The Omaha metro keeps growing west and south, into Elkhorn, Bennington, Gretna and the open land around Papillion. Most of that growth is built on new subdivisions, and investors increasingly build rentals there instead of buying them.
In short: LendingStreet finances ground-up construction for 1-8 unit residential investment projects in the Omaha area, including spec homes, build-to-rent single-families and duplexes, and infill builds in the older city. Loans are sized on loan-to-cost with terms set per project, and funds are released through a draw schedule after inspections. Plans, permits, a detailed budget and builder experience drive the decision.
On the edges of the metro, builders put up spec homes and build-to-rent houses in new subdivisions in Elkhorn, Bennington, Gretna, Papillion and western Sarpy County. These projects are predictable: platted lots, utilities stubbed in, and a buyer or tenant pool that wants new construction.
Inside the city, infill projects replace demolished houses or use vacant lots in North Omaha, South Omaha and Midtown. Infill can mean cheaper land, but it also means older utility connections, tighter lots and more coordination with the city. Both can work with the right budget and builder.
Duplexes and twin homes are a popular build-to-rent product in the growing suburbs, since they offer two rents on one lot and compete well with older rental stock on energy costs and maintenance.
Many new subdivisions outside Omaha's city limits are developed through Sanitary and Improvement Districts. An SID borrows to build streets, sewer and water, then repays that debt through a property tax levy on the lots, and sometimes special assessments too. The result is a higher combined tax bill than a similar home inside the city, at least until the area is annexed.
For a build-to-rent project, that levy goes straight into the DSCR on your exit loan. Ask the developer for the SID levy and any outstanding special assessments before you buy the lot, and build the tax into your rent-versus-cost analysis.
When the area is annexed by the city, the SID's debt is generally assumed by the city and the levy changes, but timing is uncertain, so do not count on it in your numbers.
This example is illustrative and not a quote. An investor builds a three-bedroom rental on a lot in a Sarpy County subdivision. The lot costs $78,000, hard costs are $345,000 and soft costs (plans, permits, fees, interest reserve) are $42,000, a total of $465,000.
Assuming terms set at 85% of cost for this project, the loan is $395,250 and the investor contributes $69,750. Funds are released as each phase passes inspection:
| Draw | Share | Amount |
|---|---|---|
| Excavation and foundation | 18% | $71,145 |
| Framing, roof and windows | 27% | $106,718 |
| Rough mechanicals | 20% | $79,050 |
| Drywall and finishes | 25% | $98,812 |
| Final inspection | 10% | $39,525 |
The finished home leases for $2,675 a month and appraises at $525,000. A DSCR loan at 75% LTV is $393,750, which retires the construction loan.
Estimated principal and interest on a 30-year term is about $2,686. Because of the SID levy, taxes are budgeted at $1,020 a month, plus $190 in insurance, for a payment of about $3,896. The DSCR is about 0.69x. The tax line is the reason the ratio is tighter than the rent-to-value numbers suggest.
Frost depth and winter cold shape the foundation schedule. Pouring footings and basement walls in deep winter takes heating and protection, and many builders try to get foundations in and homes framed and closed in before the hard freeze. Spring storms can damage exposed framing, so keep builder's risk insurance in place from the start.
Clay soils are common around Omaha, and basements are standard. A soils report and proper drainage design help avoid wet basements that would hurt both resale and rent.
Construction funds are held and released after an inspector confirms each phase. Map your budget to the phases in our construction draw schedule calculator so your builder knows when money arrives. Collect lien waivers from subcontractors with each draw to keep title clean.
Before the first draw, expect the permit, builder's risk insurance and a budget broken into phases. Draw requests that match city or county inspection stages move fastest.
We look for a borrower or general contractor with completed builds of similar size and type. Projects without plans or permits, or a borrower with no build track record and no experienced general contractor, usually do not qualify. A first-time builder can strengthen the file by working with an established Omaha-area builder and bringing a detailed, line-item budget.
Bring a resume of completed projects with addresses, photos and final costs compared with the original budget. A builder who has delivered several homes in Elkhorn, Gretna or Papillion on time and on budget tells us more than any single document in the file.
Spec homes in Elkhorn and Gretna typically sell to families who want new construction in those school districts. Build-to-rent homes are held and refinanced into DSCR loans. Some investors build a few at a time and later combine them under a blanket portfolio loan once five or more are leased.
Whichever exit you choose, decide it before you start. Finishes, floor plans and budget follow from the exit: a spec home competes with production builders on curb appeal and layout, while a rental home should favor durable flooring, efficient mechanicals and low-maintenance exteriors that protect cash flow for years.
Send the lot address, plans, budget, schedule and your build history through the form below, or call (877) 298-1001. Include SID levy information if the lot is in one.
Yes, for 1-8 unit residential investment projects such as spec homes, build-to-rent homes and duplexes, and infill builds.
On loan-to-cost, with terms set per project based on the budget, plans, location and builder experience.
A Sanitary and Improvement District finances infrastructure in many new Nebraska subdivisions and repays it through a property tax levy, which raises the tax bill on the finished home. Ask the developer for the current levy and any outstanding special assessments before you buy the lot.
The lot can be part of the total project cost. Bring the purchase contract or deed with your plans.
After an inspection confirms each phase is complete, according to the schedule set at closing.
Usually only with an experienced general contractor and a detailed budget. Projects without plans, permits or experience generally do not qualify.
If zoning allows it and the project is 1-8 units, yes. Check zoning and utility connections with the city early.
A sale to an end buyer, or a refinance into a DSCR rental loan once the home is leased.
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