Building in the Baton Rouge area starts with a question that comes before floor plans: how high does the slab need to be? Flood elevation rules, fill limits and drainage review shape the budget for spec homes, build-to-rent rows and infill duplexes alike.
In short: LendingStreet finances ground-up construction on 1-8 unit residential investment projects around Baton Rouge, including spec homes, build-to-rent houses, infill duplexes and fourplexes and small 5-8 unit buildings. Loans are sized on loan-to-cost with terms set per project, and funds are released through a draw schedule after inspections. Approved plans, permits, a realistic budget and an experienced builder are required.
Most investor construction in the metro falls into three types. Build-to-rent single-family homes go up in Ascension and Livingston parishes, around Prairieville, Gonzales, Denham Springs and Walker, where land is easier to find and tenants want newer houses. Infill duplexes and fourplexes go on vacant or cleared lots in Mid City, Old South Baton Rouge and near LSU, where small multifamily fits the zoning. Spec homes are built for resale in growing suburbs, including the southeast part of East Baton Rouge Parish around the newly incorporated City of St. George.
Each type is underwritten on its own exit: a sale price for spec, a rent roll and DSCR refinance for build-to-rent and infill.
Lot choice drives everything that follows. A cheap lot in a high-risk flood zone can end up costing more than a pricier lot that sits higher, once foundation, fill and insurance are counted.
After the 2016 flood, parishes across the region revisited floodplain and drainage rules. Depending on the parish and the lot, you may face higher finished floor requirements above base flood elevation, limits on bringing in fill, or a drainage study before a permit is issued.
Those rules affect cost and schedule directly. A raised slab or pier foundation costs more than a slab on grade, and drainage review can add weeks. Confirm the requirements with the parish permit office during your feasibility period, and put them in the budget you send us.
East Baton Rouge Parish permitting runs through the city-parish, while Ascension, Livingston and West Baton Rouge parishes have their own offices, and some incorporated cities such as Zachary, Central, Gonzales and Denham Springs handle their own review. Know whose rules apply before you buy the lot. We need approved plans and permits, or a clear timeline to them, before construction funds move.
This example is illustrative and not a quote. An investor builds a two-unit infill rental near LSU. The lot costs $65,000, hard costs are $380,000 and soft costs, including plans, permits, surveys and the elevation certificate, are $40,000, for a total project cost of $485,000.
For illustration, assume the loan is sized at 80% of cost, or $388,000, with the investor contributing $97,000, often partly through the lot. Once complete and leased at $2,300 per unit, the duplex appraises at $600,000. A DSCR refinance at 75% LTV is $450,000, with estimated principal and interest of about $3,146. Adding taxes, insurance and flood coverage, the payment is near $4,086, for a DSCR of about 1.13x.
| Item | Amount |
|---|---|
| Lot | $65,000 |
| Hard costs | $380,000 |
| Soft costs | $40,000 |
| Total cost | $485,000 |
| Loan at 80% of cost (illustrative) | $388,000 |
| Investor equity | $97,000 |
| DSCR refinance at 75% of $600,000 | $450,000 |
| DSCR at $4,600 total rent | 1.13x |
Construction funds are released in stages after an inspector confirms the work. A simple five-draw schedule for the duplex above might look like this. Our draw schedule calculator lets you model your own.
South Louisiana builds through heat, heavy rain and hurricane season. Build some weather days into the schedule and carry builder's risk insurance from the start. Wind and flood coverage on a finished building can be expensive, and the exit DSCR has to carry it, so get quotes for the completed property before you commit.
We look for a licensed, experienced general contractor and, ideally, a borrower with completed builds. Projects without plans or permits, or a first-time builder with no experienced contractor, usually do not qualify. A detailed line-item budget, a construction schedule and evidence of your equity make a file much stronger.
If this is your first project in the parish, a builder who has recently closed out permits there is worth a lot. They know the inspection sequence and how long each step takes.
Build-to-rent projects in Livingston and Ascension parishes usually involve a few houses on scattered lots or a short row in an existing subdivision. Tenants there tend to be families who want newer homes and particular school districts, and they often stay for several years.
Underwriting looks at the projected rent for each finished house and the cost to build it. Because the exit is usually a DSCR refinance, ask an agent or property manager for current rents on comparable new homes, budget taxes on the finished value with no homestead exemption, and get an insurance quote for the completed house, including flood coverage if the lot is in a mapped zone. If the finished rent will not cover that payment, the project needs a lower cost or a different plan.
LendingStreet finances investor construction across the metro. Our investor loans are business-purpose loans on non-owner-occupied property. Send plans, budget, lot details and your builder's background through the form below, or call (877) 298-1001.
On loan-to-cost, meaning a share of land, hard and soft costs. The exact share and terms are set per project.
Yes, through the budget. Higher slabs, piers, fill limits and drainage studies add cost and time, so include them up front.
If zoning allows it and you have approved plans and permits, yes. We finance 1-8 unit residential projects.
You complete a stage of work, an inspector verifies it and that part of the budget is released.
Yes. Build-to-rent single-family homes are common there, and the exit is usually a DSCR refinance.
Usually only with an experienced licensed general contractor. Projects without plans or permits do not qualify.
You sell the property, or lease it and refinance into a DSCR loan based on the rent.
Yes. Spec homes are underwritten on the expected sale price and your cost to build, with funds released in draws during construction.
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