In April of 2020, a lot changed in every line of work due to COVID-19. In one of our previous blogs we explained some things we ran into with the rahab side of our business, Legacy Frontline Homes. Today we will give you a brief overview of what we have seen and continue to see as far as the lending side of our business, Legacy Frontline Capital.
Before the outbreak of COVID-19, trying to obtain a loan you needed to have:
- Decent credit
- Little or no experience with Investment Properties
- Some Liquidity (Proof of Funds in your account(s))
If you lack(ed) in any of these areas, getting a loan was still doable. Some adjustments may have needed to be made or extra steps taken.
During the quarantine, lenders were very selective about the borrowers. Some lenders put a halt on everything and were not lending to anyone. Which meant, the lenders that were still open were bombarded with folks trying to get funding because their primary lenders stopped. You needed to have a great deal of experience in real estate investing, significant liquidity, and good credit history. If you didn’t have these things, your loan would be considered very “risky” and many lenders wouldn’t want to touch it.
Most lenders opened their doors again however, they are still adjusting their criteria as time goes on. Here are some of the changes we’ve seen:
- Lower LTVs (Loan to Value)
- It is more challenging to find commercial loans, but we have narrowed in on lenders who are still lending on commercial properties.
- Interest rates increased
- Interest payment reserve requirements increased
- Higher Credit Requirements
We are expecting more changes moving forward, we will continue to stay on top of those changes so you don’t have to!
We are keeping track of changes as they come and staying on top of how to best adjust to the unexpected. Who knows when or if things will go back to “normal”, but, if you are looking to get an investment property funded, contact us! We understand the challenges because we too are investors. We can offer you experience with navigating and overcoming many challenges investors face today. We do a lot of work to stay on top of things so our clients don’t have to.
Thanks for reading! Stay safe!
-Legacy Frontline Team