Greater Peoria is a value market where existing homes often sell below replacement cost, so ground-up projects have to be chosen carefully. The builds that work tend to be in growing suburbs and school districts, or infill near the hospitals and Bradley University.
In short: LendingStreet lends on new 1-8 unit investor construction in and around Peoria. Loans are sized on loan-to-cost, terms are set project by project, and money is released through a draw schedule after inspections. Typical projects include spec homes in Dunlap, Morton and Washington, build-to-rent homes in north Peoria, and infill duplexes near Bradley University and the medical district. Our investor loans are business-purpose loans on non-owner-occupied property.
North Peoria and the Dunlap school district have seen the most new subdivision activity, and spec homes there sell to buyers moving up. Peoria Heights and the areas around Bradley University and the OSF and Carle hospital campuses can support infill duplexes and small rentals for students, nurses and residents.
Across the Illinois River in Tazewell County, Morton, Washington, East Peoria and Pekin offer newer neighborhoods and strong schools in places. Woodford County towns like Germantown Hills and Metamora draw buyers looking for larger lots.
| Project type | Where it tends to fit | Local issues to check |
|---|---|---|
| Spec single-family | Dunlap, Morton, Washington, Germantown Hills | Resale comparables, basements |
| Infill duplex | Near Bradley University and the medical district | Zoning, older utilities, appraisal support |
| Build-to-rent houses | North Peoria, East Peoria, Pekin | Rent versus cost; taxes |
The City of Peoria issues building permits and enforces zoning inside city limits, and the city has a rental registration and inspection program, so check what applies to your finished rental. Peoria County, Tazewell County and each suburb run their own permitting.
Because existing homes can be inexpensive, appraisers need comparable new homes to support the completed value. Before you commit to an infill lot, look at what new or fully renovated homes nearby have sold or rented for.
Frost-depth footings and full or partial basements are standard, and winter pours need planning. Bluff lots above the Illinois River can have slope and drainage issues, and low areas near the river carry flood risk. Severe storms and tornadoes are part of the climate, so roofing and anchoring matter.
Construction loans are based on loan-to-cost (LTC). Add the land, the hard construction budget and the soft costs such as plans, permits and fees, and the loan is a share of that total, with terms set per project.
Three things move the number: a detailed, line-item budget; a builder or general contractor with a track record on similar homes; and an after-completion value that leaves a cushion over total cost.
This example is illustrative and not a quote. An investor builds a side-by-side duplex near the Peoria medical district. Land costs $20,000, the hard-cost budget is $300,000 and soft costs such as plans, permits, fees and builder's risk insurance are $28,000, for a total project cost of $348,000. If the project is sized at 80% of total cost, the construction loan is $278,400 and the investor brings $69,600 in cash or land equity.
At completion the property appraises at $375,000 and leases as two 2-bedroom units at $1,400 each, for $2,800 a month. A DSCR refinance at 75% LTV is $281,200, enough to pay off the $278,400 construction loan with about $2,800 left over before closing costs. Estimated principal and interest on a 30-year loan is about $1,918; with taxes of $620 and insurance of $140 a month, the payment is about $2,678 and the DSCR is about 1.05x.
That clears the 1.0x standard minimum. Interest during construction and closing costs are not shown, and your numbers will differ.
| Item | Amount |
|---|---|
| Land | $20,000 |
| Hard costs | $300,000 |
| Soft costs | $28,000 |
| Total project cost | $348,000 |
| Construction loan at 80% LTC | $278,400 |
| Completed value | $375,000 |
| DSCR refinance at 75% LTV | $281,200 |
| Estimated principal and interest | $1,918 |
| Taxes and insurance | $760 |
| Monthly rent | $2,800 |
| DSCR | About 1.05x |
Funds for land are typically advanced at closing, and construction money is released in draws as work is completed. Before each draw, an inspector confirms progress against the budget, such as foundation, framing, dry-in, mechanicals and finishes. Interest is generally charged on funds drawn, not on the full commitment.
Build a draw schedule before you close so you know how much cash you need between draws. Our construction draw schedule calculator can help you map it out.
Outside Cook County, Illinois assesses property at a 33.33% assessment ratio, meaning the assessed value is one-third of fair market value, and townships run general reassessments on a four-year cycle. Illinois tax rates are high, and homestead exemptions do not apply to rentals, so the tax line is often the biggest expense after the payment.
Illinois and its counties charge transfer taxes on deeds, usually paid by the seller. Budget title and recording costs on the land purchase and on the DSCR refinance at completion.
These items let us size the loan and set the draw schedule. Without plans, permits or an experienced builder on the team, a project is usually not ready for a construction loan.
Our construction loans are business-purpose loans on non-owner-occupied 1-8 unit projects in Peoria, Tazewell and Woodford counties. Tell us about the project, including land, plans, budget, builder and exit, and the team will review it and outline terms. You can also read our Illinois construction loans page. Get a quote with the form below or call (877) 298-1001.
It can, in the right location. Growing school districts and areas near the hospitals and Bradley University can support new-construction values. Check comparable new homes first.
The city has a rental registration and inspection program. Confirm what applies before you lease the finished home.
Loan-to-cost (LTC) is the loan amount divided by total project cost, including land, hard costs and soft costs. Construction loans are sized on LTC, with terms set per project.
Yes. Exits are by sale or refinance. Spec builders usually sell, while build-to-rent investors usually refinance into a DSCR loan.
At a 33.33% assessment ratio of fair market value times the local tax rate, with no homestead exemption. Rates are high, so budget carefully.
Yes. Spec homes and 2-4 unit builds across Peoria, Tazewell and Woodford counties fit our ground-up program with plans, permits and an experienced builder.
Plans and permits, or a clear path to them, are expected. Projects without plans or permits usually do not qualify.
Terms are set per project, based on the size of the build and the schedule. Short-term, interest-only financing during the build is typical, followed by a sale or a DSCR refinance.
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