It is always important to do the due diligence process right on any property that will be used for a loan. We follow a very rigid guideline to ensure that the property is suitable and qualifies as a good loan for Gap investors. Many people think they can ask their lawyer to do the due diligence on the loan. This is sometimes a mistake. Why? Because it is not really worthwhile for a lawyer to make a recommendation, as he could be liable if the borrower does not pay. Considering what the legal fees are, a lawyer might not want to be exposed to the liability, if there is a foreclosure. Lawyers often say to us “We are not real estate experts in that area”. Following that train of thought, they may not be able to assess the true property value and are likely to trash the loan, (even if it is a good loan) rather than have to do all the research and take all that responsibility in that particular area. Additional fees are likely, as many lawyer’s demand way too much unnecessary information. Lawyers would rather say no to the loan rather than miscalculate, or take responsibility for the loan.
With over 30 years combined experience, we know how to assess property values in order to give the right LTV (loan to Value ration). This analysis is key when evaluating whether a loan is suitable or not. Although 50% is as high as we go, however we prefer to be on the lower end of that scale. Unfortunately, you can never make money by saying “no” to an investment. Our job is to create a steady, fixed income for you. You need to invest your money into something in order to achieve a good return on your investment. Many lenders ask us if we think they are ready to assess a loan on their own here in Costa Rica. The answer is no, we have processed 100’s of loans with no foreclosures to date! This only comes through years of experience and being able to assess loans properly! For more information on how to qualify for a loan or become a lender, go to our “contact us” tab of our web page.
The post The Due diligence process! appeared first on Gap Investors.