The Advantages of Specialty Financing vs. Bank Financing for Rental Properties

What are the financing options for real estate investors looking to invest in rental properties? One option is to go the traditional bank route. With the traditional bank route, investors will need to prepare for the typical mortgage process. This can include predatory rates, several costly fees and a long, drawn out underwriting process. The alternative to bank financing is specialty financing. Specialty financing is financing provided by a direct, private lender with the necessary capital to provide funds to investors with straightforward rates and terms and the ability to close faster than a traditional bank. In this post we’ll explore four key advantages real estate investors have by working with a specialty financing lender versus obtaining financing through a traditional bank for their rental properties.

1) Greater Leverage

One of the main advantages of using a specialty financing lender is greater leverage. Leverage allows an investor to pay less money out of pocket and leverage their capital into buying more properties. As a new rental property investor, it’s good to have a financing partner who can help them grow their rental property business through the power of leverage as opposed to traditional bank financing that requires more money out of pocket from an investor.

2) Faster Closings

Working with a specialty finance lender such as Lima One Capital gives investors the ability to close on properties in a faster, more efficient process. When working to purchase a property, being able to obtain quick financing is crucial in the increasingly competitive real estate investing world where multiple real estate investors make bids on a single property.

One of the ways Lima One Capital is able to close faster than a traditional bank on rental properties is a less stringent and more streamlined underwriting process. Each investor will be assigned an operations analyst who will work with the investor from the time an application is submitted to the closing and the funding of the deal. Our analysts are extremely knowledgeable about our suite of Rental products and will be available to answer questions throughout the underwriting process.

3) Fewer Fees

At Lima One Capital, there are no hidden costs or junk fees that only add to the investors’ out of pocket costs. Hidden costs and junk fees can include anything ranging from application fees, document prep fees, or convenience fees. Those costs can add up to hundreds and even thousands of dollars out of pocket that the investor has to pay.

4) Flexibility

Working with Lima One Capital gives investors options with how they want to finance and grow their rental property business. Whether it’s refinancing a large rental property portfolio or purchasing a new rental property, Lima One Capital has the programs that can meet an investors’ rental needs. This range of products and options allows investors to pursue different strategies as they look to build their rental properties into a full-time rental business.

Whether an investor is interested in renting out a single home or owning and renting several properties in a large portfolio, Lima One Capital has the programs and infrastructure to provide them with the necessary tools to be successful and grow their business through cash-flowing rental properties. If you’re interested in learning more about our suite of rental products click here.

Lima One Capital, LLC. NMLS ID # 1324403, 201 E. McBee Ave. Suite 300. Greenville, SC 29601. Lima One Capital, LLC is not currently licensed in AK, ID, ME, MT, ND, NV, SD, UT or VT. Lima One Capital, LLC is licensed or exempt from licensing in all other states. Minnesota: This is not an offer to enter into an agreement. Any such offer may only be made in accordance with the requirements of Minn. Stat. §47.206(3). Lima One Capital, LLC is licensed in Arizona as a Mortgage Broker (License No. MB-0936439) and Mortgage Banker (License No. 949706). Lima One Capital, LLC is licensed as a California Finance Lender under Department of Business Oversight (License No. 60DBO-45834). Lima One Capital, LLC is licensed in Florida as a Mortgage Lender (License No. MLD1555) and Mortgage Servicer (License No. MLD1662). Lima One Capital, LLC is licensed in Oregon as a Mortgage Lender (License No. ML-5397). Annual percentage rate may be increased after fixed-rate period expires. Loans are subject to additional underwriting criteria.