Texas draws investors for an obvious reason and holds them back for a less obvious one. There is no state income tax, population growth has been sustained for a decade, and build-to-rent activity is among the deepest in the country. The offsetting factor is property tax: effective rates in much of the state run near or above two percent of assessed value, and that lands directly in the monthly payment.
The short answer: A ground-up construction loan funds an investment build from land or teardown through certificate of occupancy. Loans are sized on loan-to-cost — land plus hard and soft costs — and released in draws tied to construction milestones, with interest typically accruing only on drawn funds. In Texas, land availability and local permitting practice vary enough between metros that they belong in the timeline assumption from the start.
Texas has among the most active build-to-rent and spec pipelines in the country, concentrated in the outer rings of DFW, Houston and San Antonio where land remains available at workable basis. Sustained in-migration supports absorption. The pressures are competition for lots and subcontractor capacity rather than demand.
Primary markets: Dallas · Fort Worth · Houston · San Antonio · Austin · El Paso
Construction underwriting is the most guideline-sensitive product in investment finance. Draw structures, general contractor requirements and borrower experience minimums differ substantially between capital sources, and a project that one source declines on experience alone may be routine for another. In Texas, the exit also matters: a build-to-rent project needs a DSCR takeout underwritten in principle before the construction loan closes.
You have permits, an experienced general contractor, and a build profile a lender has funded many times before.
Your build history is limited, the draw schedule needs flexibility, or the DSCR takeout has not been underwritten yet.
No lender is best for every deal. Kiavi, RCN Capital, Lima One, Dominion Financial, Tidal Loans all write ground-up construction loans in Texas and all are legitimate options. They differ on leverage, credit floors, property types and experience requirements. The useful question is which fits this deal.
Works: A spec builder or build-to-rent investor with plans and permits in hand or close to it, and a defined exit by sale or DSCR refinance.
Does not: Owner-occupied builds, projects without plans or permits, or a borrower with no build track record and no experienced general contractor attached.
Sustained population growth, available land in the outer rings of DFW, Houston and San Antonio, and no state income tax drawing both residents and capital. Capital sources understand the product well here, which helps on financing. Competition for lots and labor is the offsetting pressure.
Yes, through the DSCR refinance. A completed build gets assessed at its finished value, and that tax figure sits inside the ratio the takeout lender calculates. Underwriting the exit against the pre-construction land tax bill rather than the post-completion assessment is a recurring error in Texas build-to-rent.
There is no single best lender for every scenario. Kiavi, RCN Capital, Lima One, Dominion Financial, Tidal Loans all write ground-up construction loans and each has different guidelines. The right answer depends on the specific deal. LendingStreet places the same scenario across 30+ capital sources so the comparison happens on one application.
Yes, in all 50 states including Texas. These are business-purpose loans on non-owner-occupied investment property, from $150,000 with no stated maximum. No W-2 or tax returns required and LLC borrowers are welcome.
Have a Texas deal? Tell us the scenario and we will price it across our capital sources.
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