Skip to content
Creative Real Estate Financing

User Stats

9
Posts
9
Votes
Nelson Arevalo
  • Lender
  • Torrance, CA
9
Votes |
9
Posts

DSCR Financing 5 - 8 Unit Multi Family Apartment

Nelson Arevalo
  • Lender
  • Torrance, CA
Posted Jul 18 2022, 14:36

Multi-Family apartment buildings 5 or more units are zoned Commercial and therefore fall under commercial loan guidelines. Commercial loans are full documentation with a full income analysis, making it hard at times for investors to get into 5 plus units. 

Recently DSCR (Debt Service Coverage Ratio) for residential properties has been the talk, you probably have seen most loan officers market the heck out of these in recent months! It's been a great alternative that some lenders have expanded their DSCR to 5 - 8 Apartment Units. Making it accessible for investors.

It has some of the same guidelines that DSCR for residential properties for 1-4 units, but it also has some similarities to a commercial transaction, one of them being a lower loan to value.

So what's the difference between a DSCR loan for 5 - 8 units and a Traditional Commercial Loan?

The main difference is the terms, DSCR terms are 15 and 30 years fixed and 30 and 40-year interest only options, there is more leniency as to Minimum Credit scores, Vacant units, and DSCR coverage.

Commercial loans are typically shorter terms with a balloon payment at the end of the term and are more strict regarding the cash flow and investor/owner finances/assets. 

Nelson Arevalo 

User Stats

4,935
Posts
7,050
Votes
Don Konipol
Pro Member
#1 Innovative Strategies Contributor
  • Lender
  • The Woodlands, TX
7,050
Votes |
4,935
Posts
Don Konipol
Pro Member
#1 Innovative Strategies Contributor
  • Lender
  • The Woodlands, TX
Replied Jul 19 2022, 16:09

@Nelson Arevalo thanks for the insight. I did not know that 5-8 unit DSCR loans were readily available.

User Stats

942
Posts
255
Votes
Jared Rine
Lender
  • Lender
  • Sacramento, CA
255
Votes |
942
Posts
Jared Rine
Lender
  • Lender
  • Sacramento, CA
Replied Jul 19 2022, 18:52

@Don Konipol..yea, they are.  They're more expensive but the underwrite is easier due to gross rents vs. having expense factors (like any type of normal commercial lender).  Some lenders will do them up 10 units at this time.  

  • Lender California (#01915324) and California (#893462)

United Lending Partners Logo
FlipSystem logo
FlipSystem
|
Sponsored
Learn From Our Team. Earn 100% of the Profits. Join our community of 500+ investors! Avg profit per flip: $14k, Avg effort per week: 4hrs

User Stats

968
Posts
1,106
Votes
River Sava#2 New Member Introductions Contributor
  • Lender
  • Charlotte, NC
1,106
Votes |
968
Posts
River Sava#2 New Member Introductions Contributor
  • Lender
  • Charlotte, NC
Replied Jan 3 2023, 11:55

Great post, Nelson - can be confusing especially when just starting out and looking for different means of financing 

User Stats

1
Posts
0
Votes
Replied Feb 16 2023, 07:41

Can anyone share contact info for DSCR lenders that would do a 10 unit in Pennsylvania ?

User Stats

205
Posts
75
Votes
Rob Lawrence
  • Real Estate Agent
  • West Chester, PA
75
Votes |
205
Posts
Rob Lawrence
  • Real Estate Agent
  • West Chester, PA
Replied Feb 17 2023, 03:38

Sure, I have one 

User Stats

9
Posts
9
Votes
Nelson Arevalo
  • Lender
  • Torrance, CA
9
Votes |
9
Posts
Nelson Arevalo
  • Lender
  • Torrance, CA
Replied Feb 17 2023, 08:07
Quote from @Elvin Morales:

Can anyone share contact info for DSCR lenders that would do a 10 unit in Pennsylvania ?

Hey Elvin 
I could help I sent you a message 

User Stats

233
Posts
27
Votes
Chad Davis
Pro Member
  • Lender
  • Richmond VA
27
Votes |
233
Posts
Chad Davis
Pro Member
  • Lender
  • Richmond VA
Replied Feb 17 2023, 10:15

@Elvin Morales can assist. pm sent 

User Stats

11
Posts
4
Votes
Replied Jun 19 2023, 12:01

Hello. Looking for a DSCR on a 6 unit in Chicago.

User Stats

1,935
Posts
1,353
Votes
Mark Ainley
Pro Member
#1 Real Estate Events & Meetups Contributor
  • Property Manager
  • Roselle, IL (Chicago Suburb)
1,353
Votes |
1,935
Posts
Mark Ainley
Pro Member
#1 Real Estate Events & Meetups Contributor
  • Property Manager
  • Roselle, IL (Chicago Suburb)
Replied Jun 20 2023, 08:39

@Tim Flickinger I am happy to refer you someone.  I can send you there info via a DM

User Stats

1
Posts
1
Votes
Replied Mar 18 2024, 20:41

Hi, also looking for a dscr loan for an 8 unit, can you message me the referral as well? Thanks 

User Stats

9
Posts
9
Votes
Nelson Arevalo
  • Lender
  • Torrance, CA
9
Votes |
9
Posts
Nelson Arevalo
  • Lender
  • Torrance, CA
Replied Mar 18 2024, 20:53
Quote from @Rocco Guarino:

Hi, also looking for a dscr loan for an 8 unit, can you message me the referral as well? Thanks 


 Just sent you a message 

User Stats

233
Posts
27
Votes
Chad Davis
Pro Member
  • Lender
  • Richmond VA
27
Votes |
233
Posts
Chad Davis
Pro Member
  • Lender
  • Richmond VA
Replied Mar 19 2024, 00:45

@Rocco Guarino Happy to take a look at 8 unit. PM sent 

BiggerPockets logo
Find, Vet and Invest in Syndications
|
BiggerPockets
PassivePockets will help you find sponsors, evaluate deals, and learn how to invest with confidence.

User Stats

3,220
Posts
3,204
Votes
Robin Simon#1 Private Lending & Conventional Mortgage Advice Contributor
  • Lender
  • Austin, TX
3,204
Votes |
3,220
Posts
Robin Simon#1 Private Lending & Conventional Mortgage Advice Contributor
  • Lender
  • Austin, TX
Replied Mar 20 2024, 05:18

Since this thread got recently bumped - sharing the BiggerPockets fully published article last year all about this type of loan (Multifamily DSCR)

https://www.biggerpockets.com/blog/multifamily-dscr-loans