The Des Moines metro has kept building outward, with new subdivisions in Waukee, Grimes, Ankeny, Bondurant, Altoona and Norwalk, while the city itself has vacant lots where an infill house or duplex can work. Each setting has its own permit path, utility fees and building calendar.
In short: LendingStreet finances ground-up construction of 1-8 unit investment properties in the Des Moines area, 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. Plans, permits, a realistic budget and builder experience drive approval.
Most new spec and rental construction is in the growing suburbs on the edges of the metro, where buyers and renters want newer homes with basements, garages and good schools. Inside the city, infill lots in older neighborhoods can support a single house or a duplex, and some sites near downtown suit small multi-unit buildings.
| Setting | Typical project | Main issue |
|---|---|---|
| Western suburbs: Waukee, Grimes, Clive | Spec homes, townhomes | Lot price, HOA and design covenants |
| North: Ankeny, Johnston, Polk City | Spec homes, build-to-rent | Subdivision rules, utility connection fees |
| East and south: Altoona, Bondurant, Norwalk | Entry-level spec, rental homes | Price ceiling vs build cost |
| City of Des Moines infill | Single-family or duplex on a vacant lot | Zoning code design standards, utilities |
We size construction loans on loan-to-cost: the loan as a share of the land, hard costs and soft costs. Terms are set per project after we review the plans, permits, budget and the builder. Land you already own can count toward your contribution.
Funds are not handed out up front. After closing, money is released in stages as an inspector confirms each phase of work. Interest is usually charged on what has been drawn, so the payment starts small and grows as the house goes up.
Before closing, we also review the contractor's bid against local costs, and the draw schedule is set to match the stages in that bid.
This example is illustrative and not a quote. A builder-investor plans a spec home in Grimes. The lot costs $85,000, hard costs are $340,000 and soft costs (plans, permits, fees, interest reserve and insurance) are $35,000, for a total of $460,000.
At an illustrative 85% loan-to-cost, the loan is $391,000 and the investor contributes $69,000. If the average balance drawn over a nine-month build is about $215,050, estimated interest is about $16,935. A sale at $545,000 with about $35,425 in selling costs leaves an estimated profit of about $32,640.
Every number here is a planning figure; your budget, bid and timeline set the actual draws.
| Draw stage | Amount released |
|---|---|
| Closing: land | $72,250 |
| Foundation and basement | $51,000 |
| Framing and roof | $85,000 |
| Mechanicals and windows | $68,000 |
| Drywall and finishes | $85,000 |
| Final and site work | $29,750 |
| Total loan | $391,000 |
Des Moines adopted a new zoning code in 2019 that includes design standards for new homes, such as requirements for garages, materials and minimum sizes in some districts. Those standards can raise the cost of a small infill house, so check them against your plans before you buy a lot.
Confirm sewer and water service, any special assessments, and whether the lot is in a flood zone near the rivers or creeks. A survey and a soils review are worth the money on older city lots that may have had a house or fill on them before.
Iowa winters shorten the season for foundations, framing and exterior work. Basements are standard in the metro, and footings have to go below the frost line. Pouring concrete in deep cold needs heating and blankets, which adds cost.
Most builders aim to have the foundation in and the house closed in before winter, then work inside through the cold months. Your budget and timeline should show that plan, because it affects both the draw schedule and the interest you will carry.
Spring rains can also slow site work on clay soils common around the metro. Grading, drainage and window wells deserve attention in the budget, because water in a new basement is an expensive warranty call and a bad first impression for a buyer or tenant.
Fast-growing suburbs often charge connection fees for water and sewer, and many new subdivisions have covenants that set minimum home sizes, materials and architectural review. Some limit rentals. Read the covenants before you commit to a build-to-rent plan.
Some Iowa cities offer property tax abatement on new construction. If yours does, ask how it applies to investor-owned homes and when it ends, and budget for the full bill afterward.
If you plan to keep the finished home or duplex, the exit is a DSCR loan that qualifies on the rent. Newer homes in Ankeny, Waukee and Altoona lease well to families who want a modern house without buying one. Run the DSCR math at the start, using a realistic rent and the tax bill on the finished value, so the permanent loan is sized to pay off the construction loan.
Duplexes are a common build-to-rent choice on city infill lots where zoning allows two units, because two rents on one lot often support the permanent loan better than one. In the suburbs, side-by-side duplexes with garages are popular with tenants who want newer space without shared floors or ceilings.
Projects without plans or permits, or a borrower with no build track record and no experienced general contractor, usually do not qualify. Have these ready:
Our investor loans are business-purpose loans on non-owner-occupied property. Send the site, plans, budget and exit plan through the form below or call (877) 298-1001. Use our construction draw schedule calculator to map your draws, and see the Iowa construction page for projects outside the metro.
On loan-to-cost: the loan as a share of land, hard costs and soft costs. Terms are set per project after we review plans, permits, the budget and the builder.
Through a draw schedule. After each phase is inspected, the matching funds are released. Interest is usually charged only on what has been drawn.
Often, if zoning allows it. Check the Des Moines zoning code, including its design standards, and confirm utilities before you buy the lot.
Yes, but foundations and exterior work cost more in deep cold. Most builders plan to be closed in before winter.
A build track record or an experienced general contractor is required. First-time builders with no experienced contractor usually do not qualify.
Yes. Refinance into a DSCR loan that qualifies on the rent once it is leased.
Land you own can count toward your contribution. We review its value and any existing liens.
Yes, small 5-8 unit residential buildings qualify. Larger buildings are commercial projects.
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