-owened, it is still the same thing. Having said that, learning the methods of a successful lender is intriguing. I think most everyone around year 2008 lost money. I’m very glad that Prosper closed shop for a period and let things mellow out.

  2. Sun says:

    The question I would ask is of supply and demand. If any investment strategy is widely deployed, wouldn’t the over supply of lenders mean lower returns for all lenders involved?

    • Lazy Man says:

      Sun, sure everything is subject to supply and demand. However, I don’t think Peter is going to make the strategy wide available.

      Additionally, there is a lot of supply of people looking to consolidate credit card debt, and perhaps not as many lenders know about the opportunity of P2P Lending since it is relatively new.

  3. Peter Renton says:

    Lazy Man, Thanks for the write up – I appreciate all your kind words. And you heard right about my Prosper investments, they have been outstanding. I have had one default since we talked so my return is down to 19.9% – still a great return after 14 months of investing there.

    Sun, The supply and demand issue is something that the marketing people at Prosper and Lending Club constantly have to monitor. But after investing for 2 1/2 years there has only been a few times where I felt like there wasn’t enough loans on the platform. Right now, between the two companies there are over 1,500 loans available for investors between the two companies which is the most I have ever seen.

  4. Jonathan says:

    I am not questioning the returns, but would like to verify them. Where is the link to the profile pages of Mr. Renton and his 19.9% returns on Prosper and LendingClub? We should be able to see the balances and returns, yes?

  5. Peter Renton says:

    Jonathan, Fair question. I detail all this inside the course but for people who are curious I can say this. My Prosper screen-name is SLN-10 – you can go to Lendstats.com and do a search on that screen-name and you will see, as of today my ROI is 16.53%. This is lower than what Prosper tells me because Lendstats discounts loans that are late. Prosper will not reduce my ROI until a loan goes into default. My goal with my Prosper account is to make 15% real return going forward and I know my 19.9% return will continue to come down closer to the Lendstats number as I get more defaults. My total invested with Prosper is $28,188 (I also have a small account there in my wife’s name).

    As for Lending Club, there is no equivalent third party check unfortunately. I have several accounts there ranging in ROI from 8.42% on the low end to 17.0% on the high end. Although these are Lending Club numbers and the real returns are 0.5% – 1.5% less than that typically. I write about my accounts regularly on my blog, the Social Lending Network, and in January I will be doing a detailed post showing my returns on every account in 2011. My total investment with Lending Club is $94,269. I have more at Lending Club primarily because Lending Club offers an IRA and that is the way I like to do most of my investing.

    I hope that helps answer your questions. Of course, you can buy the video course and find out much more detail…:-)

  6. […] Lazy Man and Money – Get Higher Interest Rates: Learn P2P Lending from an Expert […]

  7. Jonathan says:

    @Peter – Thanks for sharing your Prosper username. I figure you are just trying to build a profile there, because your loans are very new – average loan age per Lendstats is only 4 months. I would consider buying your course if you made 15% annualized with an average loan age of at least 2-3 years.

    Perhaps you can share a screenshot or PDF of your LendingClub loan statement. My performance there is better than Prosper as well. It’s not tamperproof, but I think it would increase your conversions. Cheers.

  8. Peter Renton says:

    Jonathan, I started on Prosper in October, 2010 but until recently I only had $5,000 invested. I put another $20K in to Prosper in October so this has skewed my average age to be a lot younger. I will be continuing to add more new money in Prosper (and Lending Club).

  9. Kevin Mzansi says:

    I am still active on Prosper and Lendingclub, so am always open to increasing my return.

    The problem with using the rule of 72 in this context is that the rule of 72 presupposes that the same rate of return would continue for a longer time period. Using this rule would be more appropriate for a record of more than “over a year” to make meaningful comparison possible. I was one of the early adopters of Prosper as well, and got burned after lending to average-to-low risk borrowers, making 15% for the first year and then losing a significant part of my investment (thinking that I could double my money in under 5 years).

    One must also realize that you need a 9.7% return on a $1,000 portfolio to break even on your investment in the course. (Spreading the cost over more than one year may not be reasonable because there is only “more than a year” of track record so far)

    I am not saying that a system can’t work, I would however caution prospective investors to look at all the facts and assumptions first.

    • Lazy Man says:

      Good points Kevin Mzansi. I would argue that it’s not like the P2P lending is going away after a year or the fundamentals in both Lending Club and Prosper will change after one year. It could, but I wouldn’t bet on that.

  10. Peter Renton says:

    Kevin, You bring up an interesting point. It is quite possible that the returns for investors (including myself) will reduce in coming years. In which case the rule of 72 will change. I don’t think it is realistic for any investor to expect returns of 20% a year going forward for many years.

    When p2p lending is a multi-billion industry and becomes a part of many investors portfolios I expect returns will reduce to reflect a lower risk investment.

    As to your point of $1,000 needing a 9.7% return, I agree. Lazy Man put that $1,000 number out there but if I was an investor with $1,000 to invest I probably wouldn’t buy this course. But if you are thinking about investing $2,500 or $5,000 then it doesn’t take much of an increase in return to easily pay for the course.

  11. Dan B says:

    Sorry Peter, but from an investment angle only (that excludes potential educational benefits), the wisdom of spending $97 to potentially improve the performance of a $2500 or even a $5k investment is also rather questionable. At those levels we’re talking approximately 2% & 4% of an investment respectively. Anyone who doesn’t see those figures as significant should rethink.

    Spending $97 to potentially improve performance of a $1k investment would be beyond questionable. Such an individual is really participating in what I’d call the “Voluntary Transfer of Wealth System”,………. from them to you, that is. :)

  12. Peter Renton says:

    Dan, Always good to hear your thoughts. If you are looking at a one-year time horizon, then yes, it makes little sense to forfeit 2% or 4% of your return. But does anyone get into p2p lending with a one year time horizon?

    If you have $2,500 invested and you can learn something that takes you from a 6% return to an 8% return for three years then you will easily come out ahead.

  13. Sun says:

    > One must also realize that you need a 9.7%
    > return on a $1,000 portfolio to break even on
    > your investment in the course.

    I am currently making 7% just lending to AA. I would need to make more than 9.7% to recoup my investment with you. More like 17% if I invested $1,000?

  14. Peter Renton says:

    Sun, As I said in a comment above, I think for a $1,000 investment I wouldn’t buy this course. The course is more appropriate for investors wanting to invest $2,500, $5,000 or more.

    • Lazy Man says:

      It was my mistake for putting the $1000 number out there. I had written up most of the post and at the end end decided it was worth putting a little ROI calculation together. I could have gone with $2500 or $5000, but my philosophy is to put less than 5% of your investements in P2P and I didn’t want this post to just be relevant for people who have $50,000 or $100,000 portfolios. I figured I’d set the bar a little lower.

  15. Dan B says:

    Peter…….If you’d just change the name of the course I swear I’ll never give you a hard time about it again. :)

  16. Peter Renton says:

    Dan, I didn’t expect you to like the name but you have never suggested an alternate name….

  17. Dan B says:

    Well that’s because it’s a lot easier to be critical than to be constructive.

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