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 Investments. Many people think they can ask their lawyer to do the due diligence on the loan. This is often 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 in the event of 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 reject the loan (even if it is a good one) rather than have to do all the research and take all that responsibility in that particular area. Additional fees are likely, as many lawyers demand far too much unnecessary documentation. 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 ratio). This analysis is key when evaluating whether a loan is suitable or not. Although 50% is as high as we go, we much prefer to be on the lower end of that scale. Unfortunately, you can never make money by saying “no” to a good investment. Our job is to create a steady, fixed income for you. You need to invest your money in 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 — 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, contact us now.