Construction Loans Nebraska

What You Need To Know About Building In Nebraska

There are plenty of reputable construction loan lenders in Nebraska, but for your application to get approved, you need to have building plans.

• Most Construction Loans in Nebraska offer interest only payments.
• Importantly, you are required to pay back 100% of the loan amount, when the loan terms end.

To pay back the loan in full, you need to have a clearly defined exit strategy. Either you need to sell the development for a healthy profit, or you need to refinance the property based on the revised value of the building once it is completed.

In addition, there other important factors that a lender will consider when assessing a loan application, including:

FICO Score: Typically, there will be a minimum FICO score that the borrower needs to meet in order for the loan to be granted. At the current moment in time, the minimum FICO is 650.

Cost of Project: A reputable lender should be willing to cover a substantial portion of the project cost. This ratio is called Loan To Cost, and it is a quick way to assess how much capital you can access to complete the building project. At this moment in time, New Silver offers up to 90% Loan To Cost (LTC).

Best Construction Loan Lenders In Nebraska

1. New Silver

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• Interest rates 10 – 12.75%
• Instant proof of funds letter
• Credit score 650+
• Interest only payments

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2. Lima One

Lima One Capital is a private lender offering investment property loans for various investing strategies. Borrowers can work together on their deals with the in-house team of experts at Lima One, which speeds up the hard money lending process and cuts out any middlemen.

Lima One offers new construction loans for builders who are ready to begin a ground-up project, or a tear-down. Up to 85% LTC is offered, along with 70% LTV. Loans begin at $100,000 and the maximum amount that can be borrowed is $3 million. Lima One also has a Build to Rent loan product which offers longer loan terms.

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3. Asset Based Lending

ABL (Asset Based Lending) is one of the prominent construction loan lenders focused on helping small business owners, real estate investors, and commercial contractors finance their business activities. These loans are tailored to each person’s needs and ABL provides hard money construction loans in over 29 states across the US.

ABL’s new construction loans are used for land acquisition and construction or rebuilding of existing property. Previous experience is an essential element when applying for these loans. New construction loans can be used for single family, multi-family, and mixed-use properties.

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4. Nationwide Home Loans Group

Nationwide home loans group, another top contender in the list of best construction loan lenders, offers both one-time and two-time close construction loans. The lender has made it to the top of the list based on their loan offerings and they offer up to 100% financing of the construction. Nationwide Home Loans Group provides funding for primary residences, second homes, ADUs and 1-4 unit multi-family properties.

The lender facilitates all parts of the process, from searching for a property to communicating with builders. Nationwide Home Loans Group provide fixed-rate and interest-only terms on their construction loans. The one-time close construction loan requires only one appraisal and no-requalification once the construction is complete.

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5. Lending One

LendingOne is a direct lender for real estate investors, with loans that are tailored to each investor’s strategy and is one of the top ranked Construction Loan Lenders in 2023. Lending One offers ground up construction loans which are between 12 and 24 months.

These require interest-only payments for a period of time and are applicable for single-family detached properties, condos, town homes, multi-family properties

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Nebraska Real Estate Market Analysis

Over the last 12 months, home prices in Nebraska have increased by 4.8%, with an average home value of $252,108. This is 97,000 less than the average home value in the US, which is currently $349,770.

• The Median sale to list ratio is 1.000. A sale to list ratio of 1 typically generally means that the market is relatively neutral. It doesn’t necessarily favor buyers or sellers.
• The percent of sales over list price is 42.9%
• The percent of sales under list price is 34.4%

The Nebraska Market Offers Affordability: Nebraska often offers more affordable real estate prices compared to many other states in the US, making it accessible for investors with various budgets. This affordability can lead to attractive rental yields and lower upfront investment costs.

Reasonably Strong Rental Market In Certain Cities: Nebraska has a robust rental market, particularly in cities with universities and colleges, such as Lincoln (University of Nebraska-Lincoln) and Omaha (University of Nebraska Omaha). This can provide opportunities for steady rental income.

Limited Profit Potential: One of the direct consequences of relatively low home values is that it places a threshold on the profit potential of any real estate deal in Nebraska. The market value of the completed project has a cap that is determined by comparable properties (comps) in the area. If the comps are low, the resale value of the building project will also be low.

Thankfully, new construction projects often have higher profit margins than fix-and-flip projects. In addition, the potential to build multiple units means that you can leverage the power of scale to overcome the limits that would normally impact real estate investors working with a single property.

 Data Sourced From – Zillow.com