In keeping with my long term personal finance goals of eventually becoming financially independent, I participate in lending money using Prosper. The overall goal is to create several additional income streams (other than my day to day job) that will eventually be able to pay our monthly bills. These additional income streams need to be as passive as possible in order to spend more time creating new income streams. When I first setup my Prosper lending account earlier this year, I was spending over 5 hours per week managing my account - not very passive. After implementing a few of the tips I have listed below, I am now spending about 1.5 hours per week managing my Prosper loans. While lending through Prosper or any other P2P lender can never be 100% passive, I hope to eventually reduce the amount of time I spend managing my Prosper loans to less than 30 minutes per week. As with anything in my life, I prefer to continuously improve processes one step at a time. In this case, I have reduced the amount of time I spend managing my Prosper account from 5 hours per week to 1.5 hours per week. I hope to keep improving this process so that I can reduce my hours spent on this income stream even more.
The following list are tips that I have put together that can help to make lending on Prosper as passive as possible -
- Create Saved Searches - One of the first things I did after opening up my Prosper lending account was setup several saved searches based on specific criteria for loans that I wanted to bid on. After learning the system and experimenting with several types of loans, I settled on the following criteria:
- Credit Grade - AA, A, B, C, D
- Loan category - Debt Consolidation
- Debt to income ratio - <=50%
- Loan amount - <=$15,000
- % Funded - >=50%
- Delinquencies in last 7y - 0-2 delinquencies
- Public records - 0 in last 10y
Setting up this saved searched has been the single biggest time saver so far when bidding on Prosper loans.
- Setup an Automated Transfer - If you plan on funding your Prosper account periodically with cash to bid on new loans, why not setup an automated transfer? Setting up the automated transfer is the same as you would do for any bank. My goal was to invest $100 per month into my Prosper account so that I could fund at least 2 new loans each month. I setup an automated transfer from my bank account to add $25 per week into my Prosper account. That way, every two weeks I can make a $50 bid on a new loan. The automated transfer is easy to setup and prevents me from manually adding cash to my account.
- Setup a Portfolio Plan - Another option to save time when using Prosper is to setup a Portfolio Plan. When I first opened my account, I setup a Portfolio Plan and almost immediately, I had placed five $50 bids on loans. The Portfolio Plan allows you to specify certain criteria for the type of loans you want to bid on. This is a huge time saver if you don’t mind letting Prosper do all the work for you. I actually prefer being in control of the loans I want to bid on, so I now use my Saved Searches instead to place my bids.
- Use 3rd Party sites - If you are curious about stats for your account or other Prosper lenders, then there are several 3rd Party sites and blogs that provide you with quick statistics, graphs, etc. Some of these sites can provide you with a dashboard of your data very quickly which helps you save time. Some of these sites also show how you stack up against other lenders. One of my favorites is - LendingStats.
- Use development tools - If you are interested in pulling certain data out of Prosper for your account, then they also offer several different development tools. They offer several different options of pulling data out of Prosper that can be used for analysis. While I haven’t used these tools to date, I am planning on investigating them to see if they can help me save even more time.
Check out these previous related posts on my Prosper lending experience -
Creating a new Income Stream using Prosper
Tracking a bad Prosper loan
Tracking a bad Prosper loan - Update #1
Tracking my P2P Lending Account
How much time do you spend per week on your P2P lending?
{ 2 trackbacks }
{ 3 comments… read them below or add one }
Dawn 07.10.08 at 12:59 pm
I just got my first referral bonus for Prosper, so I am about to transfer over another $25 to fund another loan. This will be my third loan so far.
Scott @ The Passive Dad 07.10.08 at 2:08 pm
Prosper can be a great source of passive income. I prefer to manually review each of my loans, but the portfolio plans seem to be a good option when you have more money to invest. I agree, it can be very time consuming to research each of the loans. Especially when you get outbid and need to research another loan.
CItyBeautifulVC 07.17.08 at 4:03 pm
I had a similar experience with Prosper when I started using it 6 months ago. I spent probably 7-10 hours/week at first. I then graduated to saved searches like you and cut my time down significantly, bidding manually.
I have now moved on to Portfolio Plans. Each week I have a $50 inbound transfer to prosper (automated) and most of my maintenance is geared towards adjusting the loan amount to minimize the amount of money in the cash account at any time.
I probably spend 45 minutes on Prosper each week now, and I’d bet 35 of those 45 minutes are analysis, tracking, and Quicken integration of the account, not loan-picking.
If you’re interested, here are my stats:
http://www.lendingstats.com/lenders/CityBeautifulVC