Last updated: December 2025
Quick answer
Investors decide between ground-up construction and heavy rehab based on factors like acquisition cost, project timeline, permitting requirements, ROI potential, and market demand. Renovations are faster and often less risky, while ground-up builds offer greater design control and long-term upside, when the location and timing are right.
In today’s real estate environment, investors are facing a fundamental decision: build new from the ground up or renovate an existing structure?
Each strategy has its advantages, and the right choice depends on your experience level, available capital, timeline, and investment goals.
With private financing options expanding for both construction and renovation projects, the focus shifts to strategy and execution.
This article breaks down the key differences between ground-up development and heavy rehab, and how smart investors decide which path offers the best return.
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What is a ground-up project?
Ground-up construction refers to building a property entirely from scratch, typically on vacant land or after the complete demolition of an existing structure.
This strategy is commonly used for:
- Custom homes
- Multifamily developments (2–30 units)
- Mixed-use or commercial builds
- Modern design-driven SFR investments
Key components include:
- Land acquisition
- Entitlements and zoning approvals
- Architectural and engineering plans
- Full vertical construction
- Utility hookups and inspections
Ground-up projects offer a clean slate but also involve more steps, longer timelines, and higher upfront costs.
What is a heavy rehab?
A heavy rehab involves renovating an existing property that requires significant repairs or modernization. This can include:
- Structural repairs (foundation, framing)
- Full interior gut renovation
- Systems upgrades (plumbing, electrical, HVAC)
- Layout reconfigurations
- Exterior improvements and landscaping
Heavy rehabs are often used in value-add strategies, especially in high-demand markets where location is more valuable than the existing structure.
Key differences: Ground-up vs. heavy rehab
| Factor | Ground-up construction | Heavy rehab |
| Property type | New builds on vacant land | Existing buildings needing updates |
| Approval process | Extensive (zoning, entitlements) | Moderate (permits, inspections) |
| Timeline | 12–24+ months | 6–12 months |
| Cost predictability | Moderate (subject to site prep) | Higher with good inspections |
| Design flexibility | Full control | Limited by existing structure |
| Risk | Higher (weather, delays, costs) | Lower (fewer unknowns) |
| Financing | Requires construction loan | Can use reno or value-add loan |
| ROI potential | High, long-term upside | Faster turnaround and cash flow |
Ground-up timelines are heavily influenced by local entitlement and permitting cycles, which are tracked nationally through the Building Permits Survey.
When ground-up makes more sense
The decision often hinges on a highest and best use analysis, which evaluates whether renovation or redevelopment represents the legally permissible and financially feasible use that maximizes property value.
Consider new construction if:
- You own or can acquire entitled land in a prime location
- The cost to renovate exceeds the cost to rebuild
- You want full control over design and layout
- You’re developing multifamily units to hold long-term
- The comps support high resale or rental prices for new builds
Ground-up projects often carry higher upfront costs, but the payoff can be significant, especially in luxury SFR or urban infill markets where buyers demand new construction.
When heavy rehab is the better strategy
Renovation is often the preferred choice when:
- The structure has “good bones” but needs modernization
- You want a faster project timeline
- The property is in a desirable, established neighborhood
- You need to start generating income quickly
- You want to reposition a multifamily property for better rents
Many investors use private-value-add renovation loans to fund heavy rehabs, enabling them to upgrade, lease, and refinance within 12–18 months.
Financing options for each strategy
At Marquee Funding Group, we provide tailored financing for both ground-up construction and heavy renovation projects.
Ground-up construction loans
| Feature | Typical Range |
| Loan size | $3M–$10M+ |
| Loan-to-cost | Up to 85% |
| Interest rate | 9%–12%, interest-only |
| Term length | 12–24 months |
| Funding method | Draw schedule based on progress |
We fund both land acquisition and vertical construction with flexible terms and built-in interest reserves.
Renovation/value-add loans
| Feature | Typical Range |
| Loan size | $1M–$10M+ |
| Based on | After-repair value (ARV) |
| Loan-to-cost | Up to 85% |
| LTV (ARV-based) | Up to 70% |
| Timeline | 6–18 months |
| Draw schedule | Customized to rehab phases |
These loans are perfect for multifamily repositioning, SFR flips, or long-term rental upgrades.
Questions to ask before choosing your path
Before deciding between ground-up and rehab, ask yourself:
- What’s my timeline? (Can I wait 18+ months for new construction?)
- What’s the local market demanding? (Turnkey, new build, value upgrades?)
- What are the entitlement and permit timelines in my city?
- Do I have the right team (GCs, architects, subs) for a new build?
- Is the current structure salvageable or a teardown?
- What’s my long-term strategy: flip, hold, or rent?
Remember: both strategies can be profitable, but choosing the wrong one for your market or experience level can create delays and cost overruns.
Build smart, whether you renovate or start from scratch
There’s no one-size-fits-all answer when choosing between heavy rehab and ground-up construction. Both offer great potential, but only when backed by the right team, the right timing, and the right capital partner.
At Marquee Funding Group, we finance both strategies with common-sense underwriting, fast approvals, and flexible structures tailored to your vision. Marquee lends up to 85% LTC on both ground-up and heavy rehab projects for qualified LLCs/Corps.
If you’re debating which path to take, we’ll help you evaluate your deal and get you funded fast. No red tape. No delays.
Not sure which path fits your portfolio? Get personalized deal structuring from Marquee Funding Group.
Frequently asked questions: Ground-up vs heavy rehab
Q: Is ground-up construction riskier than renovation?
A: Generally, yes. Ground-up projects involve more variables, such as entitlements, inspections, weather, and labor delays, which can increase both risk and timeline unpredictability.
Q: Can I get financing for land and construction in one loan?
A: Yes. Marquee Funding Group offers loans that combine land acquisition and vertical construction, based on the project’s ARV and cost structure.
Q: What’s the average timeline for heavy rehab vs. new construction?
A: Heavy rehabs typically take 6–12 months, while new builds can take 12–24 months or more, depending on location, size, and permitting.
Q: Do private lenders finance both strategies?
A: Yes. Marquee funds both heavy renovations and ground-up builds, often approving and closing deals within 5–10 business days.
Q: How do I know which option will give me better ROI?
A: Compare total costs (acquisition + construction), time to completion, and projected ARV or rent rolls. A strong pro forma and local comps are essential for this analysis.