COVID-19 has impacted nearly every aspect of our world, but how has it affected the real estate investment sector, specifically lending? Is there a definitive answer? There seems to be nearly every opinion under the sun, with an unpredictable future ahead. Here at Cost Fund and Indicate Capital, we have continued to operate business as usual, prefaced with cautious optimism. We have experienced steady deal flow and loan inquiries as more and more local and national lenders cease operations for the foreseeable future, and some even permanently.
We are experiencing a similar ripple effect with many of our clients and borrowers. Some of our borrowers have chosen to hold off for the time being and wait to see what happens in the market, while others are eager to dig up new opportunities that may come from panic selling. We have received many positive updates from clients in the residential industry that properties are still selling above asking price with multiple offers. Some even say they are busier than ever.
One notable negative impact we have seen is the delay in city inspections. Builders are frustrated with the promptness of inspections and are meeting delays in projects accordingly. Some have even experienced multiple “no-shows” from city inspectors. It seems to be a common thread amongst most lenders, that new build construction is not being considered at this time. Of interesting note, we have been receiving many calls from borrowers whose lenders have changed terms at the last minute due to the current situation and uncertainty in the market. Borrowers that were locked in at 90% LTC are being changed to 60% LTC, requiring much larger sums of cash from the investor to close. This is leaving many investors between a rock and hard place, unable to close deals they have had lined up.
Overall, the impact seems to differ from person to person, and company to company. Everyone in our office is still available to chat about any issues, concerns, deals, or just to reconnect and plan for the future. We are confident in our abilities to navigate through this crisis and are here for our investor community!
Max Miller | Loan Officer