How to Finance a Build-to-Rent Community in Texas
Terrydale Capital
Dec 16, 2025 6 Min read
The Build-to-Rent (BTR) strategy has become one of the most powerful real estate investment models in Texas. Investors across Dallas, McKinney, Prosper, and the DFW area are leveraging build-to-rent financing to develop high-quality single-family rental communities that deliver long-term cash flow and appreciation.
Financing a BTR community requires a different approach than buying a single rental property. From land acquisition to construction and permanent financing, understanding each phase is critical for success.
This guide explains how real estate investors can finance a Build-to-Rent community step by step.
Step 1: Land Acquisition Financing
Every BTR project starts with land. Investors often use land loans or short-term acquisition financing to secure property before construction begins.
Land financing is commonly used for:
- Raw land
- Improved lots
- Future residential subdivisions
- Infill development sites
Lenders evaluate zoning, utility access, market demand, and exit strategy. Many investors roll land loans directly into construction financing once permits are approved.
Step 2: Construction Financing for BTR Communities
Once land is secured, investors move into BTR construction loans, which fund the development of multiple rental units simultaneously.
Construction financing typically covers:
- Site preparation and infrastructure
- Vertical construction
- Contractor labor and materials
- Project management costs
These loans are structured with interest-only payments and draw schedules tied to project milestones. Loan amounts are usually based on Loan-to-Cost (LTC) rather than stabilized value.
Construction loans are ideal for investors developing multi-unit flex space industrial–style rental layouts or traditional residential communities.
Step 3: Bridge Loans for Phased Developments
For larger or phased BTR projects, investors often use bridge loans to maintain momentum between construction stages.
Bridge loans are useful when:
- Developing a community in phases
- Refinancing out of a short-term loan
- Completing lease-up before permanent financing
- Needing fast access to capital
These loans provide flexibility and speed, especially in competitive markets like Dallas and Prosper, where land and development opportunities move quickly.
Step 4: DSCR Loans for Permanent Financing
Once the community is built and leased, most investors refinance into DSCR loans, which qualify based on property cash flow rather than personal income.
DSCR loans are ideal for BTR communities because they:
- Do not require tax returns or W-2s
- Allow ownership under an LLC
- Scale across multiple properties
- Offer long-term fixed-rate options
- Support cash-out refinancing
This step transforms a construction project into a stabilized, income-producing asset.
Step 5: Portfolio and Blanket Loan Strategies
Investors with multiple BTR properties or entire neighborhoods often transition into portfolio loans or blanket loans.
These financing options allow:
- One loan across multiple properties
- Simplified loan management
- Flexible release clauses
- Easier refinancing as the portfolio grows
This approach is common among institutional investors and private capital groups working with industrial banks or specialized loan agencies.
Why Texas Is Ideal for Build-to-Rent Financing
Texas continues to dominate the BTR space due to:
- Strong population growth
- High rental demand
- Business relocations
- Affordable land relative to coastal markets
- Investor-friendly lending environment
Markets like DFW, McKinney, and Prosper offer ideal conditions for long-term rental community success.
Choosing the Right BTR Lender
Not all lenders understand Build-to-Rent financing. Investors should work with specialists experienced in:
- Construction lending
- DSCR underwriting
- Portfolio and blanket loans
- Investor-focused capital structures
Working with an experienced lender like Terrydale Capital ensures smoother approvals, flexible structures, and scalable solutions for growing portfolios.
Final Thoughts
Financing a Build-to-Rent community requires strategic planning at every stage—from land acquisition to construction, stabilization, and long-term refinancing. With the right combination of construction loans, bridge financing, and DSCR loans, investors can build scalable rental communities in some of the strongest real estate markets in the country.
Partner With Terrydale Capital for Your Debt Financing Needs
When it comes to debt financing, understanding the right timing, process, and options is crucial. At Terrydale Capital, we provide a comprehensive range of commercial loan solutions tailored to meet your business's unique needs.
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Headquartered in Dallas, Texas, Terrydale Capital is a leader in commercial real estate financing. We have close relationships with the nation’s top banks, lenders & family offices allowing us to provide the most competitive financing solutions in the market.
