Colorado Springs keeps expanding east toward Banning Lewis Ranch and north toward Monument, while older neighborhoods near downtown still have lots where a small new building makes sense. Both kinds of projects run into the same local realities: soils, utility fees and the regional building department.
In short: LendingStreet finances ground-up construction for 1-8 unit investor projects in Colorado Springs and El Paso County, 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. We look for plans, permits or a clear path to them, a detailed budget and an experienced builder.
Build-to-rent single-family homes and paired homes on finished lots in the east and northeast, spec homes in established subdivisions with a few remaining lots, and infill duplexes or fourplexes in older areas such as Hillside, Knob Hill, the Westside and the neighborhoods around downtown are the most common investor projects.
Outside city limits, areas like Falcon and Black Forest have larger lots, but some rely on wells and septic systems, and Black Forest carries wildfire exposure. Those factors affect cost, insurance and the eventual rent or sale price.
Rental demand from the bases and the city's steady job growth support build-to-rent, but rents vary by area. A new home near Peterson or Schriever competes with existing tract homes nearby, while an infill duplex near downtown competes with older units that lack modern systems.
Expansive bentonite clay is common along the Front Range. Most new homes in the area need a soils report, and many need engineered foundations, over-excavation or structural floors in basements. These items are not optional extras: they are part of the hard-cost budget and the regional building department will expect the engineering.
Get the soils report before you finalize your budget. A project budgeted on a standard foundation that turns out to need an engineered system can run short before framing starts.
Colorado Springs Utilities provides water, wastewater, electric and natural gas inside the city, and connection and development fees are a real part of the soft-cost budget. In newer subdivisions, metro districts may also charge fees and levy mills that will appear on the finished property's tax bill.
Ask for a written fee estimate from the utility and the city before you close on land. Underestimated fees are one of the most common reasons small investor projects run short.
This example is illustrative and not a quote. An investor buys an infill lot near downtown for $165,000 with approved plans for a side-by-side duplex. Hard costs, including the engineered foundation recommended by the soils report, are budgeted at $590,000. Soft costs, including plans, permits, utility fees and an interest reserve, are $105,000. Total cost is $860,000.
If the loan is sized at 80% of cost, it is $688,000, and the investor's equity including the lot is $172,000. Hard-cost funds are released after inspections, roughly as shown below. When both units are leased, a DSCR loan can pay off the construction loan.
| Draw | Share of hard costs | Amount |
|---|---|---|
| Soils report, excavation, engineered foundation | 18% | $106,200 |
| Framing, roof, windows | 27% | $159,300 |
| Rough plumbing, electrical, mechanical | 18% | $106,200 |
| Insulation, drywall, exterior | 15% | $88,500 |
| Finishes, landscaping, final inspection | 22% | $129,800 |
The Pikes Peak Regional Building Department reviews plans and performs inspections for Colorado Springs and most of El Paso County, while zoning and site plans go through the city or county planning office. Snow load, wind and energy code requirements all apply. Build plan review time into your schedule, and use contractors licensed with the department.
State law adopted in 2024 requires many larger Colorado cities to allow accessory dwelling units. If you plan an ADU, confirm the local standards before you design it.
Projects that usually qualify have approved or nearly approved plans and permits, a line-item budget with a contingency, a realistic schedule and either a borrower with completed builds or an experienced licensed general contractor.
Projects with no plans or permits, or a borrower with no build track record and no experienced general contractor, usually do not qualify. A fix and flip or a smaller first build can be the right starting place.
Contingency matters more on the Front Range than in many markets because foundation surprises, weather delays and summer labor shortages are all common. A 10% contingency line in the budget is a sign of an experienced builder.
Most build-to-rent investors refinance into a 30-year DSCR loan once the units are leased. New construction in Colorado Springs usually rents at a premium to older homes, which helps the ratio. Spec builders sell, and investors who build several homes can later combine five or more under a blanket portfolio loan.
Before you start, get a rent opinion for the finished product from a local property manager and run the DSCR on that rent at your expected permanent loan amount. If the numbers only work at maximum leverage, add more cushion to the budget.
Spec builders in Colorado Springs sell into a market where production builders dominate the newer subdivisions. Small spec projects tend to stand out most on infill lots in established neighborhoods near downtown and the Westside, where buyers want new construction without moving to the edge of the city. Price the finished home against recent sales of newer homes nearby, and remember that many buyers are military families on VA financing with fixed timelines.
Our investor loans are business-purpose loans on non-owner-occupied property. Share your plans, permit status, soils report, budget and builder background through the form below, or call (877) 298-1001. We will review loan-to-cost sizing and the draw schedule with you.
Investor 1-8 unit projects: spec homes, build-to-rent homes, infill duplexes and fourplexes and small 5-8 unit buildings.
In most cases yes. Expansive soils are common in the area, and the foundation design usually depends on the soils report.
On loan-to-cost, covering land, hard costs and soft costs, with terms set per project.
They should be. Connection and development fees are part of soft costs, and we review them along with the rest of the budget.
The Pikes Peak Regional Building Department handles plan review and inspections for the city and most of the county.
After each phase of work is completed and inspected. Our draw schedule calculator helps you plan.
No. Our investor loans are business-purpose loans on non-owner-occupied property, so the home must be rented to a tenant, not lived in by you.
Yes. Metro district mills appear on the finished home's tax bill and are part of the DSCR payment when you refinance.
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