The Fargo metro keeps growing outward, and investors build a meaningful share of its new rental housing. Twin homes and townhomes in West Fargo and Horace are the classic build-to-rent product, with spec homes and small apartment buildings close behind.
In short: LendingStreet finances ground-up construction of 1-8 unit investment properties in Fargo, West Fargo and Horace, including spec homes, build-to-rent twin homes and townhomes, 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 by draw after inspections. Plans, permits, budget and builder experience drive approval.
Twin homes are a Fargo-Moorhead staple: two attached homes, usually on separate lots, each with its own garage and basement. Investors build them to rent both sides, sell one and keep one, or sell both. Townhome rows and small four- to eight-unit buildings with garages are common in south Fargo and West Fargo, where zoning and new streets allow them.
Infill is rarer but possible in older north and central Fargo neighborhoods, where a teardown lot can take a new single-family home or duplex.
Build-to-rent projects work in Fargo because the metro has steady demand for newer rentals with garages, which matter in a northern winter. Tenants will often pay more for an attached garage, main-floor laundry and an efficient furnace than for higher-end finishes.
The loan is a share of the total project cost: land, hard costs and soft costs such as plans, permits, engineering, utility connections and fees. Your equity covers the rest, and land you own can often count toward it. Terms are set per project.
We look closely at the builder. Borrowers with completed projects or an experienced general contractor qualify most easily. Projects without plans or permits, or with no experienced builder, usually do not.
Expect us to review the general contractor's license, insurance and recent projects, and to compare your budget against local costs. A contingency line protects the project from price changes in lumber, concrete and labor, which can move during a single building season.
This example is illustrative and not a quote. An investor buys a Horace twin-home lot for $85,000 and budgets $470,000 in hard costs and $40,000 in soft costs, for a total of $595,000. At 80% of cost, the construction loan is $476,000.
After completion, each side leases for $2,300, or $4,600 a month, and the pair appraises at $720,000. A DSCR refinance of $485,000, about 67% of value, repays the construction loan and costs. Estimated principal and interest is about $3,391; with taxes and specials of $900 and insurance of $180, DSCR is about 1.03x.
If the units rent for less than planned, the refinance amount drops. Many builders keep cash available to pay down part of the construction loan, or plan to sell one side of the twin home if the rental math is tight.
Funds are released in stages after an inspector confirms each phase. Here is how the hard-cost budget in the example might be split. Use our draw schedule calculator to model your own.
| Stage | Share of hard costs | Amount |
|---|---|---|
| Footings, foundation and basement | 18% | $84,600 |
| Framing, roof and windows | 27% | $126,900 |
| Plumbing, electrical and HVAC rough-in | 20% | $94,000 |
| Insulation, drywall and trim | 20% | $94,000 |
| Finishes, flatwork and final inspection | 15% | $70,500 |
Footings in the Red River Valley go deep to get below the frost line, and most homes have full basements. The heavy clay soil moves with moisture, so foundation design, drain tile and grading matter more than in many markets. Builders who work here every year know how to handle it; ask for their standard foundation details.
Winter pours are possible with heated enclosures and blankets but cost more. Many builders aim to have foundations in and homes closed in before the deep cold arrives.
Ask your builder how they handle winter dewatering and heating during framing and drywall. Those costs are real and should appear in the budget, not as surprises halfway through the project.
New lots in Fargo, West Fargo and Horace often carry special assessments for the streets and utilities that serve them. Ask for the full balance and annual installment before you buy the lot, and include it in both your budget and your rental math. Confirm utility hookup costs and timing with the city.
Utility timing matters too. Water, sewer, gas and electric connections need to be scheduled, and a completed home cannot be occupied without them. Confirm who installs each connection and how long it typically takes in your subdivision.
Some lots sit in or near mapped floodplains, where building rules set minimum floor elevations and may require fill. The Fargo-Moorhead Area Diversion is expected to change flood risk over time, but build to current requirements and check the FEMA map and city rules for each lot.
Floodplain lots can still be good projects, but the extra fill, engineering and insurance belong in the budget. Lots outside mapped zones can usually skip those costs, which is one reason they often sell for more.
Spec homes sell to local buyers and relocating workers. Build-to-rent projects refinance into DSCR loans once leased. Twin homes give you both: sell one side to recover cash and keep the other as a rental. Run your sale and rental numbers before you break ground.
Twin homes also make a natural phase plan. Some investors build a pair, sell one, and use the profit toward the next lot. Others keep both sides and refinance into a DSCR loan. Either way, the projected rent and resale value should come from recent local leases and sales.
Send plans, permits or approval status, a line-item budget, the builder's resume and your exit plan. Our investor loans are business-purpose loans on non-owner-occupied property. Call (877) 298-1001 or use the form below.
If you are early in planning, send what you have. We can tell you what a complete file needs and how loan-to-cost sizing would work on your budget.
Yes. Twin homes, townhomes, spec homes, duplexes, fourplexes and small 5-8 unit buildings qualify.
On loan-to-cost, covering a share of land, hard and soft costs, with terms set per project.
Yes, with winter conditions budgeted. Foundations and exterior work cost more in deep cold.
Through a draw schedule after each phase is inspected.
Yes. They affect your budget and your rental DSCR after completion.
It helps. An experienced general contractor can make up for a limited track record.
Yes. That is a common exit. The sale pays down the loan and the other side can be refinanced.
You sell, or refinance into a DSCR loan once the units are leased.
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