Texas, North Carolina and Georgia are where many smaller build-to-rent projects are going up: rental houses, duplexes, fourplexes and townhomes in the suburbs around Dallas-Fort Worth, Houston, Austin, San Antonio, Charlotte, Raleigh and Atlanta. Under $5M, a project is typically a handful of homes, built by a local builder or an investor who wants the rent afterwards.
The financing is the same in all three states. What differs is how the closing works, what the finished homes will cost to carry, and how much land and permitting add to the timeline.
The two loans
Both loans are made to a US LLC. US and foreign investors borrow on the same terms, the foreign investor with no US credit history. The fee is 1% to 2% of each loan at closing, with no upfront fees.
| Construction loan | DSCR take-out | |
|---|---|---|
| When | From land to completion | Once homes are finished and leased |
| Leverage | Up to 85% of total cost (LTC) | Up to 80% of appraised value (LTV) |
| Qualifies on | Plans, budget, builder, schedule and exit | Rent against the loan payment |
| Funding | Draws after inspected stages | One payment that repays the construction loan |
| Payment | Interest-only on the drawn balance, typically 8% to 12% | 30-year fixed available, from 6% to 6.5% |
| Term | 12 to 24 months | 30 years |
Phasing is what makes the numbers work
Build in phases so the first homes lease while the last are still under construction. That reduces interest carry, gives the take-out a real rent roll instead of projections, and tests your rents before every home is committed. Arrange the DSCR take-out before the first draw: the construction loan's maturity should never be the moment you find out what the rents will refinance.
The general mechanics, including how to test that 80% of the leased value repays the construction loan, are in financing a build-to-rent project under $5M.
State by state
Every carrying cost belongs in the DSCR calculation from day one, because the take-out is sized on rent after taxes, insurance and dues. A project that pencils before the MUD tax or the reassessment may not pencil after.
| State | Closing | Carrying cost to model | Our page |
|---|---|---|---|
| Texas | Choose the title company or closing agent early | Property tax on the finished homes is reassessed, and many new subdivisions add a municipal utility district (MUD) tax | Texas build-for-rent |
| North Carolina | Choose the closing attorney or agent early | Property tax and any homeowners' association dues for the subdivision | North Carolina build-for-rent |
| Georgia | Conducted by a licensed Georgia attorney, as required by the state Supreme Court | Property tax and any homeowners' association dues for the subdivision | Georgia build-for-rent |
What to send for a term sheet
A term sheet comes back in 24 to 48 hours. See construction loans for the build and DSCR loans for the hold.
- Site control, zoning and permit status, and the number and type of homes
- Plans, a line-item budget with contingency, and the builder's contract
- The phasing plan and the expected lease-up
- Comparable rents and sales for new rental homes nearby
- Your track record or the builder's, and proof of equity and reserves
Foreign investors building to rent
Non-US investors build to rent in all three states on the same terms as US investors, through a US LLC and with no US credit history. The practical difference is distance: you need a builder and a property manager you trust on the ground, and you should plan how draws are approved and how documents are signed from abroad before the first one is due.