P2P Lending

Person to Person Lending

Loaning on Reddit's r/Borrow

My Experience: I started loaning out money in December of 2020 as an experiment to see if I can make a decent coin without much effort. I knew it would be a little risky, with no guarantee that my investment wouldn't just go down the toilet. I think it's even more of a risk to know that I'd be doing this through Reddit (r/Borrow). This is because of the Reddit anonymity, all you have is someone's handle and history to go off of.

However, I quickly learned, that the subreddit does have a good record keeping system in place. I also knew that those who have took out loans and repaid them on time and have a history of payments were most likely going to do the same with any loan they took with me. So my first criteria of vetting the borrowers was to make sure that they had a few successfully paid back loans already.

I wouldn't say this is completely hands-off by any means. You actually have to put in time trolling the page and refreshing it to find new loan requests. Then you have to do a little digging to make sure that the borrower isn't a scammer or into risky things like gambling, drugs, etc. The nice thing about reddit is you can easily find these things out just by clicking the user's name and looking at their comment/post history.

To be successful you need to set up funding criteria. I typically look for loans that would provide me 20% or more return on investment and not take longer than a week to repay in full. I also make sure that anyone I loan to has a history of successful repayment. The last thing I look out for is a bunch of recent requests to borrow money without paying back the last one.

I think this is the easiest way to safeguard my investments. I've had 3 bad apples out of the 30 loans which is a little surprising. But I factor that into the total amount of money I've made so if these ever do come around to repaying me I'll be even further in the green. Also make sure you set up a tracking and reminder process. I track ALL my loans in a spreadsheet. I've also implemented a policy that I remind all borrowers the day before repayment on how to get the money back in my hands when they are ready to repay.

Ideas for improvement: The hardest part about making a ton of money here is the time you have to put in finding these borrower posts and then tracking your own loans and when the payment date comes. I've found that I typically message the user the day before payment is due and remind them how they can repay the loan back the next day when ready. Some users prefer Paypal, Venmo, Zelle, or other payment forms so you have to be open to these and also make it easy for them to repay you back.

I'd love to find a way to automate this a bit more. I'm thinking building out some kind of bot that automatically alerts me that there is a 'safe' borrower looking to take out a loan. I'd set up certain criteria around vetting a safe borrower, like their loan history. Then when someone who passes my criteria makes a post I'd be alerted somehow to reach out and start the conversation about providing them with this loan. Pretty easy I would think. Just need to put on my Developer hat and figure out how Reddit dev works.

Conclusion: Now I haven't gotten rich from using this passive income strategy but I have made over $500 in interest payments in 4 months which isn't terrible. I also figure that if I were somehow able to automate this some I could probably bring in around 10x that amount without much extra effort.