#13 (out of 100+) Last year ranking: #6

Lending Home:

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What is Lending Home?

 

Update: January 2, 2018: Lending Home now charges a 1.15 - 2.6% "incentive fee", which no other real estate crowdfunding platform charges. (So if, the loan would have returned 9% gross, it would return 7% net after a 2% fee). Lending Home says that if a loss were to be incurred on a loan, they would use it to offset it. In our opinion, this is nice that they would use it as a loan reserve. However, that is a silver lining on a cloud that doesn't exist on competing platforms.

Lending Home specializes in residential debt. They have substantial volume with 20-25 open investments when we sampled, and the impressive backing of $110 million of VC funding.

However, they do require $50,000 to open an account (versus $5000 industry average). 

 

One of the biggest complaints from investors is that unlike other platforms, Lending Home does not supply addresses of the properties. (Lending Home says this is because of customer privacy issues). The end result is that an investor cannot actually do any proper due diligence on any of the loans, and must rely 100% on the company to underwrite them properly and rate the risk. 

 

Personally, I would not feel comfortable investing with a  platform under these circumstances. The more loans the company underwrites, the more chance they have of receiving compensation. By removing from the investor the ability to do proper due diligence, there is no way to mitigate this conflict of interest and make sure that their own interests are being  fully protected. I really hope that by the time of the next review the company has found some way to resolve this problem.

 

Additionally, all of the loan to value ratios when we looked at the site were all over 65%. All of them exceed what is considered by many to be the upper end for a safe/nonspeculative investment that can reliably withstand a foreclosure without losing principal and interest. (See the series on "hard money loan roulette" for information on the possible risks and ways to  solve them). Again, I hope that they start to introduce more conservative loans by the time of the next review.

Finally, they have an uncured default rate on their active loans above 2% which is at about twice as high as the average of the best-of-breed residential rehab platforms and funds (which are close to or under 1%). See more information on  industry uncured defaults. Lending Home says that they have improved and are continuing to improve their underwriting. So I hope to see this reflected in their performance, by the time of the next review.

I spoke with a Lending Home representative on 1/18/2018 and learned that they do not view themselves as competing against the crowdfunding platforms, but against larger institutions like Goldman Sachs and Anchor Loans, and also the peer to peer platforms like Lending Club. I myself have been increasingly disappointed with the continually increasing defaults I've experienced at Lending Club. I could see how an investor that was new to real estate, and had no intention to learn more about it would find Lending Home an appealing option. Currently, they could invest in the highest grade loans and receive 6% with a lot of downside protection of collateral if the loan defaults. This compares very favorably with a Lending Club return of 5 to 6% with absolutely no protection of collateral when the loan defaults. Since they have a lot of volume, such an investor might find a Lending Home a very appealing investment.

At the same time, an investor who is willing and learn the ins and outs of hard money loans and examine other platforms,  will probably find higher risk-adjusted returns by looking more closely at competitors.

  • Advantages: excellent volume (18 open investments when we sampled them), by far the largest amount of funding of any site in the industry ($110 million), prefunding of investments, and bankruptcy protection.
     

  • Disadvantages: No addresses are supplied of the property, which makes it impossible to do proper due diligence. Loan to value ratios were all over 65%, which in our opinion is too high if there is a foreclosure. Uncured default rate above 2% is twice as high as best-of-breed competitors. Only site to charge an additional 1.15% - 2% "incentive fee".  Average minimum investment of $2500, however a larger than average $50,000 is required to open an account.
     

  • Accolades: None.
     

For more raw data on the site (including investor and sponsor fees, legal structure etc.), or to easily compare it with the data of competitors, see the feature by feature comparison matrix.
 

Where can I discuss other Lending Home deals?


You can do this with thousands of other investors in the private investor club. While the club is free, membership is restricted to investors who have no business connections to sponsors or platforms. Also, all members must agree to keep all club info confidential by signing a nondisclosure agreement. Click here to join or get more info.

 

Who are Lending Home Competitors?

 

Here are the reviews and rankings for other residential debt sites:
 

OR...if you're looking for more volume and/or more conservative LTV's than most crowdfunding sites provide, then a fund might be a better choice for you. If so, here is our Guide to the Top 15 Hard Money Loan Funds (and honors)

How to pick?
 

Check out our step-by-step guide.
 

Real Estate Tutorials:
 

Looking to learn more about real-estate investing?

On probation (3 out of 10 stars)

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This site has been ranked and reviewed as part of our in-depth, 100+ site industry review. All data is believed to be correct, but may have mistakes. Please contact us if you notice one. All non-data (including rankings, investor comment summaries, etc.) are my opinion only. I'm just an investor and not an attorney, accountant, or certified financial advisor. To maintain neutrality: I do not own a portion of any of the companies reviewed. 

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