Credit

Credit issues? It’s about the value of the property

Credit report

People stress that credit is everything these days, but there are plenty of responsible people who have made a financial mistake or fallen on hard times. A private commercial real estate lender such as Stronghill can often still help these people because the value is in the real estate.

Let’s look at an example of someone trying to get a loan for a rental property with bad credit because he/she had a medical crisis a few years back that tapped out savings. This person will be rejected by most banks without ever asking why the credit score is low. It’s not the bank’s fault—they are heavily regulated and must conform to federal guidelines.  However, some private lenders using their own money happily work with people who have below average credit scores, like us. The foundation of these loans is the value of the property you wish to buy or update. With a plan for maximizing rent and good value in the property, firms like ours are happy to lend against rental properties. Regardless of credit.

It’s truly about the value of the property and the LTV ratio (loan-to-value). If you have poor credit it probably doesn’t matter because the property is what is used as collateral. It’s plain and simple.

Don’t be discouraged if your credit is bad. You may face other financial challenges because of it, but it won’t hold you back from smart real estate investing. In fact, many investors appreciate the value-focused underwriting process of private lenders because it helps confirm the value of the property.