6 Ways To Finance Your First Investment Property in Omaha

6 Ways To Finance Your First Investment Property in Omaha

Looking to buy your first investment property, but you aren’t sure how to finance it? Here are 6 ways to get the cash you need to invest, in Omaha or anywhere!

Real estate investment is one of the best ways to build long-term wealth and Omaha is a great place to build your portfolio–offering consistently strong returns, a stable economy, and solid rental income. But, purchasing your first property is the hardest step. Once you clear that hurdle, investing in real estate becomes easier and easier. As you build equity and experience, you’ll be better at spotting deals and you’ll have the means to quickly turn them into profit-producing investments.

The first question is if you will buy with a qualified (personal) mortgage or a commercial loan. Personal loans have better terms (usually a percentage point lower interest rate and lower down payments) and you may be able to qualify for special programs through USDA, VA or other groups. Unfortunately, there are constraints, like a limit of 5-10 homes max. Commercial loans generally require 30% equity and shorter loan lengths. Starting with personal loans is generally preferable.

Here are six ways to start your nest egg.

Find A Partner

Partnering is one of the best ways for first-time investors to get started. It’s important to choose your partner carefully to avoid buyer’s remorse later. To find the right partner, join local investment groups (like OmahaREIA), reach out to people in online forums (like BiggerPockets), or reach out to the people you see who are doing a lot of the buying in your area (like Chenoa Investment). These more experienced buyers may not only be able to work with you, but they may be able to mentor you as well. When reaching out to more experienced investors,

Utilize A Private Lender

Working with a private lender in Omaha can help you to get the cash you need to make your first property investment. They will typically have different requirements for getting a loan than a conventional bank does. You will likely be able to get your money faster, without having to jump through as much red-tape. The interest rates may be higher though.

Sell An Asset

Do you own land? Maybe an extra vehicle? Many people have a valuable asset just laying around that could be liquidated and reinvested into something of greater value. You may not have thought about them because they’ve been sitting idle for so long. Take a look at the things you own and what you could part with. If it isn’t making you money or deeply sentimental, consider how selling it could help you buy your first real estate investment in Omaha. I sold a solid duplex rental to reinvest into a 5 unit apartment.

Save For Your Down Payment

Depending on where your finances stand today, saving for your downpayment may be easier than you think. In most cases, to borrow money from a traditional lender, you will need to put 20% down. Your first investment property doesn’t have to be anything flashy. In many parts of the country, you can pick up a property for less than $100k. While saving up $20k may sound daunting, it can be done when the right budget is put in place. The Richest Man in Babylon is a fun read to set your mind on saving and investing.

House Hacking — The Owner/Occupant Loophole

Many investors get their start with House Hacking an owner-occupied investor property. You can get great terms on an FHA loan, that allows up to four units. The catch is that you must live onsite for about two years. If you sell, you qualify for capital gains exemption. By living in the property, you can fund your own room and board with rental income, while putting money toward a multi-family, income-producing asset that could benefit you for years to come. For many investors, the trade-off is well worth it!

Single investors who want to buy their first home or investment property can apply the same concept to a single-family home. By renting rooms to friends or family, you’ll be able to pay your mortgage, possibly living for free. Down the road, you’ll be able to rent out the house in its entirety or you will be able to move into the property yourself and your future family, with much of the balance owed already paid off.

Get A Home Equity Line of Credit (HELOC)

A home equity line of credit or HELOC can help you purchase your first investment property by providing you with a loan that is secured against the current equity you have in your primary residence. It is also known as a second mortgage. Unleveraged equity is basically money that is just sitting there. When you use a HELOC to buy an investment property in Omaha, you are putting that money to work for you, which will pay off in the long run. HELOCs can be secured rather quickly and offer very competitive interest rates.

Purchasing your first investment property in Omaha is a big deal! At Chenoa Investment, we can help you to reach your investment goals by helping you find the perfect property. We offer discounted real estate in Omaha, working with investors or people looking to save money on a home of their own. When you are ready to buy a house in Omaha, find out how Chenoa Investment can be of assistance.

Let us help you with your first investment property in Omaha! Reach out to us today to find out how we can be of assistance!

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