Establishing a self-sustaining Prosper loan ladder

Well, it's official. I've gotten the $1500 Prosper loan applied to my account, and I've managed to deploy about $900 of it so far on bids. Time will tell how many of them become winning bids, but for now, my screening criteria seems to be providing me with at least a few quality loans to bid on.

Right now, everyone is getting a bid of $50. This is going to be the default amount bid until I reach a point where I can't find enough loans to bid on for all of the income that is coming in from payments. I'm thinking I'll probably have a flurry of bids for the next two or three months until I get all of the money into play, and then it will settle down back to one or two bids per month again. The other consequence of bidding as much as I am now is that my average rate of return will probably drop. On the other hand, my risk adjusted rate of return will most likely rise, as I am now able to bid on a slightly more diverse range of credit grades. For example, I would bid on a "C" credit grade all the way down to 15%...but I'll probably get the loan at around 20%. That gives me a risk adjusted rate of 16%...4% more than my required minimum, and approximately 8% higher than the loan I took out from Prosper to re-lend.

I'd consider that to be pretty damn good. :-)