In New York City, a small ground-up project usually means a two- or three-family in Queens or Staten Island, a new building on a narrow Brooklyn lot, or a small walk-up in the Bronx. The math is tight, and the permitting is not quick.
In short: LendingStreet finances ground-up construction for investors building 1 to 8 units across the five boroughs, sized on loan-to-cost with terms set per project and funds released through inspected draws. Most of our New York City construction files are two- to four-family homes and small walk-ups in the outer boroughs. Approved DOB plans, a detailed budget and an experienced general contractor are essential.
Land prices in Manhattan and prime Brooklyn rarely leave room for a 1-8 unit project, so most investor construction happens in Queens, the Bronx, Staten Island and outer Brooklyn neighborhoods. Two-family homes with a garden rental and an owner-style upper unit, built to rent both, are common, as are three- and four-unit buildings on 20- to 25-foot lots.
Tenant demand is deep across the city. New units with modern layouts and laundry tend to lease well, which supports a refinance into a long-term rental loan when the build is done.
Typical 1-8 unit NYC construction projects by borough: Each type has its own exit and its own local issues.
| Project type | Where it is common | Local note |
|---|---|---|
| Two- or three-family | Queens, Staten Island, outer Brooklyn | Zoning district sets units, height and parking |
| Four- to eight-unit walk-up | Bronx, Brooklyn, Upper Manhattan edges | Building and fire code requirements rise with units |
| Attached townhouse | Staten Island, eastern Queens | Party walls and adjacent-property protection |
| Spec one-family | Staten Island, eastern Queens | Value depends on the specific block |
Plans are filed with and approved by the Department of Buildings, and the NYC Zoning Resolution controls how much you can build on a lot. The city's 2024 City of Yes for Housing Opportunity changes loosened some rules for small buildings, accessory units and parking in many districts. Have your architect confirm what they mean for your specific lot.
Work next to existing buildings usually requires adjacent-property protection, monitoring and sometimes access agreements with neighbors. These items add cost and schedule risk, so put them in the budget and timeline.
Tax incentive programs for new rental housing can carry affordability and registration requirements. If your plan depends on one, review the rules with counsel before you close.
New York State's mortgage recording tax applies to new loans, and the rate in the city is higher than in much of the state. Transfer taxes also apply when you buy the land. Get the figures from your title company and attorney early.
Some parts of Queens, Brooklyn and Staten Island are in mapped flood zones, where elevation and flood-resistant construction rules apply.
We size ground-up loans on loan-to-cost. Add up land, hard costs, soft costs such as plans, engineering, permits and fees, and a contingency, and the loan is a share of that total. The rest is your equity.
We also check the project against what the finished building should be worth in New York City. If the cost is close to the expected value, the loan is usually smaller, because there is less room for overruns or a soft market.
This example is illustrative and not a quote. An investor builds a new two-family in Queens to sell on completion. Land costs $700,000, hard costs are $900,000, soft costs are $180,000 and the contingency is $70,000, for a total project cost of $1,850,000.
At a sample 75% loan-to-cost, the loan is $1,387,500 and the investor puts $462,500 into the project. Most of the loan funds through draws as work is completed.
If the finished property sells for $2,400,000 in total and selling costs run about 6%, or $144,000, net proceeds of $2,256,000 repay the $1,387,500 loan and leave $868,500 before interest and carrying costs, against $462,500 of cash invested.
| Item | Amount |
|---|---|
| Land | $700,000 |
| Hard construction costs | $900,000 |
| Soft costs (plans, engineering, permits, fees) | $180,000 |
| Contingency | $70,000 |
| Total project cost | $1,850,000 |
| Loan at a sample 75% LTC | $1,387,500 |
| Investor cash in the project | $462,500 |
| Sale price | $2,400,000 |
| Selling costs at about 6% | $144,000 |
| Left after repaying the loan, before interest and carry | $868,500 |
After closing, the loan funds in stages. You or your general contractor request a draw when a stage is complete, an inspection confirms it, and funds for that work are released.
Keep your contingency in the budget for surprises like rock, soil conditions or price changes, which are common on New York City sites. Draws are tied to the approved budget, so overruns beyond it generally have to be covered by the borrower.
Plans, permits, budget and builder experience matter most. Projects without plans or permits, or a borrower with no build track record and no experienced general contractor, usually do not qualify.
A realistic budget is the other half. Lenders compare your line items with local costs, so a New York City budget that skips site work, utility connections or fees will be revised before the loan is sized. A contingency of several percent of hard costs is common.
If you are building to sell, the exit is the sale of the finished home or units. If you are building to rent, the usual exit is a DSCR refinance once the property is leased, with a standard minimum DSCR of 1.0x and 30-year terms available.
Some investors keep both options open until the end of the build and decide based on the New York City market at completion. Having comparable sales and rents ready makes either path easier.
Our investor loans are business-purpose loans on non-owner-occupied property. To get a quote on a New York City project, use the form below or call (877) 298-1001 with your plans, budget and land details.
We review projects in every borough, but most 1-8 unit investor builds we see are in Queens, Brooklyn, the Bronx and Staten Island, where land costs leave room for a profitable small project.
Generally yes. Projects without plans or permits usually do not qualify. Approved plans, or a clear path to approval, are part of a complete NYC file.
New York's mortgage recording tax generally applies to new mortgages, including construction loans, and the rate is higher in New York City. Ask your title company for the exact figure.
It depends on the building and any tax benefits you use. Some incentive programs come with rent-regulated units. Review the rules with counsel before you commit to a program.
Usually only with an experienced general contractor on the project. A borrower with no build track record and no experienced GC usually does not qualify.
Loan-to-cost is the loan divided by the total project cost, including land, hard costs, soft costs and contingency. Construction loans are sized this way, with terms set per project.
Yes. Small 5-8 unit buildings are part of our residential construction program. Buildings of 9 or more units are commercial.
Draws are tied to the approved budget, so overruns beyond the contingency generally have to be covered by the borrower. A realistic budget and contingency protect the project.
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