Financing for our first deal

4 Replies

I recently got connected with another new real estate investor here in Omaha and are running into some trouble. We have an agent working with us to find us deals but we are stuck on how to fund the deal. We got connected with a lender but like all smart lenders, they want us to have some skin in the deal in order to proceed. So this is where my question comes. Since we are new investors, what do you think is the best route for us to take in financing our first deal. Should we continue searching for financing and determine which has the best terms? Or should we be looking more towards hard money lenders? Also, our current lender recommends we open a line of credit through an LLC. What's the best route for us to take to secure our first deal?

Most will require some skin in the game - bring capital to the table, not only the deal. But you can definitely find lenders (they don't have to be local) that will lend 100%. Keep looking. You can also try to get a credit line, but if it is a new LLC, you may not get much.

Hello Rafael, I am also an active investor in the Omaha market. Have you already found the deal you are interested in funding? If so what are your plans for the property, is it a flip or a rental you would like to keep? Knowing what your plans are with the property as well as having another exit strategy are important things to consider when deciding what funding option to go with. The Omaha market has been on fire, especially for properties $200k and under. If anything decent has come up it is usually under contract within 48 hours.

@Rafael Perez getting an unsecured line of credit could definitely help for a number of reasons especially if there's flexibility in what that line is used for. While yes banks want to see skin in the game you could get a line from one bank and use it as a down payment for the loan. With some lenders this may be difficult to do and you have to make sure it makes sense to do this because your cash flow needs to be good to cover the interest on the regular mortgage and the interest on the LOC. Also you want to be sure there's a way to refinance the property in the near future to recycle that LOC since it's supposed to be short-term debt. May be difficult to find starting out though unfortunately banks want to see a track record for these lines

@Rafael Perez

I use private lenders to fund my deals.  At the beginning, I funded the rehab while they funded the purchase.  After the first one they funded both purchase and rehab.  You may need to partner with an experienced investor on the first deal to gain credibility and experience.  It’s a bummer to give up some profit, but for the long range it might be the best avenue.