Northwest Arkansas has been one of the busier building markets in the region, with new subdivisions spreading through Centerton, Bentonville, Rogers, Springdale, Farmington and Prairie Grove, and infill projects filling lots in central Fayetteville. Investors build spec homes to sell and duplexes and cottages to rent.
In short: LendingStreet finances ground-up construction of 1-8 unit investor properties across Fayetteville, Bentonville, Rogers, Springdale and the rest of Northwest Arkansas: spec homes, build-to-rent houses and duplexes, infill 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.
Benton County suburbs such as Centerton, Bentonville, Bella Vista, Pea Ridge and Rogers see the most new single-family construction, aimed at corporate and vendor employees moving to the region. Springdale, Lowell and Tontitown have infill and subdivision lots between the two counties.
In Fayetteville, infill on older lots near downtown and the university supports duplexes, cottages and small multi-unit buildings. Farmington, Prairie Grove and Elkins offer cheaper land for spec homes with a longer commute.
Build-to-rent demand follows the jobs. Newer three-bedroom homes and duplexes with garages near the Interstate 49 corridor lease to corporate, logistics and healthcare workers, and many tenants are new to the region and want something move-in ready.
| Area | Typical project | Watch item |
|---|---|---|
| Centerton, Bentonville, Pea Ridge | Spec homes, build-to-rent | Competition from production builders |
| Rogers, Lowell, Springdale | Duplexes, single-family | Zoning for two or more units |
| Central Fayetteville infill | Cottages, duplexes, fourplexes | Lot size, design review, utilities |
| Farmington, Prairie Grove | Lower land cost spec homes | Resale pace |
Much of the region sits on Ozark limestone and chert, and some lots hit rock within a few feet. Excavation, trenching for utilities and foundations can need rock breaking, which adds cost and time. Hillside lots in Fayetteville and Bella Vista add grading, retaining walls and drainage.
Get a site evaluation before you buy the lot, and show rock and grading allowances in your budget. A budget that assumes flat, easy dirt on an Ozark hillside will not survive the first week of site work.
Stormwater rules are another site cost. Cities in the region require drainage plans on many projects, and hillside lots may need detention or erosion control during construction.
This example is illustrative and not a quote. An investor builds a two-unit rental on a $118,000 lot in Rogers with $498,000 in hard costs and $44,000 in soft costs for plans, engineering, permits, impact and utility fees. Total project cost is $660,000.
Using an assumed 85% loan-to-cost for illustration, the loan is $561,000 and the investor brings about $99,000 in equity. Funds are drawn by stage as each one passes inspection.
The table shows one way hard costs might be released over six stages. Actual draw stages are set per project and confirmed by inspection. Soft costs and interest are handled separately in the budget, and a contingency line covers surprises such as extra rock.
| Draw stage | Share of hard costs | Approximate draw |
|---|---|---|
| Site work, excavation and rock removal | 14% | $69,720 |
| Foundation and slab | 14% | $69,720 |
| Framing and roof | 22% | $109,560 |
| Mechanical, electrical and plumbing rough-in | 18% | $89,640 |
| Insulation, drywall and trim | 16% | $79,680 |
| Finishes and final | 16% | $79,680 |
A spec home competes with production builders who buy in volume, so your price and finish level need to stand out or your lot needs a location they cannot match. A build-to-rent duplex competes with apartments and other rentals, so what matters is rent against the full payment.
Many local builders keep both options open: list the finished home, and if the sale is slow, lease it and refinance into a DSCR loan. Run both sets of numbers, including taxes on the finished value at the 20% assessment ratio, before you start.
HOA dues in newer subdivisions also count in the DSCR payment on a rental.
Plans, permits, budget and builder experience drive the decision. Projects without plans or permits, or a borrower with no build track record and no experienced general contractor, usually do not qualify.
Each city handles its own permits and inspections, and Washington and Benton counties cover unincorporated areas. Fayetteville has encouraged smaller infill housing types in some zones, but lot standards, design rules and parking requirements vary. Impact fees and utility connection fees can be significant in fast-growing cities. Confirm requirements for your specific lot.
Many subdivisions in Benton County also have architectural review committees and covenants that limit rentals or set minimum home sizes. Get approvals in writing before you close on the construction loan, since a late rejection can delay the first draw.
Building runs year-round, but ice storms in winter and heavy spring rain can stop site work. Tornado season makes builder's risk insurance an important line. Contractors stay busy in a growing metro, so lock in key trades early and ask your general contractor how many other projects they are running.
Materials lead times matter too. Order windows, trusses and cabinets early and show those dates in your schedule, since a late delivery can hold up a draw.
A spec home sells to a retail buyer. A build-to-rent home or duplex can refinance into a 30-year DSCR loan once leased, qualifying on rent. Use our construction draw schedule calculator to plan funding by stage, and run the post-build DSCR before you break ground.
If you plan to hold, ask your builder about features that lower long-term costs: impact-resistant roofing, durable flooring and efficient HVAC. They help with insurance, tenant demand and turnover repairs.
Send your plans, budget, lot information and builder resume with the form below or call (877) 298-1001. Our investor loans are business-purpose loans on non-owner-occupied property. For other Arkansas markets, see our Arkansas construction loan page.
Tell us whether you plan to sell or hold, so we can look at the exit at the same time as the construction loan.
On loan-to-cost, with terms set per project based on the plans, budget, location and builder experience.
Through a draw schedule. Each stage is inspected and funds are released for completed work. Photos and invoices with each draw request speed up inspections.
It affects the budget. Show rock and grading allowances so the loan covers the real cost of site work.
Yes, where zoning allows. Build-to-rent duplexes can refinance into a DSCR loan after lease-up. Check city zoning before you buy the lot.
A track record helps. Without one, an experienced, licensed general contractor is essential. We look at completed projects, references, licensing and insurance.
Projects need plans and a clear path to permits. Projects without them usually do not qualify. Permit timing varies by city, so ask early.
No. Our investor loans are business-purpose loans on non-owner-occupied property.
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