If finding a great property is the first big step to making money in real estate, financing the deal is second. Lima One Capital can’t help you with the first one. But as a specialist in real estate investment financing, the company helps many real estate investors with the latter.
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What Is Lima One Capital?
Lima One Capital has a wide variety of financing products. Its real estate loans are tailored to real estate investors buying single-family and multi-family residential property. They lend to house flippers, builders, long-term single-family and multifamily rental investors, and other residential real estate investing types.
The company is based in South Carolina but has a large national footprint, making loans in 41 states. It’s been around since 2010 and has grown rapidly. In the process, it’s developed a reputation as a refuge for investors who have been turned down by banks and other conventional lenders.
Hard Money Lenders
Lima One Capital is a hard money lender. Unlike banks, credit unions and similar lenders, hard money lenders tend to cater to investors rather than owner-occupants.
Hard money lenders use the real estate property as collateral. They aren’t concerned about debt-to-income ratios. They may be willing work with borrowers with less-than-perfect credit scores.
Lima One Capital and other hard money lenders don’t sell their loans to other investors like most mortgage lenders do. They write and service the loans themselves. They can close quicker than other lenders, usually in two to four weeks. The downside, however, is that rates are higher than banks.
Hard money lenders like Lima One also have some added hurdles for borrower to clear. For instance, they may require an investor have a minimum number of years of experience in the business. They also often require several months of cash reserves.
Hard money lenders like Lima One Capital are tailor-made for real estate investors that are in a hurry or having trouble getting financing. Here’s contact info for Lima One Capital:
Lima One Capital
201 East McBee Ave, Suite 300
Greenville SC 29601
You can apply for pre-approval online. The initial application takes just two minutes.
Lima One Capital Programs
The FitSmallBusiness website named Lima One as one of the best hard money lenders for 2019. In fact, the website selected Lima One as the nation’s premier lender for investors seeking a single all-purpose lender.
That highlights one of the things that makes Lima One stand out. Namely, its large number of loan products.
Here are Lima One’s programs for real estate investing:
FixNFlip is Lima One’s loan for investors who are buying, renovating and selling single-family homes. The short term and high loan-to-value ratio are specially tuned to the needs of house flippers. The main features of the flip loans include:
- Loan to after repair value can be up to 75 percent
- Will loan up to 90 percent of the cost of buying and rehabbing a property
- The loan term length is 13 months
Bridge Plus is aimed at experienced investors who buy properties and quickly flip them. It can also be a bridge to long-term financing. Features include:
- Loan to value up to 80 percent
- Loan term is 13 months
- Borrower must gave completed at least five flips in the last two years
If you already own a lot free and clear, you can use one of these loans to pay for building on it.
- Max loan to after repair value is 70 percent
- The loan term is 13 months
Cash Out Loan
If you own a property free and clear, you can use Lima One’s cash out loan to tap your equity. You can use the cash to purchase another property or for any other reason.
- No down payment as long as you own the property
- Can borrow up to 50 percent of the as-is value of the property
- Loan term length is 13 months
This lets an investor borrow money short-term to rehab a rental property. Then the investor can convert the short-term loan to a long-term note.
- For single family homes as well as duplexes, triples and fourplexes
- Repair and rehab loan for 13 months with a balloon payment at the end
- Long-term loan for 30 years can be fixed or adjustable rate
- Can also be used to purchase and refinance a property
- Any amount from $75,000 to $5 million
- Credit score of at least 620
Another single-close option for investors who want both short- and long-term financing is the Build2Rent offering.
- Interest-only construction loan with balloon payment at the end
- Construction loan terms from 13 to 19 months
- Permanent note is a 30-year amortizing adjustable or fixed-rate loan
- Can be used for single-family homes up to fourplexes
- Loan amounts from $75,000 to $5 million
- Minimum credit score 620
Lima One’s financing programs for rental investors can be used to purchase, refinance or take cash out of a property. The company has three different ones. These are:
This is Lima One’s long-term financing tool for rental investors. Rental30 features include:
- 30-year term amortizing loan
- Fixed or adjustable interest rate from 5.25 percent to 7.9 percent
- Suitable for single-family homes, duplexes, fourplexes and condos
- Loan amount from $50,000 to $1,000,000
- Maximum loan to value of 75 percent
- Credit score of at least 660
- No required debt-to-income ratio
This is Lima One’s long-term offering for investors seeking to finance a minimum of five properties. Its features:
- 30-year amortizing term
- Fixed and adjustable interest rates from 5 percent to 7.65 percent
- Suitable for single-family, duplexes, fourplexes and condos
- Loan amounts from $500,000 up
- Maximum loan to value 80 percent
- Minimum credit score of 660
- No debt-to-income ratio requirement
This program helps investors bridge the gap between short-term financing and permanent financing. It consists of a two-year interest-only purchase or refinance loan that can be paid off with a balloon or extended for another year.
- Interest rates as low as 7.25 percent
- Suitable for single-family homes, duplexes, fourplexes, condos, and townhomes
- Will work with single properties or portfolios of multiple properties
- Loan amounts from $50,000 to $2.5 million
- Maximum loan to value of 75 percent
- Minimum credit score of 660
- No debt-to-income ratio requirement
Lima One provides financing for multifamily properties of at least five units. The properties can be ready to rent or in need of rehab.
- Two year term
- Interest-only loan
- Suitable for investors buying, refinancing, rehabbing or cashing out
- Rates as low as 6.99 percent
- Amounts range from $250,000 to $7.5 million
- Loan to cost of purchase as much as 80 percent
- Loan to ARV on refinance as much as 70 percent
- Cash-out refinance up to 60 percent loan to value
- No prepayment penalty
Lima One Cons
While Lima One has grown fast and attracted a lot of customers, it’s not the perfect lender for every investor. For one thing, Lima One is not licensed to lend in nine states. These include Alaska, Idaho, Maine, Montana, North Dakota, Nevada, South Dakota, Utah and Vermont.
Also, like other hard money lenders, Lima One has higher rates than banks and credit unions. Depending on the product and the lender, rates range from 5.75 percent to 12 percent.
Fees are also likely to be higher. Loan origination fees may be up to 3.5 percent, and closing costs could tack on another 5 percent. Also, you need a credit score of at least 620 or so. Otherwise, Lima One is not likely to approve your loan request.
Lima One Capital vs Private Hard Money Lenders
I am partial to private lenders because I’m a hard money lender myself. Basically, I lend my money to investors who fix and flip properties. But it’s not cheap. I charge based on the deal, which could be up to 25% annually (12% of the total deal, regardless of term).
It may sound higher than traditional lenders, but I base my decisions on relationships I’ve built over the years. If I don’t know you, I won’t lend to you. If I do, I will. Lima One is stricter, but rates are also lower than guys like me. I’m fairly hands off, and I have flexible payback deadlines. Need more time? Just ask.
The benefit of working with a private lender is that the money is there as soon as you need it. There is no approval process, as these agreements are usually trust-based. In hot markets, the difference between getting and losing a deal can be as little as 12 hours, so there’s a benefit to working with a private lender.
There is a place for both types of lenders, however. While private lenders are typically more flexible, they charge higher rates. If you’re hoping to increase your profit margins (and don’t mind a little more upfront work), Lima One may be a good route for you.
At first glance, Lima One is professional, offers many solutions, and has a nice looking website. I’ve never personally used the service. But online reviewers speak highly of the company. Many hard money lenders have shaky platforms or websites that look like they’re from the 90’s.
Lima One seeks to buck this trend by offering good service at a solid price. And their rates look good too. As of September 2019, advertised rates for the Rental30 program fall between 5.25% and 7.9%.
I’d be interested to see if this is actually true. My guess is that the rates are mostly on the higher side. At these rates, that’s not much more than a bank, and you’re getting a 30 year loan.
Many banks avoid writing 30 year commercial loans (loans to LLCs or corporations) because they keep these loans in-house. On the flipside, they sell primary residence loans into the secondary market.
Banks can’t predict where rates will go. If rates rise, banks are exposed because they’ve lent their money at lower rates. To continue writing loans, they need to borrow money from the Fed (or other banks) to continue making loans.
After all, banks lend other people’s money and use their deposits (money in members’ accounts) as their “reserve.” Higher reserves result in lower leverage and therefore lower default risk.
This means that as an investor, banks typically shy away from 30 year loans. So you’re stuck with a 5 year loan that balloons unless you refinance–certainly a pain.
Although Lima One is more expensive than a bank, their Rental30 program offers more flexibility and longer rates than found at a bank. I think it’s certainly worth exploring.
Who Should Use Lima One?
Lima One Capital has a big geographic footprint, serving most major markets. The company has a lot of different kinds of loans.
You can get fix and flip, bridge, construction, long-term rental, multifamily, cash-out and other loans from Lima One. Some of its programs are only available to large or experienced investors. But it also has programs for small investors and newbies.
Lima One provides an important alternative for investors who don’t have the credit history or time to apply for a conventional loan. Lima One welcomes investors who need short-term loans for fix and flip projects and have been turned down by other lenders.
Applicants with good credit scores and sound properties can probably find a Lima One program to help finance their investment activities. If you are only going to have one real estate investment lender, this company is worth a look.