Lubbock keeps growing south and west, pushed by Texas Tech, a large health sciences center and the region's agriculture and energy economy. Builders are adding subdivisions at the edge of town every year.
In short: LendingStreet finances ground-up construction of 1-8 unit investment property in Lubbock, Wolfforth, Shallowater, Idalou and Slaton. Loans are sized on loan-to-cost, funded through inspected draws and priced per project. Spec homes in south Lubbock, duplexes near Texas Tech and build-to-rent homes in the Frenship and Lubbock-Cooper school areas are common projects.
South and southwest Lubbock, along 98th, 114th and 130th streets and beyond, have most of the new subdivisions, in the Lubbock-Cooper and Frenship school districts. Wolfforth, west of the city, has also grown quickly.
Near Texas Tech, Tech Terrace and the Overton area have older homes and redevelopment, and students and staff rent heavily there. Shallowater, Idalou and Slaton are smaller towns with lower land costs.
The city's growth has followed the Marsha Sharp Freeway and the Loop 289 and Loop 88 corridors, with new retail and schools pulling subdivisions farther south. Lots close to new schools tend to command higher prices and lease or sell faster.
| Area | Common build | Main issue |
|---|---|---|
| South Lubbock (Lubbock-Cooper) | Spec and build-to-rent homes | Lot prices, school demand |
| Southwest Lubbock, Wolfforth (Frenship) | Spec homes and rentals | Competing new supply |
| Tech Terrace, Overton | Duplexes and student rentals | Occupancy rules, land cost |
| Shallowater, Idalou, Slaton | Lower-cost rentals | Rent support |
We look at total project cost, meaning land, hard construction costs and soft costs such as plans, engineering, permits and fees, and size the loan as a share of that figure. That share is set per project.
Funds go out in stages after inspections confirm the work, not as a lump sum. Use the draw schedule calculator to map foundation, framing, rough-ins, drywall and finish against your budget so the cash you bring and the draws line up.
Texas Tech and the Texas Tech University Health Sciences Center bring students, residents, faculty and staff. Medical residents and graduate students often rent newer duplexes and small homes close to campus.
Families moving for jobs in health care, agriculture and energy drive demand for three- and four-bedroom homes in the southern school districts. Many rent first, then buy.
Lubbock's housing stock has many older brick ranch homes in central neighborhoods and a steady flow of new construction on the edges. New rentals with modern layouts, garages and efficient systems compete well, especially for tenants who plan to stay several years.
Student demand shifts as large purpose-built complexes open near campus, so many investors focus on graduate students, medical residents and staff who want quieter housing.
The City of Lubbock and the smaller towns issue their own permits, and Lubbock County handles some unincorporated areas. Texas has no statewide residential contractor license, so vet your builder carefully.
Expansive clay and caliche soils are common on the South Plains, and foundations need proper design. Hail and high winds are frequent, so impact-resistant roofing is worth considering. Some areas also have drainage issues, as many playa lakes collect stormwater.
We fund investors and builders putting up 1 to 8 units in and around Lubbock, usually through an LLC, and you sign for the loan personally. Our investor loans are business-purpose loans on non-owner-occupied property.
Expect questions about your last few completed projects, your general contractor's license and insurance, and how the budget was built. Files missing plans or permits, or run by a first-time builder without an experienced GC, generally do not move forward.
Texas has no state income tax, and investors do not get homestead exemptions. A new rental is taxed on its full appraised value by the Lubbock Central Appraisal District.
Hail-related insurance costs are high on the South Plains. Get a quote with the wind and hail deductible before the build is done.
Lot prices on the South Plains are low compared with the state's big metros, so building costs make up a larger share of the total. Getting firm bids on framing, concrete and roofing before closing protects the budget more than shaving a few thousand off the land.
This example is illustrative and not a quote. An investor builds two two-bedroom units on an infill lot near campus for graduate students and staff. Land costs $60,000, hard construction costs $300,000 and soft costs $25,000, for a total project cost of $385,000. For illustration the loan covers 80% of cost, or $308,000, and the investor brings $77,000 plus closing costs; actual LTC is set per project.
At completion the appraisal comes in at $420,000, with total rent of $3,300 a month. Refinancing into a DSCR loan at 75% of value gives $315,000, which pays off the $308,000 construction balance. With estimated principal and interest of about $2,149, taxes near $720 and insurance near $170, the monthly payment is about $3,039 and the ratio is about 1.09x.
Leases timed to the academic calendar help reduce vacancy.
| Item | Amount |
|---|---|
| Land | $60,000 |
| Hard costs | $300,000 |
| Soft costs | $25,000 |
| Total project cost | $385,000 |
| Construction loan (80% of cost, illustrative) | $308,000 |
| Investor cash before closing costs | $77,000 |
| Completed value | $420,000 |
| DSCR refinance (75% of value) | $315,000 |
| Monthly rent | $3,300 |
| Estimated principal and interest | $2,149 |
| Taxes and insurance | $890 |
| Estimated DSCR | About 1.09x |
In south Lubbock and Wolfforth, spec homes sell to owner-occupants. Near Tech, investors usually hold and refinance into a DSCR loan once leased.
Watch supply in the southern subdivisions, where many builders are active.
Texas property taxes take a large share of rent on any held property here, so a realistic tax estimate on the finished value is the most important number in the refinance projection. Use the full combined rate with no homestead exemption.
Send the address, plans, budget and timeline through the form below or call (877) 298-1001. LendingStreet reviews Lubbock builds directly and comes back with a term sheet that shows the loan amount, LTC and draw structure.
Yes, for 1-8 unit buildings that meet zoning and occupancy rules.
Expansive clay and caliche require proper foundation design. A soils report helps.
A DSCR refinance once the units are leased. DSCR loans qualify on rent, with no W-2s or tax returns, and LLC borrowers are standard.
Yes. Hail is frequent on the South Plains, and premiums and deductibles reflect that.
Yes. Wolfforth and the Frenship area are part of the Lubbock market we serve.
No. We lend only on non-owner-occupied investment property.
Sometimes, if an experienced licensed general contractor runs the job. A first-timer without an experienced GC, plans or permits usually does not qualify.
Our Texas construction loans page covers the state.
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