Lima One Capital provides hard money loans for real estate investing. The process involves the borrower submitting an application, undergoing underwriting, providing a rehab budget and appraisal, and requesting an initial inspection and closing. Loans are offered at 13% interest, with fees of 4% of the loan amount. Borrowers put down a minimum of 20% of total project costs. The example shows a borrower purchasing a property for $77,000, spending $45,000 on rehab for a total cost of $123,000. With a 20% down payment of $24,600, the borrower receives a loan of $98,400 plus $3,936 in fees for a total loan of $
7. Who is Lima One Capital?
Before
Client Down
Payment:
$23,780
Loan Amount:
$98,924.80
8. 1Who is Lima One Capital?
Sales Price:
$191,000
Client Profit:
$53,508.44
After
9. 1918 Main Street
Atlanta, GA 30337
Sales Price: $180,000
Purchase Price: $77,000.00
Rehab Budget: $45,000.00
Down Payment: $24,600.00
Monthly Payment: $1,108.64
Lender Fee: $3936.00
Loan to ARV: 57%
9
Before
After
Example
10. Purchase Price: $77,000
Rehab Budget: $45,000
+ Closing Costs: $1,000
Total Costs: $123,000
Total Costs: $123,000
x Down Required: 20%
Down Payment: $24,600
10
Calculating Down Payment
11. Total Costs: $123,000
- Down Payment: $24,600
Gross Loan Amount: $98,400
Gross Loan Amnt: $98,400
x Origination Fee: 4%
Lender Fee: $3,936
11
Gross Loan Amount: $98,400
+ Lender Fee: $3,936
Total Loan : $102,336
Calculating Lender Fee and Total Loan Amount
12. Loan Amount: $102,336.00
x Interest Rate: 13%
Total Annual Interest: $13,303.68
Total Annual Interest: $13,303.68
12 Months
Monthly Payment: $1,108.64
12
Calculating Monthly Payment
14. 1918 Main Street
Contract Sales Price - $180,000.00
Minus
Down Payment – $24,600.00
Realtor Fee - $10,800
Loan Amount - $102,366
Interest Payments (5 Months) - $5,543.20
Profit - $36,690.80
15. 1918 Main Street
What Lima One made:
Origination: $3,936.00
Monthly Interest: $5,543.20
Total: 9,479.20
What our client made:
Profit - $36,690.80
Return on Investment: 121%
16.
17. RENTAL30 Benefits
Long Term Rentals = Long Term Financial Security
Build your portfolio
Future wealth and security
Cash flow & Passive income
18. Program Highlights
30 year fixed/6.5-8%
Low Minimum Loan Amount of $45,000
No down payment up to 75% LTV
Close Quickly
Credit score as low as 630
Financial leverage- Our clients are able to leverage their capital to complete more than one project at a time by only bringing 20% down at closing as opposed to being responsible for 100% of the project at a given time.
Many hard money lenders funnel deals to other lenders or other investors. By doing so, they get paid on top of the other lender fees which drive the costs up for the borrower. We have no other fees and fund the deals ourselves as opposed to broker them to another lender.
Straight forward terms- Our terms do not fluctuate between deals, based on credit, or on the size of the loan. Many competitors offer terms that are variable to the project or the borrower.
Longer terms- 13 months with no prepayment penalty allows for our borrowers to take the time to complete their project without worrying about a shorter loan pay-off. If they do pay-off early, there is no early pay-off penalty for the borrower to occur.
Fully Capitalized-We are able to provide financing to any deal at any time, there is no delay with trying to raise capital for each loan that we do. If qualified, borrower is able to do multiple deals at a given time.
Customer Service- We pride ourselves on customer service and offer fast turnaround times, quick inspection times, and have teamed with professionals that work quick and efficiently. Clients have access to online accounts to manage their projects through the process.
Security in Work Completion- Since the rehab budget goes into an escrow account where draws are made based on completed work, our clients are able to verify progress made on their project through the inspections. These inspections not only protect our clients from misused funds, but also protects Lima One in the occurrence of a project not being complete.
No junk fees-These include application fees, credit fees, pre-approval letters, etc. Often, our competitors will charge for each of each of these services. This ties into our excellent customer service that we pride ourselves on and that our clients notice.
No junk fees-These include application fees, credit fees, pre-approval letters, etc. Often, our competitors will charge for each of each of these services. This ties into our excellent customer service that we pride ourselves on and that our clients notice.
Loan Amount ÷ ARV = Loan to ARV Percentage
ARV comes from the appraisal that is completed
We lend up to 65% of the ARV. If the loan amount goes over slightly we can adjust the down payment amount to lower loan amount and LARV
Total Loan amount divided by ARV
I – Income
Most investments offer either a consistent return (i.e. annuities) or the potential for equity appreciation (i.e. stocks). Real estate offers both. Good buy and hold investments offer positive cash flow from rents that not only offset the expenses and debt service, but also provide a monthly income. The average annuity only pays out 3.27% per year.
A halfway decent buy and hold investor can beat that any day.
D – Depreciation
The IRS allows you to write off the value of any property over 27.5 years. This depreciation counts as negative income, but it’s only negative on paper since the costs of keeping a property in good condition can be paid for out of the rental income.
Thus, the depreciation “losses” wipe out the positive cash flow from the property and remove any tax obligation. Unfortunately, due to the Tax Reform Act of 1986, only active investors can take advantage of this.
E – Equity Build Up
Real estate is the easiest investment to leverage (more on that later).
With a mortgage, unfortunately, comes the obligation to pay it back. Fortunately, the cash flow mentioned above allows an investor to pay back that mortgage without spending any of their own money. Instead, the tenant pays for it.
Furthermore, each month — assuming you don’t have an interest-only loan — part of the principle is paid off, too. Right off that bat, with a 30-year amortization, about 15 to 25 percent (depending on the interest rate) of each loan payment pays off the principle of the loan and adds to the equity you have in the property.
A – Appreciation
Real estate, like any other asset, can go up or down in value.
Many have been scared off by the crash in 2007. However, a look at the long term history of real estate prices is encouraging. The trend is consistently up. In fact, over the past 40 years, real estate has gone up an average of 4.62% per year. The combination of accelerating equity pay down (with each payment, you pay more principle and less interest), and appreciation means that the investor’s equity in any given property will grow exponentially the longer they hold it.
.
Which leads us to the next point:
L – Leverage
If you invest $20,000 into the stock market, and it goes up 10 percent, you’ve made $2000. If you invest that same money into real estate, you can buy a $100,000 property with an $80,000 loan. Let’s say it only goes up 5 percent. Well, you’ve made $5000. Or in other words, you’ve made a 25 percent return!
Average turn around time is 7-10 business days. This depends on the schedule of our appraiser
Construction draws can be made based on completed work. The borrower will need to start the rehab project and make draws once line items have been completed. They can also do a partial draw. For example: Our borrower has budgeted $2000 for plumbing. The borrower starts and finishes the rough plumbing and makes a draw for $1000. We will order an inspection with our inspector who will go to the property and verify that the rough plumbing has been completed. We will wire $850 to the borrower ($1000 Draw request - $150 inspection fee) for the completed rough plumbing. Once the borrower has finished the plumbing, they can request the remaining funds to be sent. Again, the inspector will go to the property and there is a $150 inspection fee that is directly paid to the inspector via the escrow account
