Your sentence is mostly clear and grammatically correct, but it can be improved slightly for better flow and correctness.
Here's your original sentence:
“The beaver builds its home from sticks and clay. The lodge sits in the water and has an underwater entrance.”
Suggestions:
- Instead of "the beaver," you might say "Beavers" to talk about them in general.
- Using "their" instead of "its" when talking about beavers in general can be more natural.
Improved sentence:
“Beavers build their homes from sticks and clay. Their lodge sits in the water and has an underwater entrance.”
This version is grammatically correct and easier to understand.