Huffines Communities has found success in a product and place where most developers in Dallas wouldn’t think to look—rental housing on a train line.

In the sprawling, car-dependent metropolis where single-family housing is both plentiful and affordable, Huffines is building rental apartments in Lewisville, Texas, on a new train line that stretches from Dallas to Denton. The project, called Hebron 121 Station, is the first transit-oriented development in Denton County, and it took off even before the first units were available. Huffines leased more than 70 units when there was little more than a construction trailer on the site.

“It’s an absolute home run,” said Robert Kembel, Huffines' president. Construction on the first phase of 234 apartments began last October and is expected to be finished this October. In total, the project, near the Vista Ridge Mall and Interstate 22E, will have more than 1,700 apartments and 250,000 square feet of retail and office space.

Already more than 100 residents have moved into the first phase. With only 74 units left to lease and the project averaging 35 new contracts a month, Huffines expects this phase to be fully leased and occupied in 90 days.

Huffines said the rail station at the community is definitely a big appeal to renters, particularly those who work in places along the rail line, including professors who work at the University of North Texas in Denton as well as people who work at the hospital there. They are typically renters by choice, who have lived in other leased homes for several years before.

“We all had a lot of doubts about rail in Texas,” said Kembel, who admits to ignoring the significance of the city’s linked light and heavy rail system for a while. “But we are finally getting the critical mass of ridership. The existing rail line runs parallel to the interstate, so it’s easy to market because it’s right in front of people’s faces as they are stuck in traffic.”

Another appeal is that the apartments are being built to condominium standards, with upgraded sound-proofing and amenities that rival those at resorts.

The project plans look more like a resort than an apartment complex, with a large resident center, a number of resort-style pools, and an open village green. There will also be trails along Timber Creek Lake, a boardwalk, and paddle boats in a channel.

Each of the three phases has a different architectural theme. The first is reminiscent of the West Indies. The other two are planned to resemble southern coastal and Tuscan architecture.

“It’s a hip place,” said Kembel. “This is the coolest thing on the rail.”

For Huffines, which typically builds for-sale master planned communities that require many years and large investments before there are economic returns, the move into rental housing and commercial development on the side offers a way to create an income stream now, said Kembel.

“One of the things we want to do is balance strategically cash flow streams,” he said. “This project with 1,700 units will have a cash flow well above debt service. That’s a stable stream for a long time."

Hufffines was able to finance the first phase of the development with HUD 221 d 4 funds at less than 5% financing for 40 years. The HUD plan has since changed to less-favorable terms, said Kembel.

Huffines is now looking for cash to build the project’s second phase, which will include the tenant amenities center, with private funds, which are plentiful now for multifamily development, he said.

“Multifamily money is like a fire hose right now,” said Kembel. “It’s one of the few places where the capital markets are comfortable again, particularly in Texas. There are literally hundreds of sources for multifamily financing.”

Kembel doesn’t expect Huffines will be alone in the multifamily ramp-up in Texas. “We think we are going to see an exploding number of multifamily starts,” he said. “Why not harvest some of that value? It’s a good time to be in the multifamily business.”

Teresa Burney is a senior editor for Builder magazine.

Learn more about markets featured in this article: Dallas, TX.