Bargain Hunting on the Notes Marketplace
When investors decide to exit a loan, they may try to sell their share of it by listing a note in the Notes Marketplace at a discount. The Notes Marketplace offers investors an opportunity to be a part of a loan that has already funded. This is especially useful for quick funding loans, and can be a vital part of any investment strategy. Great yield can sometimes be made from investors selling at a steep discount to get quick liquidity.
The Notes marketplace is a market of funded loans where an investor has listed their note, or share of the loan for sale. Most of the listed notes offer a discount on the full repayment amount of the investor’s share. See the example below where an investor has listed a note for 1% discount of the full repayment amount, otherwise known as the yield. Notes can be listed for active, late, and defaulted loans, so be careful when selecting a note to purchase; always do your research into who the borrower is, their reputation and repayment history, any collateral or insurance available, and how much yield is offered. Always remember that another investor is choosing to sell this note rather than hold it.
How It Works
The Notes Marketplace can be found at btcpop.co/NotesMarketplace. The available notes are listed in chronological order. The “Loan Status” column displays whether a note is “Active” and pending, “Late” and outstanding, or in “Collections” and defaulted. There are many pages of notes available; a thorough search is recommended. You can also view find notes by looking at the investments tab of every funded loan.
Click the “Buy Investment” button to see a new window with pertinent details of the available note. The provided information is self explanatory. If you are satisfied with the purchase, click the “Buy Investment” button to proceed. Once you do, the newly procured note will be displayed on your statement, and it is now your owned debt and interest. The best way to see your held debt is on your “Payments In” page.
Each investor is entitled to sell their share of a loan. Listing a note does not incur a fee, but Btcpop charges a fee of 2% of the sale figure when the note sells. For example, if a 1BTC investment sold at a 1% discount for 0.99, then Btcpop would take a fee of 0.0198 and transfer 0.9702 to your account. This is important to keep in mind when selling a loan that has a small APR. The minimum note yield is 1%, the maximum is 99%. Listing your note can be done right in the loan page under investments tab. You can also see other notes listed for the loan to compare.
Note Investment Strategies
- Less Than 5 Minutes
Did you miss out on a popular loan because it funded too quickly? The Notes Marketplace offers a good opportunity to still be apart of it. Lenders sometimes list notes for quickly funded loans with a small discount in order to make a quick buck. Search for trusted borrowers with good repayment histories.
- Late Loans
When a borrower does not make a payment on time, the loan will be listed as late. Some investors in a late loan might try to sell their share of the loan on the Notes Marketplace for a larger than normal discount. The higher discount makes the note more profitable if the borrower performs, but there is also a higher likelihood of default as they are late on their payment. If a person thought the borrower would not default, but make the outstanding payment soon, this would provide a good chance to attain a premium on the existing return on the note.
- Quick Repayment
Loans have a deadline to repay. Keeping a close eye on the calendar, one might see an opportunity to look for notes on loans that are due for repayment. This can provide a quick return and small yield. If you buy right before the payment, you can make a quick return on investment.
- User Search
Looking for somebody? Until the Btcpop user interface is updated, one method of searching for a user is in the Notes Marketplace. The search feature allows you to search for a user name in full or partial. Only a small subset of the total user base has a pending loan with a note listed, so keep in mind that there is a very big chance the user will not be found.
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