How to Make Sure You Never Miss Another Loan on Prosper

An example of p2p investors on Prosper

I managed to invest in this listing on Prosper last week. It was open to investors for less than an hour and I happened to get lucky. If you look closely at the above graphic you will see that the first investor came in at 9:08am and the last (worth-blanket2) fully funded the balance of the loan at 9:57am.

So if you didn’t happen to login in that hour timespan you missed out on this loan. When worth-blanket2, Prosper’s largest investor by far, invests in a loan they typically fund the balance of the loan. This means individual investors like you and I miss out. Before July, this didn’t happen because automated plans on Prosper would invest money without the investor having to login to the platform. But today you have to be logged in to Prosper.com in order to invest.

I have pretty strict criteria for investing in Prosper. I mostly invest in previous borrowers who have maintained decent credit and these can be popular loans. Most of the loans I invest in are on the platform for less than a day. I am logging in to my Prosper account two or three times a day to ensure I invest in every loan I can that meets my criteria but even with this approach I know I miss out on loans.

When Prosper Adds Loans to Their Platform

I contacted Prosper about this problem and they gave me a tip that will help. Prosper adds new loans on to their platform at specific times each day. These times are 9am and 5pm (Pacific time) on weekdays and noon on Saturday and Sunday. So, if you want to invest in popular loans you should login just after those times. I checked this morning and there were 34 new loans added to the platform at 9am.

If you click through all the loans that worth-blanket2 invests in (this information is available on Lendstats) you will notice that they invest regularly (often daily) and they usually gobble up the remainder of the loan leaving other investors unable to invest. So if you want to get in before worth-blanket2 then you should make a note to login at these specific times to look for loans.

Can We Place Limits on Institutional Investors?

Not being an institutional investor with $150 million to invest I would like to see some limits placed on them. What I would like to see is either a time and/or funding limit. For example, they cannot invest in more than 50% of the loan or if they want to invest more than that they have to wait at least two days before investing. This will give retail investors a chance to invest in the loans, too.

Over at Lending Club this crowding out of retail investors rarely happens. Most of their institutional investors invest through their private placement funds which are managed by Lending Club. Though this fund invests millions of dollars every month they have a system which only allows the fund to kick in a pro-rata share of each loan based on the mix of retail and institutional demand of the previous week. It is a somewhat complex system that ensures retail investors a more level playing field.

Of course there is nothing on Lending Club stopping an institutional investor managing their own investments and crowding the retail investors out but the data suggests this doesn’t happen. Most loans stay on their platform 5-7 days giving ample time for retail investors to invest.

But getting back to the main point of this post. Quick moving Prosper investors can still invest in all the loans they would like by logging in at specific times each day. Do I wish it was easier than this? Of course. I would love Prosper to bring back automated plans or limit institutional investors but right now this is what we have to work with.

I know I will be logging in just after 9am and 5pm every weekday from now on to ensure I can invest in every loan that meets my criteria.

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Roy S
Roy S
Sep. 28, 2011 4:48 pm

Ideally, investors like worth-blanket2 would recognize that there are other investors on the platform who would like to invest in these loans, too, and would then act accordingly. I’m not sure how I feel about limiting the large institutional investors, but it is Prosper’s platform and they can do what they please. Ultimately, I would prefer large institutional investors to wait a day or two before funding 95% of a loan or limit themselves to no more than 50% of any given loan. But if I don’t like it on Prosper, then I can always mosey on over to LC…

Shawn
Shawn
Sep. 28, 2011 5:09 pm

Even better is that they continue to attract the best borrowers then everyone gets what they want… =) But yeah, I’ve definitely noticed that and I get excited when I not only get a good loan now but when I notice later that I beat worthblanket2

~Shawn
Prosper lender “shawnw2”

PeerLend
Sep. 28, 2011 5:39 pm

Looks to me like an opportunity to build an application using Prosper’s API.

Jason
Jason
Sep. 29, 2011 6:17 am

I wouldn’t want to limit institutional investors nor do I think proper would. They represent nearly 1/5 of the funded loans each month. That said, I have money just sitting in my account waiting for the right loan. The worst thing someone can do is change their strategy just to get a loan.

I think you had the best idea. Bring back automated plans. Logging on twice a day just to grab loans is far from convenient or passive.

Btw, I will end up logging in at those times. I appreciate the heads up. I’m sure prosper will find a good solution. I suspect they use sites like yours as a barometer for customer satisfaction.

Jason

ChasingBread
ChasingBread
Sep. 29, 2011 11:00 am

@ Jason, I agree 100%. I like to see institutional investors involved. They are contributing a big part to the quest for Prosper to become profitable. I know us retail investors suffer a bit, but I’d rather miss out on a loan or two for the sake of helping Prosper get where it needs to be. One day we may be overtaken by then, but for now I think we need them.

It is inconvenient to log in twice a day; however, comparing it to stocks, I think it is a lot less time consuming.

Bilgefisher
Sep. 29, 2011 12:58 pm

Peter,

I did the same thing and 1 loan that nearly fit my criteria had 5 bids by 9:03am. Gotta be quick.
BTW, I just came across another institutional investor who appears to be investing $3000 per bid. “intelligent-repayment8”

Jason

Paul Beerkens
Paul Beerkens
Sep. 30, 2011 10:22 am

Today in 3 minutes Aberdeen (yet another institutional investor) took up an entire loan. This look like the end of retail investors for me. If 2 or 3 institutional investors are fighting each other to take 100% of attractive loans then we don’t stand a chance. I work for a high frequency trading desk so I know what they can do.

I don’t understand people saying here that Prosper should not limit this. That is like saying “It is ok for that kid to beat me up because he was bigger than me”.

Retail investors helped build Prosper and now that it has become mature and starts to return good yields we should not just hand it over to institutional investors.

I predict that it will be a week before one of the institutional investors will create a system that does thousands of simultaneous log-ins and sweeps all of the loans in less than a second after they being issues. That is what my system would do if I was asked to start to invest in this asset class.

I urge everyone to contact Propser to request that some percentage of the loan amount will be reserved for retail investors.

https://www.prosper.com/invest/listing.aspx?listingID=530260

Dan B
Dan B
Sep. 30, 2011 10:28 am

Twice a day with only a few minutes window in order to insure a shot at the best loans? That sounds like a lot of fun. I’ll be remembering this discussion the next time someone suggests that investing at Prosper constitutes a “passive” investment.

Of course none of this would even be a topic for conversation if these people could just get some new borrowers through the door. Or even better, entice more previous borrowers to come back for their 5th or 6th “debt consolidation” loan. Yeah, let’s keep them permanently in debt.

ChasingBread
ChasingBread
Sep. 30, 2011 11:20 am

I have been logging in at the allotted times since it started. Aberdeen has been knocking the loans out like that for a while now (at least a few months). The reason it can be perceived as being quiet is because you never see the loans he bids on in the 1st place. I log in on the dot and sometimes I would refresh the page and Aberdeen (mostly) or worth-blanket2 will have wiped out the loan. Worth-blanket2 is usually a bit slower, but Aberdeen is very punctual with it.

If you are new to Prosper, and don’t have a clear criteria of what you are looking for, you are at a huge disadvantage. I know what I like to see in repeat borrowers, but if I hesitate I might lose my window.

@Paul, I completely understand your analogy, but I guess I am more worried about the future of Prosper than most. Once Prosper becomes profitable or at least close to it, then I want to see rules like the ones suggested established. I’d rather miss out on a few loans than possibly lose the money I currently have invested. I know its not right for us retail types, but I think we need it for Prosper to continue to increase its monthly loan origination goals.

Good discussion!

Dan B
Dan B
Sep. 30, 2011 11:41 am

Peter……….I completely agree that they appear to be excellent investments. Apparently others think so as well. Since you guys brought up Aberdeen, check out his/her portfolio composition & you’ll notice something like 80%+ are repeat borrowers.

As for Prosper limiting any of their institutional investors in any way? Wishful thinking aside I see no reason why they would or should………..especially considering the reality of their situation.

Roy S
Roy S
Oct. 1, 2011 9:31 am

“It is also strange that sometimes they come back and bid a second time on the same loan, which makes me wonder if their strategy is really very consistent.” I have done this. There were very few loans I wanted to invest in, and I thought it was better to add a little more to the other loans than let the money sit in my account.

“But there are probably only a handful of us who are really focused on getting the loans we want. Most other investors would never even know this problem exists.” Unfortunately, I believe you are correct. And why would they risk agitating 2 or 3 investors who invest a lot more than the investors who would actually notice. I would like to see Prosper institute some restrictions. While I probably wouldn’t start taking any money out, when I begin to start adding to my position in p2p lending again I’ll probably take more of a look at LC. It’s a good idea to be on both platforms anyway. At the moment it is just a little more work than I care to invest in at the moment, but if I can’t find what I want on Prosper then I’ll just have to find it elsewhere. Dan is right, when does it stop being passive income?

Roy S
Roy S
Oct. 1, 2011 10:27 am

Anyone heard of credit-socrates648? (https://www.lendstats.com/loansearch/loanfilter.php?type=lender&lender=credit-socrates648) Doesn’t necessarily appear to be another institutional investor, but $140k+ in two weeks is still a lot. Looks like p2p lending is beginning to really take off now…