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  1. #1
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    Syndicate Returns

    As a syndicate, what type of of yearly returns can you expect on avg?

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    Quote Originally Posted by happyman View Post
    As a syndicate, what type of of yearly returns can you expect on avg?
    Depends on what type of deals you syndicate on.

    1.25 24 Months I would never ever not in a million years put my money into.

    1.49 40 Day Terms as a 6th (All day long) - And the Guys doing the 1.25's would never do what I do.

    I can't see tying my money up for 2 years, to create a 20-25% Return, with the risk (alot can happen in 2 years). 1.49 40 Days, You can flip your money over and over (your only exposed for Under 20 Days with your Fee)

    Do the Math. 1.49 Every 40 Days (Minus say 8% Management Fee's) that's a 1.41 every 40 Days (240 days a Year)

    You could make an 8.46 Factor on your money Per year.

    Take Into account Defaults (20%) - Round up to 2.0, then minus it
    ** My Defaults are lower, but always safe to round up

    6.46 Factor for the Year

  3. #3
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    Quote Originally Posted by ryan $ View Post
    Depends on what type of deals you syndicate on.

    1.25 24 Months I would never ever not in a million years put my money into.

    1.49 40 Day Terms as a 6th (All day long) - And the Guys doing the 1.25's would never do what I do.

    I can't see tying my money up for 2 years, to create a 20-25% Return, with the risk (alot can happen in 2 years). 1.49 40 Days, You can flip your money over and over (your only exposed for Under 20 Days with your Fee)

    Do the Math. 1.49 Every 40 Days (Minus say 8% Management Fee's) that's a 1.41 every 40 Days (240 days a Year)

    You could make an 8.46 Factor on your money Per year.

    Take Into account Defaults (20%) - Round up to 2.0, then minus it
    ** My Defaults are lower, but always safe to round up

    6.46 Factor for the Year
    6.46 is unrealistic. Just doesn’t work like that. Too long to explain

  4. #4
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    Funder I know ids putting out 30-40% returns a years - curious if thats below or above avg

  5. #5
    Senior Member Reputation points: 3418 kevin85k's Avatar
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    below

  6. #6
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    i think it is average to above average

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    Quote Originally Posted by ryan $ View Post
    Depends on what type of deals you syndicate on.

    1.25 24 Months I would never ever not in a million years put my money into.

    1.49 40 Day Terms as a 6th (All day long) - And the Guys doing the 1.25's would never do what I do.

    I can't see tying my money up for 2 years, to create a 20-25% Return, with the risk (alot can happen in 2 years). 1.49 40 Days, You can flip your money over and over (your only exposed for Under 20 Days with your Fee)

    Do the Math. 1.49 Every 40 Days (Minus say 8% Management Fee's) that's a 1.41 every 40 Days (240 days a Year)

    You could make an 8.46 Factor on your money Per year.

    Take Into account Defaults (20%) - Round up to 2.0, then minus it
    ** My Defaults are lower, but always safe to round up

    6.46 Factor for the Year
    you are missing commission and you must be really lucky that on your 40 days deals your default is lower than 20% .For a merchant to take that they need to be as high-risk as high risk gets

  8. #8
    Senior Member Reputation points: 50566 ADiamond's Avatar
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    Quote Originally Posted by happyman View Post
    Funder I know ids putting out 30-40% returns a years - curious if thats below or above avg
    definitely above average.

    keep in mind that they cannot (should not) be promising you anything specific.

    ask them to see a static pool of their book without client names and do the math yourself. I think that is a very fair ask, if they're asking you for money.

    know that you have to account for upfront commission, management fees & default rate, etc.
    Anthony Diamond
    Underwriter

  9. #9
    Senior Member Reputation points: 50566 ADiamond's Avatar
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    Quote Originally Posted by ryan $ View Post
    Depends on what type of deals you syndicate on.

    1.25 24 Months I would never ever not in a million years put my money into.

    1.49 40 Day Terms as a 6th (All day long) - And the Guys doing the 1.25's would never do what I do.

    I can't see tying my money up for 2 years, to create a 20-25% Return, with the risk (alot can happen in 2 years). 1.49 40 Days, You can flip your money over and over (your only exposed for Under 20 Days with your Fee)

    Do the Math. 1.49 Every 40 Days (Minus say 8% Management Fee's) that's a 1.41 every 40 Days (240 days a Year)

    You could make an 8.46 Factor on your money Per year.

    Take Into account Defaults (20%) - Round up to 2.0, then minus it
    ** My Defaults are lower, but always safe to round up

    6.46 Factor for the Year

    Well you're correct about one thing - a 20+ percent default rate with those types of deals/funders.

    What you're doing is the simple math, and it's extremely inaccurate. I wouldn't even go as far to say that it's remotely correct.

    As a matter of fact - how you arrive at a 20% default rate equating to 6.46 net sell rate yield post-default, from a 8.46 gross rate - I haven't the slightest clue - because that's actually 200%.

    What's funny is that I thought the same exact thing you're stating here - 8 years ago. "Well, it has to work out that way" right? It never does.

    Like SmartAdvanced said - too long to explain. If you know, you know.

    SIMPLETON EXPLANATION:

    You actually have to make back the profit to roll it for it to actually compound - not just keep rolling principal from the payments you receive from days 1-30 - you do realize that right?



    To each his own, and everyone has a different risk appetite - but you're only getting new syndicates to sign by telling them 1.499 @ 40 days 6th position - because they have zero idea what you're actually talking about - or about how it actually works itself out in real life.
    Last edited by ADiamond; 07-19-2021 at 06:27 PM.
    Anthony Diamond
    Underwriter

  10. #10
    A forum user Reputation points: 2147483647 Sean Cash's Avatar
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    Quote Originally Posted by ADiamond View Post
    What's funny is that I thought the same exact thing you're stating here - 8 years ago. "Well, it has to work out that way" right? It never does.

    Like SmartAdvanced said - too long to explain. If you know, you know.
    yup

  11. #11
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    Quote Originally Posted by happyman View Post
    As a syndicate, what type of of yearly returns can you expect on avg?
    15-25%
    Larger Volume = lower returns
    Niche Funder may provide higher returns, but eventually with the right track record will get cheaper access to capital.

  12. #12
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    Obviously it never works out perfectly.
    There are 89734654 things that come up on a daily basis.

    But there are certain deals that do preform this way. I have a few. That Refi every 30 Days, Over and Over.

    There are 100 different ways to analyze the numbers. If your Getting a 1.41 on your money every 40 days, 240 Days a Year. That is 6 Times a Year. 1.41 x 6 is the 8.46, Minus 6 = 2.46

    246% a Year

    And this is putting the same dollar amount out, which you would never do... you would put your returns back out.

    So if you start with $10,000, In 40 Days then put out $14,900, then in another 40 Days put out $21,009 and so on.....

    IF EVERYTHING GOES PERFECTLY (and yes I'm not counting commission payments), and I'm over-simplifying it, Technically the money would turn quicker with Refinancing, and allow for more profit. And I'm not counting Bounced Payment Fee's, Monthly ACH Fee's, Normal Funding fee's (Which would make $9,000 the first funding amount, instead of $10,000)

    If your funding 1.49's and keeping terms under 60 days, and only making 20% Returns a Year, something is extremely wrong.

    image.png

    So yea the 8 Figure was excessive, But didn't feel like doing the Math all the way (accounting for re-funding profits), I knew it was close.

    Less we forget, some Defaults/Slow Pays become more profitable than the original deal. You can asses Fee's.... and Freeze a Bank Account. I just saw a file where Seabrook had a Stop Payment Placed and got a Judgement Granted (super quick) and were repaid In full, plus Fee's, just about when the deal would have paid off Normally)

    Now, if your Funding 6 -8 Month 1.3's - Yea expect 15-20%

    60 Day 1.49's w/ Solid Collections... If your making that little.... what's the point? The profit on good deals has to cover bad deals.
    Last edited by ryan $; 07-21-2021 at 11:58 AM.

  13. #13
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    Of Course it is over simplified.

    But if I had to cherry pick a deal as an example, to illustrate said returns..... I could.

  14. #14
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    You could always ask Par's Investors what their Return was from ABetterFinancialPlan.Com, LMAO

  15. #15
    Quote Originally Posted by ryan $ View Post
    Obviously it never works out perfectly.
    There are 89734654 things that come up on a daily basis.

    But there are certain deals that do preform this way. I have a few. That Refi every 30 Days, Over and Over.

    There are 100 different ways to analyze the numbers. If your Getting a 1.41 on your money every 40 days, 240 Days a Year. That is 6 Times a Year. 1.41 x 6 is the 8.46, Minus 6 = 2.46

    246% a Year

    And this is putting the same dollar amount out, which you would never do... you would put your returns back out.

    So if you start with $10,000, In 40 Days then put out $14,900, then in another 40 Days put out $21,009 and so on.....

    IF EVERYTHING GOES PERFECTLY (and yes I'm not counting commission payments), and I'm over-simplifying it, Technically the money would turn quicker with Refinancing, and allow for more profit. And I'm not counting Bounced Payment Fee's, Monthly ACH Fee's, Normal Funding fee's (Which would make $9,000 the first funding amount, instead of $10,000)

    If your funding 1.49's and keeping terms under 60 days, and only making 20% Returns a Year, something is extremely wrong.

    image.png

    So yea the 8 Figure was excessive, But didn't feel like doing the Math all the way (accounting for re-funding profits), I knew it was close.

    Less we forget, some Defaults/Slow Pays become more profitable than the original deal. You can asses Fee's.... and Freeze a Bank Account. I just saw a file where Seabrook had a Stop Payment Placed and got a Judgement Granted (super quick) and were repaid In full, plus Fee's, just about when the deal would have paid off Normally)

    Now, if your Funding 6 -8 Month 1.3's - Yea expect 15-20%

    60 Day 1.49's w/ Solid Collections... If your making that little.... what's the point? The profit on good deals has to cover bad deals.
    I'm no expert but I'm definitely curious. You mention funding 1.49 and since your grid shows 1.41 I'm guessing 8 pt commission. You also stated 8% management fee higher at the thread... so if the management is on funded amount, it looks like it'd cost me 11,600 upfront to participate 10k. At a 20% default rate, the return at 1.49 is $11,920, for a straight line ROI of $320 on $11,600 (2.75% return)... what am I missing? I know redeploying returned capital and renewals will jack up the average annual gains but it still doesn't seem possible to get the returns you're talking.

  16. #16
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    As with anything...it depends. Most people would be happy with a consistent return around 20%. You have to remember MCA is not a bubble, there are overhead costs, variable costs, and many ways a deal can go. Using a single file as an example won't cut it, since you need to include both paying and default accounts in your calculations. Sometimes you may fund a deal for $20k and they stop paying right away. You lose 20k, plus the broker fee you paid. These types of situations cut into profit and aren't all that uncommon.

    Again, many factors need to go into your return calculations, but if done correctly you can expect around 20%.

  17. #17
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    Quote Originally Posted by ryan $ View Post
    Obviously it never works out perfectly.
    There are 89734654 things that come up on a daily basis.

    But there are certain deals that do preform this way. I have a few. That Refi every 30 Days, Over and Over.

    There are 100 different ways to analyze the numbers. If your Getting a 1.41 on your money every 40 days, 240 Days a Year. That is 6 Times a Year. 1.41 x 6 is the 8.46, Minus 6 = 2.46

    246% a Year

    And this is putting the same dollar amount out, which you would never do... you would put your returns back out.

    So if you start with $10,000, In 40 Days then put out $14,900, then in another 40 Days put out $21,009 and so on.....

    IF EVERYTHING GOES PERFECTLY (and yes I'm not counting commission payments), and I'm over-simplifying it, Technically the money would turn quicker with Refinancing, and allow for more profit. And I'm not counting Bounced Payment Fee's, Monthly ACH Fee's, Normal Funding fee's (Which would make $9,000 the first funding amount, instead of $10,000)

    If your funding 1.49's and keeping terms under 60 days, and only making 20% Returns a Year, something is extremely wrong.

    image.png

    So yea the 8 Figure was excessive, But didn't feel like doing the Math all the way (accounting for re-funding profits), I knew it was close.

    Less we forget, some Defaults/Slow Pays become more profitable than the original deal. You can asses Fee's.... and Freeze a Bank Account. I just saw a file where Seabrook had a Stop Payment Placed and got a Judgement Granted (super quick) and were repaid In full, plus Fee's, just about when the deal would have paid off Normally)

    Now, if your Funding 6 -8 Month 1.3's - Yea expect 15-20%

    60 Day 1.49's w/ Solid Collections... If your making that little.... what's the point? The profit on good deals has to cover bad deals.

    There are some things wrong with your assumption. You are pulling all revenue into 1 pot & saying that is what the investors can make which is NEVER the case unless you want to work for free.

    Let's break down a 1.49 (high-risk deal). 15 points for Sales & Marketing (ISO or internal does not matter). 12 points for the cost of money (investor). 10 points for default allowance. 8 points for overhead. You are already at 1.43. You have 6 points profit.

    Don't get me wrong. Good high-risk underwriting can definitely see much higher returns than 20% per annum but saying that you will see a factor of 5 is extremely improbable.

    Let's also not forget the wonderful metric of "risk-adjusted returns." How much risk are you taking for that increased return?

  18. #18
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    Again, NOT saying Investors will make this. Not at all.

    I said if I had to Hand Pick a deal, to show returns like this, I could.

    **And Yes Im only taking into account a Management Fee. Not Commission.

    I'm basically playing Devils Advocate. The opposite side of the spectrum, from everyone saying conservatively 10-20% a Year.

    With High Risk 1.49's You can make more. That is the Fact that I am trying to show.

    It's not meant to be a legitimate formula for expected returns.
    Last edited by ryan $; 07-22-2021 at 09:29 AM.

  19. #19
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    Quote Originally Posted by mistamca View Post
    There are some things wrong with your assumption. You are pulling all revenue into 1 pot & saying that is what the investors can make which is NEVER the case unless you want to work for free.

    Let's break down a 1.49 (high-risk deal). 15 points for Sales & Marketing (ISO or internal does not matter). 12 points for the cost of money (investor). 10 points for default allowance. 8 points for overhead. You are already at 1.43. You have 6 points profit.

    Don't get me wrong. Good high-risk underwriting can definitely see much higher returns than 20% per annum but saying that you will see a factor of 5 is extremely improbable.

    Let's also not forget the wonderful metric of "risk-adjusted returns." How much risk are you taking for that increased return?
    This is all Correct.

    But I am sure if you ask any High Risk Funder they can pluck a deal that has generated such high returns.

    I'm saying it is Possible.

  20. #20
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    Mid risk 5-7 month deals w/ BR's in the low to mid 3's as a 2nd **3rd on bigger deals behind good funders** is the sweet spot for building a moderate to high yield with acceptable risk.

  21. #21
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    Is there a concept that already exists where everyday peeps can throw $100 - $1000 into a funding deal which is fully funded by like minded peeps - in a pool of funds or as a conglomerate?

  22. #22
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    I think this does exist. I just can't remember the name. Almost like a Lending club type of thing for MCAs.

    I googled....Supervest.

    I've never used it. But I believe the premise is similar to a Lending club type of thing (although lending club doesn't even operate like they used to with their acquisition of Radius)

  23. #23
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    Seems peeps have to be " accredited investors " to participate in syndication.

    Not many peeps make $200k annually in last two years to be an accredited investor.

  24. #24
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    Check out Kickfurther. It appears to be crowdfunding for POs.

  25. #25
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    Quote Originally Posted by cruisinman View Post
    Is there a concept that already exists where everyday peeps can throw $100 - $1000 into a funding deal which is fully funded by like minded peeps - in a pool of funds or as a conglomerate?
    Supervest.com does this I think?

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