South Bend has made infill housing a city priority, including pre-approved house plans meant to speed up building on vacant lots. Paired with Indiana's property tax caps, that makes small new rentals easier to underwrite here than in many Midwest cities.
In short: LendingStreet lends on new 1-8 unit investor construction in and around South Bend. 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 infill single-family homes and duplexes near Notre Dame and the East Bank, spec homes in Granger and Mishawaka, and build-to-rent homes in St. Joseph County. Our investor loans are business-purpose loans on non-owner-occupied property.
Near the University of Notre Dame, the Northeast Neighborhood and the areas around Eddy Street and Howard Park have strong demand from students, staff and young professionals. The Near Northwest Side, River Park and parts of the west side have vacant city lots that suit new homes and duplexes at lower land cost.
Mishawaka to the east has newer neighborhoods and commercial growth along the Grape Road corridor, and Granger, in Clay and Harris townships, draws buyers for schools and larger homes. Elkhart County, around Elkhart and Goshen, adds RV-industry employers and more lots.
| Project type | Where it tends to fit | Local issues to check |
|---|---|---|
| Infill single-family and duplex | Near Northwest, River Park, west side | Lot acquisition from the city, appraisal support |
| Student and staff rentals | Northeast Neighborhood, near Notre Dame | Land cost, zoning, lease calendar |
| Spec homes | Granger, Mishawaka | Resale comparables, school district |
South Bend has offered pre-approved building plans for small homes and two-family buildings on infill lots, which can shorten design and review time. The city also sells some vacant lots it owns. Check the current status of these programs and any build deadlines tied to a city lot.
Building permits in South Bend and St. Joseph County are handled through the local building department, and Mishawaka runs its own. Indiana's residential code applies statewide.
South Bend gets lake-effect snow from Lake Michigan, so foundation work and framing schedules slow in winter. Frost-depth footings and basements are common. Lots near the St. Joseph River can carry flood risk, and older city lots may need old foundations removed.
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 two-family home on an infill lot near the East Bank. Land costs $30,000, the hard-cost budget is $310,000 and soft costs such as plans, permits, fees and builder's risk insurance are $28,000, for a total project cost of $368,000. If the project is sized at 80% of total cost, the construction loan is $294,400 and the investor brings $73,600 in cash or land equity.
At completion the property appraises at $400,000 and leases as two 2-bedroom units at $1,450 each, for $2,900 a month. A DSCR refinance at 75% LTV is $300,000, enough to pay off the $294,400 construction loan with about $5,600 left over before closing costs. Estimated principal and interest on a 30-year loan is about $2,047; with taxes of $400 and insurance of $140 a month, the payment is about $2,587 and the DSCR is about 1.12x.
That clears the 1.0x standard minimum. Interest during construction and closing costs are not shown, and your numbers will differ.
| Item | Amount |
|---|---|
| Land | $30,000 |
| Hard costs | $310,000 |
| Soft costs | $28,000 |
| Total project cost | $368,000 |
| Construction loan at 80% LTC | $294,400 |
| Completed value | $400,000 |
| DSCR refinance at 75% LTV | $300,000 |
| Estimated principal and interest | $2,047 |
| Taxes and insurance | $540 |
| Monthly rent | $2,900 |
| DSCR | About 1.12x |
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.
Indiana caps property taxes as a share of gross assessed value: 1% for an owner's homestead, 2% for residential rentals and 3% for most other property. A finished South Bend rental falls under the 2% cap, which makes the tax line more predictable than in neighboring Illinois. Indiana assessors trend values annually.
Indiana has no state mortgage recording tax or transfer tax on deeds, which keeps closing costs on the land and the DSCR refinance lower than in many states.
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 St. Joseph and Elkhart 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 Indiana construction loans page. Get a quote with the form below or call (877) 298-1001.
The city has offered ready-made plans for small homes and two-family buildings on infill lots to speed up permitting. Confirm the current options with the city before you design.
Residential rentals are capped at 2% of gross assessed value, so the tax line is more predictable. Use the completed value when you estimate the exit DSCR.
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.
Yes, where zoning allows. 1-8 unit ground-up projects near campus fit our program with plans, permits and an experienced builder.
Yes. We finance spec, build-to-rent and small multi-unit projects across St. Joseph and Elkhart counties.
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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