After Hurricanes Ian, Helene and Milton, a lot of Sarasota-area building is rebuilding. Teardowns of older flood-damaged homes, elevated new construction and spec homes inland are where investors are putting construction money to work.
In short: LendingStreet lends on new 1-8 unit investor construction in and around Sarasota. 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 elevated rebuilds on teardown lots, spec homes in North Port and Venice, build-to-rent homes in Bradenton and Parrish, and infill duplexes near downtown Sarasota. Our investor loans are business-purpose loans on non-owner-occupied property.
In the city, infill lots and teardowns in neighborhoods near downtown such as Laurel Park, Gillespie Park, the Rosemary District area and Southside Village support new single-family homes and some duplexes and townhomes. Older low-lying homes damaged by recent storms are being replaced with elevated new construction.
North Port, like Palm Bay on the east coast, has a large inventory of platted single-family lots, and builders use it for spec and build-to-rent homes. Venice, Englewood and Port Charlotte to the south, and Bradenton, Parrish and the Lakewood Ranch area to the north, add more options at different price levels.
| Project type | Where it tends to fit | Local issues to check |
|---|---|---|
| Elevated rebuild on a teardown lot | Low-lying areas of Sarasota and Bradenton | Flood elevation, demolition, coastal review |
| Spec and build-to-rent houses | North Port, Venice, Parrish | Utilities, septic, insurance cost |
| Infill duplex or townhome | Near downtown Sarasota | Zoning, land cost, design rules |
In a mapped flood zone, the FEMA substantial damage and substantial improvement rule means a home damaged or improved beyond 50% of its value generally has to be brought up to current flood elevation. That is one reason many owners sell storm-damaged homes as teardowns, and why new construction on those lots is built higher.
The City of Sarasota, Sarasota County, Manatee County, North Port and Venice each handle their own permits. Barrier island lots on Siesta Key, Lido Key and Longboat Key can involve state coastal construction rules. Confirm the required elevation and review steps before you buy.
Wind-rated roofs and openings, elevated foundations and flood vents are now baseline design here. Insurance has become the biggest operating cost for many new rentals, so get a homeowners and flood quote on the finished home before you commit to the lot.
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 an elevated duplex on a teardown lot in Bradenton. Land costs $110,000, the hard-cost budget is $520,000 and soft costs such as plans, permits, fees and builder's risk insurance are $50,000, for a total project cost of $680,000. If the project is sized at 75% of total cost, the construction loan is $510,000 and the investor brings $170,000 in cash or land equity.
At completion the property appraises at $820,000 and leases as two 3-bedroom units at $2,800 each, for $5,600 a month. Because flood and wind insurance on the Gulf Coast is the largest expense after the payment, the investor plans the DSCR refinance at 65% LTV instead of the 75% maximum. That loan is $533,000, enough to pay off the $510,000 construction loan with about $23,000 left over before closing costs. Estimated principal and interest on a 30-year loan is about $3,636; with taxes of $1,080 and insurance of $700 a month, the payment is about $5,416 and the DSCR is about 1.03x.
That clears the 1.0x standard minimum. Interest during construction and closing costs are not shown, and your numbers will differ.
| Item | Amount |
|---|---|
| Land | $110,000 |
| Hard costs | $520,000 |
| Soft costs | $50,000 |
| Total project cost | $680,000 |
| Construction loan at 75% LTC | $510,000 |
| Completed value | $820,000 |
| DSCR refinance at 65% LTV | $533,000 |
| Estimated principal and interest | $3,636 |
| Taxes and insurance | $1,780 |
| Monthly rent | $5,600 |
| DSCR | About 1.03x |
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.
Florida assesses at just value, and a non-homestead rental has a 10% annual cap on assessed value increases after the first year. New construction is assessed on its completed value, and a rebuilt home will not carry the old owner's homestead-capped assessment, so budget on the new value.
Documentary stamp tax on deeds and notes and intangible tax on new mortgages apply to both the construction loan and the DSCR refinance at completion. In Sarasota County, deed stamps are customarily a seller cost on resales, but confirm on your land contract.
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 Sarasota and Manatee counties, including Bradenton, Lakewood Ranch, Venice and North Port. 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 Florida construction loans page. Get a quote with the form below or call (877) 298-1001.
In a flood zone, if repairs or improvements exceed 50% of a home's value, the home generally must meet current flood elevation. Many damaged homes are torn down and rebuilt higher instead.
Yes. Ground-up construction on a cleared or teardown lot fits our program when plans, permits, a budget including demolition and an experienced builder are in place.
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.
Some do; many outlying lots need a well and septic. Confirm utilities with the city before you buy.
The usual exit is a DSCR refinance, and insurance is part of the monthly payment. On the Gulf Coast, a high premium can lower the ratio more than taxes do.
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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