Fourplexes on bungalow lots, hillside spec homes, SB 9 splits and fire rebuilds: building in Los Angeles takes patience with permits and a lender that understands the budget.
In short: Our top pick for ground-up construction in Los Angeles is LendingStreet. We finance residential investment projects of one to eight units, including spec homes, build-to-rent and infill duplexes and fourplexes. Loans are sized on loan-to-cost with terms set per project, funds are released through draws after inspections, and finished projects can sell or refinance into a 30-year DSCR rental loan. We look closely at the things that make or break an LA build: plans, permits, the budget and the builder's experience.
Los Angeles rewards builders who can add housing to land that already exists: a fourplex where a tired bungalow stands, a spec home on a hillside lot, a lot split with two new units under state law. LendingStreet finances ground-up construction on residential investment projects of one to eight units, so these are exactly the projects we review.
Our construction loans are sized on loan-to-cost, with terms set per project. Funds are released on a draw schedule after inspections confirm the work, and when the build is done you can sell or refinance into a long-term DSCR rental loan. Plans, permits, the budget and your builder's experience drive the review.
If you have a permitted or near-permitted project in Los Angeles County, get a quote with the form below or call (877) 298-1001.
Each option fits someone. A bank can be a good match for an established builder with strong financial statements, and a private lender may fund a quick land purchase. For an investor building one to eight units to sell or hold, the picture usually looks like this.
| What LA builders need | LendingStreet | Typical bank | Typical private or hard money lender |
|---|---|---|---|
| Project types | Spec, build-to-rent, infill 1-8 units | Varies; often prefers established builders | Varies |
| Sizing | Loan-to-cost, set per project | Often lower leverage plus deposits | Varies; fees and terms vary |
| How funds release | Draws after inspections | Draws after inspections | Varies |
| Path to a long-term loan | DSCR refinance available | Separate permanent loan | Usually none; short-term only |
| Borrow in an LLC | Standard | Common | Common |
| Personal income documents | Focus on the project and track record | Often tax returns and financials | Deal-focused |
Infill builders focus on neighborhoods with older housing on lots zoned for more than one unit: Highland Park, Eagle Rock, Mid-City, West Adams, Echo Park and parts of the San Fernando Valley such as Van Nuys and North Hollywood. Spec builders target the Westside, the hills above Silver Lake and Los Feliz, and Valley neighborhoods south of Ventura Boulevard.
Across Los Angeles County, cities such as Pasadena, Long Beach, Glendale and Inglewood run their own permit counters and zoning codes, so the same project can take very different paths a few miles apart. After the January 2025 wildfires, many lots in Pacific Palisades and Altadena are being rebuilt, with their own fast-track processes and insurance challenges.
In the City of Los Angeles, plan check and permits run through the Department of Building and Safety, with Planning reviewing zoning and any discretionary approvals. Hillside lots fall under the city's hillside rules, which limit size and grading, and many areas sit in high fire hazard severity zones with stricter building standards.
State laws have opened up options on single-family lots. Accessory dwelling units are broadly allowed, and SB 9 lets many single-family lots add a second unit or split into two lots. Tearing down older rent-stabilized units brings replacement and tenant relocation rules, so confirm what is on the lot today.
Budget time as well as money. Plan check, utility connections and school and impact fees can stretch a schedule, and lenders look for a realistic timeline.
This example is illustrative and not a quote. A builder buys a lot zoned for four units for $950,000 and plans four 1,100-square-foot units, 4,400 square feet in all. Hard costs are budgeted at $375 a square foot, or $1,650,000, and soft costs for architecture, engineering, permits, fees and insurance are $260,000. Total project cost is $2,860,000.
If this project were sized at 80% of total cost, an assumption for illustration since leverage is set per project, the loan would be $2,288,000 and the builder would contribute $572,000. The builder's equity typically goes in first, and draws then follow the schedule below as inspections confirm each stage.
| Draw stage | Share of hard costs | Draw amount |
|---|---|---|
| Foundation and slab | 15% | $247,500 |
| Framing and roof | 25% | $412,500 |
| Rough plumbing, electrical and mechanical | 20% | $330,000 |
| Drywall, cabinets and finishes | 25% | $412,500 |
| Final inspection and certificate of occupancy | 15% | $247,500 |
| Total hard costs | 100% | $1,650,000 |
Many LA builders hold new units as rentals. In this example, the four units lease for $4,600 each, or $18,400 a month. With taxes budgeted at $3,600 and insurance at $900, refinancing the full $2,288,000 construction balance into a 30-year DSCR loan would mean estimated principal and interest of about $15,608 and a DSCR of about 0.92x, below our 1.0x standard minimum.
The rent supports a DSCR loan of about $2,037,000 at 1.0x, with estimated principal and interest of about $13,896. The builder could pay down the difference, look at a sub-1.0 DSCR program, or sell one or more units. Running this test before you break ground keeps the exit realistic. Note that in high fire zones, insurance can cost far more than this example shows.
Construction funds are not handed over at closing. After each stage, an inspector confirms the work, and the draw for that stage is released. A clear budget broken out by stage, with a contingency line, makes draws faster and keeps the project funded.
Before you apply, map your budget against a draw schedule with our construction draw schedule calculator, and make sure your general contractor's payment schedule lines up with it.
Ask every lender the same questions and compare the answers. Here is how LendingStreet responds.
Strong files have approved or nearly approved plans, a line-item budget, a realistic schedule and a builder with completed projects. Projects without plans or permits, or a borrower with no build track record and no experienced general contractor, usually do not qualify.
Our top pick is LendingStreet. We finance one- to eight-unit spec, build-to-rent and infill projects sized on loan-to-cost, release funds through inspected draws and offer a path into a 30-year DSCR loan when the build is done.
Yes. We finance construction across the City of Los Angeles and Los Angeles County, and we lend in all 50 states and DC.
Often, yes, if the project has plans, permits and a realistic budget. Confirm with the city that the lot qualifies under SB 9.
We review rebuild projects like any other ground-up loan. Insurance availability and cost in fire zones are major factors, so get quotes early.
Plans and permits are central to the review. Projects without them usually do not qualify, so share your permit status up front.
After an inspector confirms each stage of work, that stage's draw is released.
Yes. Once the units are complete and leased, a DSCR refinance can replace the construction loan if the rent supports the payment.
ADUs can be part of a one- to eight-unit investment project. Tell us the full scope and the plan for each unit.
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