New Construction in Florida: From Land to Finished Property

Ground-up construction is one of the most profitable strategies in Florida real estate, but also one of the most complex. Unlike a fix and flip where you purchase an existing property and renovate it, new construction starts from a vacant lot and builds from the ground up.

In this article, I will break down the four phases of the process, the real costs involved, how financing through construction loans works, and a complete example with actual numbers from a Cape Coral operation. Whether you are evaluating building as a borrower or investing as a lender, this guide gives you the full picture.

Phase 1: Land Acquisition (Month 1-2)

Purchasing the Lot

Every new construction project begins with selecting and purchasing a lot. In Florida, land availability varies significantly by area. Markets like Cape Coral, Lehigh Acres, Port St. Lucie, and areas along the I-4 corridor still offer lots at reasonable prices, while more established areas like Miami-Dade or Palm Beach have limited inventory and elevated prices.

Land cost represents approximately 20% of the total project cost. This percentage varies by location, but serves as a useful reference for initial budgeting.

Land Due Diligence

Before purchasing a lot, a series of verifications determine whether the land is viable for the planned project:

• Soil study: determines the terrain composition and its capacity to support the planned structure. In Florida, where the water table is high in many areas, this study is critical.
• Survey: establishes the exact boundaries of the lot, setback restrictions, and any easements that affect construction.
• Zoning verification: confirms that residential use is permitted on the lot and identifies density, height, and coverage restrictions.
• Feasibility analysis: evaluates whether the project makes economic sense: how much it will cost to build, what the finished property will be worth, and what the projected profit margin will be.

Phase 2: Permits and Design (Month 2-5)

Architectural Plans and Engineering

With the land secured, the design phase begins. This includes:

• Architectural plans: define the layout, room distribution, facade, and dimensions of the property.
• Engineering plans: structural, electrical, plumbing, and mechanical. Florida has strict hurricane resistance requirements that directly impact structural design.
• Energy calculations: Florida requires compliance with energy efficiency codes that affect insulation type, windows, and HVAC systems.

Municipal Approval

Plans must be approved by the building department of the corresponding county or municipality. This process can take between 2 and 4 months, depending on the jurisdiction and project complexity.

The cost of permits and design represents approximately 5% of the total project cost. This includes architect fees, engineering fees, municipal fees, and any specialized consulting.

Phase 3: Construction (Month 5-14)

From Foundation to Finishes

The construction phase is the longest and most expensive, representing approximately 65% of the total cost. The process follows a defined sequence:

1. Site preparation: lot clearing, grading, installation of temporary utilities.
2. Foundation: in Florida, most single-family homes use slab-on-grade construction.
3. Framing: wall structure, roof, and interior divisions. Florida uses a combination of concrete block for exterior walls and wood framing for interiors.
4. Rough-in: installation of plumbing, electrical, and HVAC within the walls before closing them up.
5. Drywall and interior finishes: wall closing, painting, flooring, cabinets, countertops.
6. Exterior finishes: stucco, exterior paint, landscaping, pool (if applicable), driveway.
7. Final inspections: the county conducts inspections at multiple stages and a final inspection before issuing the Certificate of Occupancy (CO).

How Draws Work (Milestone-Based Disbursements)

In a construction loan, money is not disbursed all at once. It is released in stages called draws, tied to the completion of construction milestones. This mechanism protects both the lender and the borrower:

• Each draw requires an inspection. Before releasing funds for the next stage, an inspector verifies that the completed work meets the standards and approved plans.
• The lender controls the flow of funds. If the borrower does not complete a stage satisfactorily, funds for the next stage are not released.
• The risk of fund diversion is minimized. Money is released for specific, verified costs, not as a lump sum.

A typical draw schedule for a single-family home in Florida might look like this:

| Draw | Stage | % of Total Construction | |---|---|---| | 1 | Foundation completed | 15% | | 2 | Framing and roof completed | 20% | | 3 | Rough-in completed (plumbing, electrical, HVAC) | 15% | | 4 | Drywall, interior paint | 15% | | 5 | Cabinets, countertops, flooring | 20% | | 6 | Final finishes, CO issued | 15% |

Phase 4: Sale or Refinancing (Month 14-18)

Certificate of Occupancy (CO)

Once all final inspections are completed, the county issues the Certificate of Occupancy, certifying that the property meets all building codes and is habitable. Without this document, the property cannot be legally sold or occupied.

Exit Strategies

The borrower has two primary options:

• Sale: list the property on the market and sell. In active markets like Cape Coral or Fort Myers, a well-located new construction property can sell in 30-90 days.
• DSCR loan refinancing: if the borrower prefers to keep the property as a rental investment, they can refinance with a long-term DSCR (Debt Service Coverage Ratio) loan, replacing the construction loan with permanent financing.

Real Example: New Construction in Cape Coral

Let us look at the numbers for a typical new construction project in Cape Coral, Florida: a single-family residence with 4 bedrooms, 3 bathrooms, 2,200 sqft with pool.

Cost Breakdown

| Item | Cost | % of Total | |---|---|---| | Land (lot) | $120,000 | 21.1% | | Permits and design | $25,000 | 4.4% | | Construction (~$150/sqft, 2,200 sqft + pool) | $330,000 | 58.1% | | Holding costs (14 months at 10%) | $36,200 | 6.4% | | Closing costs (commissions, title, transfer tax) | $57,000 | 10.0% | | Total investment | $568,200 | 100% |

Result

| Item | Value | |---|---| | Sale price | $700,000 | | Total investment | $568,200 | | Net profit | $131,800 | | ROI | 23.2% | | Project duration | 14-18 months |

These numbers are representative of the Cape Coral market in 2026. Construction costs can vary based on the contractor, materials selected, and market conditions. You can model your own scenarios with our construction calculator.

New Construction vs Fix and Flip

Both strategies are valid and profitable, but they have different profiles:

| Feature | New Construction | Fix and Flip | |---|---|---| | Typical duration | 12-18 months | 4-8 months | | Capital required | Higher ($400K-$700K+) | Lower ($150K-$400K) | | Complexity | High (permits, draws, inspections) | Medium (renovation) | | Typical ROI | 20-30% | 15-25% | | Control over final product | Complete | Limited by existing structure | | Cost overrun risk | Moderate-high | Moderate |

For a detailed breakdown of a fix and flip operation, review our article on the anatomy of a fix and flip operation in Florida.

The Lender's Perspective (Investor)

If you are evaluating participating as a lender in a new construction project, these are the key considerations:

• LTV is calculated on the completed value (ARV). A 65% LTV on a $700,000 ARV means a loan of up to $455,000.
• Draws protect your capital. You do not disburse everything upfront; funds are released as the project progresses and milestones are verified.
• The term is longer than fix and flip. Expect 12-18 months of duration, which impacts liquidity planning.
• Returns tend to be higher. Rates for construction loans are typically 1-2 points higher than for fix and flip, reflecting the greater complexity and duration.

Conclusion

New construction in Florida represents a significant opportunity for both borrowers seeking to maximize margins and lenders seeking higher returns backed by tangible real estate. The process is longer and more complex than a fix and flip, but the complete control over the final product and potentially higher margins justify that complexity for experienced operators.

The key to success lies in detailed planning, correct land selection, rigorous cost control, and choosing a reliable contractor. If you are considering a construction project, use our construction calculator to model the numbers before committing capital, and contact us if you need financing or guidance.

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This article is for informational purposes only and does not constitute tax, legal, or financial advice. Consult qualified professionals before making investment decisions.