Richmond has strong rental demand, older neighborhoods with buildable lots and a city working to allow more housing types. Small builders find room for infill homes and duplexes across the city.
In short: LendingStreet finances ground-up construction in Richmond and the surrounding counties for investors building 1 to 8 units, including infill homes, duplexes, townhomes and small 5-8 unit buildings. Loans are sized on loan-to-cost with terms set per project, and funds are released through inspected draws. Historic district review, zoning updates and Virginia's recordation taxes are the local items to plan for.
Infill investors work in Manchester, Church Hill, Union Hill, Jackson Ward edges, Northside, Highland Park, Scott's Addition edges and Randolph. VCU, the medical center and downtown employers support rental demand.
In Henrico and Chesterfield counties, spec builders work on suburban lots, where each county has its own zoning and permitting.
Richmond's neighborhoods have seen rapid price changes in the last decade, and new construction often sells at a premium to renovated older homes nearby. Appraisers will look for recent new-build sales, so comparable support matters. In the suburbs, Henrico and Chesterfield have their own zoning, proffer or fee arrangements and utility rules, so confirm the jurisdiction and the cost of water and sewer connections early.
Common Richmond 1-8 unit projects: Each type has its own exit and its own local issues.
| Project type | Where it is common | Local note |
|---|---|---|
| Infill single-family | Church Hill, Union Hill, Northside | Sale exit |
| Duplex | Manchester, Highland Park | Rental exit into DSCR |
| Small 5-8 unit building | Corridors near VCU | Zoning review |
| Suburban spec | Henrico, Chesterfield | County permits |
City permits and plan review run through Planning and Development Review. The Richmond 300 master plan supports more housing types, and the city has been rewriting its zoning code to match, so confirm current rules for your lot.
In City Old and Historic Districts, the Commission of Architecture Review approves exterior design. Virginia charges recordation taxes on deeds and deeds of trust, plus a grantor tax typically paid by the seller.
Parking minimums, lot width and setback rules have changed in parts of the city, and more changes may come with the zoning rewrite. Check the current code for your parcel before you buy, not the rules a seller or listing describes.
Lots near the James River and creeks may be in flood zones, and some hillside lots in Church Hill and Manchester need grading and retaining walls. Older lots may have old foundations or utility lines that need replacement.
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 Richmond. 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 duplex in Manchester to hold as a rental. Land costs $95,000, hard costs are $480,000, soft costs are $60,000 and the contingency is $25,000, for a total project cost of $660,000.
At a sample 80% loan-to-cost, the loan is $528,000 and the investor puts $132,000 into the project. Most of the loan funds through draws as work is completed.
Once the two units lease for a combined $4,100 a month and the property appraises at $730,000, a DSCR refinance at 75% LTV would be $547,500, enough to repay the $528,000 construction balance. The rent then has to cover the new payment, including taxes and insurance, at the program's DSCR minimum.
| Item | Amount |
|---|---|
| Land | $95,000 |
| Hard construction costs | $480,000 |
| Soft costs (plans, engineering, permits, fees) | $60,000 |
| Contingency | $25,000 |
| Total project cost | $660,000 |
| Loan at a sample 80% LTC | $528,000 |
| Investor cash in the project | $132,000 |
| Monthly rent at completion | $4,100 |
| Completed value | $730,000 |
| DSCR refinance at 75% LTV | $547,500 |
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 Richmond 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 Richmond 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 Richmond 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 Richmond project, use the form below or call (877) 298-1001 with your plans, budget and land details.
Yes. We finance investor construction across Richmond, subject to plans, permits, budget and builder experience.
In City Old and Historic Districts, the Commission of Architecture Review approves exterior design. Plan for that review.
Virginia charges recordation taxes on deeds and deeds of trust, and a grantor tax usually paid by the seller. Get exact figures from your settlement agent.
It depends on zoning. Richmond is updating its zoning to allow more housing types, so confirm current rules for your lot.
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.
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.
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