Palm Bay has one of the largest supplies of pre-platted single-family lots in Florida, left over from mid-century subdivision plans. That makes it a natural market for spec and build-to-rent homes, if you know which lots have utilities and which do not.
In short: LendingStreet finances ground-up construction on 1-8 unit investment properties in the Palm Bay area, with the loan sized on loan-to-cost and funds released through inspected draws. Typical projects include single-family spec homes and build-to-rent houses on Palm Bay's platted lots, duplexes where zoning allows, and homes in West Melbourne and Viera. Our investor loans are business-purpose loans on non-owner-occupied property, and most projects exit by sale or a refinance into a DSCR loan.
Much of Palm Bay was platted decades ago as Port Malabar and related subdivisions, and thousands of quarter-acre lots remain vacant, especially in the southeast and northwest parts of the city. Builders buy these lots in groups and put up three- and four-bedroom block homes for buyers and renters.
Demand comes from the Space Coast's aerospace and defense employers in Melbourne, Palm Bay and up toward Cape Canaveral. West Melbourne and Viera have newer master-planned growth at higher price levels, while Cocoa and Titusville to the north offer lower land costs.
| Project type | Where it tends to fit | Local issues to check |
|---|---|---|
| Spec and build-to-rent houses | Southeast and northwest Palm Bay | Water, sewer or septic; road access |
| Higher-priced spec homes | West Melbourne, Viera | Land cost, HOA rules |
| Duplexes | Zoned areas of Palm Bay and Melbourne | Zoning, utility capacity |
The key question on a Palm Bay lot is utilities. Some areas have city water and sewer, while many outlying lots need a well and septic system. In parts of the Indian River Lagoon watershed, new septic systems may need enhanced nutrient-reducing designs, which cost more. Confirm utility availability and septic requirements with the city and the county health department before you buy.
Palm Bay issues building permits and collects impact fees inside city limits, and Brevard County handles unincorporated areas. Florida's statewide building code includes wind-load requirements for the coast.
Concrete block construction with hurricane-rated windows or shutters is standard on the Space Coast, and roof design affects insurance. Some low-lying lots need fill to meet floor elevation rules. The insurance quote on the finished home often decides the exit DSCR more than the tax bill does.
Ground-up loans are sized on loan-to-cost (LTC): the loan is a share of the total project cost, which includes land, hard construction costs and soft costs such as plans, engineering, permits and fees. The exact LTC and terms are set per project, based on the plans, the budget, the location and the builder's record.
The appraiser also estimates the completed value. A project where the finished value comfortably exceeds the total cost gives everyone room if the budget runs over or the market softens.
This example is illustrative and not a quote. An investor builds a 4-bedroom concrete block build-to-rent home on a Palm Bay lot with city water. Land costs $40,000, the hard-cost budget is $262,000 and soft costs such as plans, permits, fees and builder's risk insurance are $26,000, for a total project cost of $328,000. If the project is sized at 80% of total cost, the construction loan is $262,400 and the investor brings $65,600 in cash or land equity.
At completion the property appraises at $365,000 and leases as one 4-bedroom, 2-bath home, for $2,450 a month. Because Florida insurance premiums take a big share of the rent, the investor plans the DSCR refinance at 70% LTV instead of the 75% maximum. That loan is $255,500, so the investor pays down about $6,900 of the $262,400 construction loan with cash and leaves more equity in the property. Estimated principal and interest on a 30-year loan is about $1,743; with taxes of $420 and insurance of $230 a month, the payment is about $2,393 and the DSCR is about 1.02x.
That clears the 1.0x standard minimum. Interest during construction and closing costs are not shown, and your numbers will differ.
| Item | Amount |
|---|---|
| Land | $40,000 |
| Hard costs | $262,000 |
| Soft costs | $26,000 |
| Total project cost | $328,000 |
| Construction loan at 80% LTC | $262,400 |
| Completed value | $365,000 |
| DSCR refinance at 70% LTV | $255,500 |
| Estimated principal and interest | $1,743 |
| Taxes and insurance | $650 |
| Monthly rent | $2,450 |
| DSCR | About 1.02x |
The loan is not handed over in one piece. After closing, construction funds are released through a draw schedule tied to milestones like foundation, framing, roof and windows, rough-ins and final completion. Each request is checked by an inspection before money goes out.
Subcontractors usually need to be paid before a draw lands, so keep working capital on hand. Map the timing with our construction draw schedule calculator.
Florida has no state income tax. Property is assessed at just value, and non-homestead property such as a rental has a 10% annual cap on assessed value increases after the first year. A new home is assessed on its completed value, so budget taxes on that figure, not the lot bill.
Florida charges documentary stamp tax on deeds and notes and an intangible tax on new mortgages. These apply to the construction loan and again to the DSCR refinance, so ask your title company to estimate both.
Gather these first. A borrower with no completed builds and no experienced general contractor, or a project with no plans or path to permits, usually does not qualify.
We finance business-purpose construction on non-owner-occupied 1-8 unit properties across Brevard County, including Melbourne, West Melbourne, Viera, Cocoa and Titusville. Send the address, plans, budget, builder details and your exit plan, and we will review the LTC, the draw schedule and the completed value. For statewide context, see our Florida construction loans page. Call (877) 298-1001 or use the form below to get a quote.
Some do and many do not. Outlying lots often need a well and septic. Confirm with the city utilities department before you buy.
Often yes, project by project. Experienced builders can run several homes at a time, and each one needs plans, a permit and a budget.
They can. In parts of the Indian River Lagoon watershed, new septic systems may need enhanced designs. Get the requirement from the health department first.
Documentary stamp tax on the deed and note, intangible tax on the mortgage, title insurance and recording fees. They apply again when you refinance into a DSCR loan.
Experience matters. A borrower with completed builds, or one working with an experienced licensed general contractor, is in a much stronger position. Projects with no build track record on the team usually do not qualify.
Most investors refinance the finished, leased property into a long-term DSCR loan that qualifies on rent, with no W-2s or tax returns. Seasoning rules vary by program.
No. Our investor loans are business-purpose loans on non-owner-occupied property. We do not finance a home you or your family will occupy.
Often soon after completion and lease-up, but seasoning rules for a DSCR refinance vary by program. Plan the timing with us before you start the build.
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