Once again, one of our mortgages paid out in just under a month, with a 6-month minimum interest clause (prepayment penalty). On the lender’s $80,000.00 investment, that made for $4,000.00 of profit in less than 30 days! The idea now is to place it, immediately with the same developer at 12% per year, for two years. That equates to 18% for this year and 12% for next year. If another early payout happens, then the great returns will be even more impressive.
Some lenders tell us that they are not interested in short-term loans or bridge loans. This is not all that we offer when we work with established developers. Think of it as a series of bridge loans, back-to-back, in order to generate these great returns. We want your money working for you consistently, not sitting idle waiting for that perfect 15%, 3-year term with 10% LTV (Loan to Value).
This was one of the developer loans we have been promoting over the last year. Many of these loans will not pay out early, but some do. This is the second time this has happened this year. It is a bit of the luck of the draw.
Regardless of the timing of the payout, all the developers that we work with have an excellent track record with their monthly payments to our lenders. This speaks volumes. Always keep in mind that we do many other types of mortgages, as you can see in our investor alerts.
So how is the mortgage market overall in Costa Rica?
We have many loans coming in on a daily basis. Many of the borrowers are overreaching their capacity to pay off the loan once it comes due. Many of the loans are in places that we still have to look up on Google Maps. We reject the majority of applications to protect our lenders.
Interestingly enough, many of the loan requests are for larger amounts. Many projects are starting up along the coastal areas, or trying to at least. We are also getting a fair share of renewals as well. Speaking of renewals, this is why we cannot emphasize strongly enough that lenders have funds on hand to pay at least 10% of the principal. That way we do not have to go back to the lender to ask for additional funds for the same loan.
By paying down the loan principal, we can confidently create a new loan for the same terms and conditions without increasing the interest rate or asking for new collateral. This also keeps the Loan to Value the same. This makes life much easier for all involved.
Appreciation of property is a commonly accepted assumption in the USA or Canada. In Costa Rica, properties can take a long time to sell for a variety of reasons. This can make it difficult to analyze if there was substantial appreciation on the property during the loan term.
Markets like to work in frenzies. If there is a huge demand and properties are selling quickly, that moves the prices upwards, but when it takes six months to get a traditional bank loan it is hard for a buying frenzy to start.
Contact us now to earn great returns in Costa Rica today!