Every quarter I take some time to share how my marketplace lending investments have been doing. I open the kimono and take you inside my Lending Club and Prosper accounts, as well as many other investments, to share my returns. I do this because I believe in transparency and I want people to see how returns can change over time. I have been sharing these returns for almost five years now.
My list of accounts keeps growing. You will see in the table below that I now have 12 accounts – eight Lending Club and Prosper accounts (I know it is a little excessive) and four other investments. The new kid on the block this quarter is PeerStreet – listen to my podcast with their CEO Brew Johnson from earlier this year. PeerStreet is a real estate platform primarily focused on fix and flip properties – so short term loans. I like the marketplace lending real estate vertical and will be moving more money into this sector in the coming months.
Now, let’s get right to the numbers.
Overall Marketplace Lending Return Now at 8.21%
I am beginning to wonder when the decline will stop. I thought it would have stabilized by now but in Q3 my overall returns saw another substantial decline. I think it is safe to say that Q3 was my worst quarter ever when it comes to defaults at Lending Club. I have been focused on the higher risk end of the spectrum and those loans with vintages in 2014 and particularly 2015 continue to perform worse than previous years. Both Lending Club and Prosper have increased interest rates several times this year as well as tightened their underwriting and that will help going forward. But because these are three and five year loans I am investing in I won’t be seeing the benefit in my returns here for quite some time.