Most of Baltimore's 2-4 unit rentals are not purpose-built duplexes. They are grand old rowhomes and brownstones, carved into apartments decades ago, in neighborhoods like Charles Village, Bolton Hill and Mount Vernon. The first question on any of them is whether the city recognizes every unit.
In short: LendingStreet finances Baltimore duplexes, triplexes and fourplexes with DSCR loans that qualify on the combined rent of all units, with no W-2s or tax returns and LLC borrowers allowed. Loans start at $150,000 with no stated maximum, purchases go up to 80% LTV, cash-out up to 75% and the standard minimum DSCR is 1.0x. In Baltimore, a multi-unit rowhome needs a valid use and occupancy permit for its unit count, current rental licenses and a realistic budget for the city's property taxes.
Converted rowhomes with two to four apartments are common in Charles Village, Bolton Hill, Mount Vernon, Reservoir Hill, Remington, Hampden, Station North and Barclay, close to Johns Hopkins, MICA and the University of Baltimore. Many are three- and four-story brick homes built between the 1880s and the 1920s.
On the east side, Patterson Park, Highlandtown, Butchers Hill and Canton have rowhomes split into two or three units, often with a basement or first-floor unit and apartments above. A smaller number of purpose-built duplexes and garden apartments exist in neighborhoods such as Hamilton and Lauraville and in Baltimore County.
Prices vary widely. A renovated multi-unit brownstone in Bolton Hill or Mount Vernon can cost several times as much as a two-unit rowhome in Highlandtown, while rents per unit differ far less, which is why the east side often pencils out better for DSCR.
In Baltimore, the number of legal units in a building is tied to its use and occupancy permit and the zoning district. Converting a single-family rowhome into multiple units generally requires zoning approval, and the city has limited conversions in many residential districts. Some buildings were converted decades ago without approvals.
Before you buy, ask for the use and occupancy permit showing the unit count and check the zoning. An appraiser or underwriter who finds that a three-unit building is legally a single-family home may value it that way, which can shrink the loan.
Buildings in historic districts such as Bolton Hill, Mount Vernon and Charles Village also face design review for exterior changes. That rarely blocks a purchase, but window, door and masonry work can cost more and take longer.
Units near Hopkins Homewood, the medical campuses and downtown rent to graduate students, medical residents, nurses and young professionals. One-bedroom and two-bedroom apartments with updated kitchens, in-unit laundry and decent heating lease fastest. Top-floor and basement units usually rent for less.
Lenders use the lower of actual leases and market rent on many programs, so get a rent estimate for each unit rather than an average.
Heat is a big cost question in old rowhomes. If the building has one boiler for all units, the owner usually pays heat, which does not appear in the DSCR ratio but can take a large bite out of winter cash flow. Buildings with separate furnaces and meters for each unit are easier to run.
This example is illustrative and not a quote. An investor buys a rowhome in Charles Village with three legal apartments for $465,000. The units rent for $1,350, $1,250 and $1,150, for $3,750 a month in total. City property taxes are $871 a month and insurance is $220.
At 75% LTV the loan is $348,750. Estimated principal and interest on a 30-year term is about $2,379, so the total payment is about $3,470. DSCR is about 1.08x. City taxes are close to 40% of principal and interest here, which is why Baltimore 2-4 unit files need a realistic tax figure from the start.
| Item | Charles Village triplex |
|---|---|
| Purchase price | $465,000 |
| Loan at 75% LTV | $348,750 |
| Estimated principal and interest | $2,379 |
| City property taxes | $871 |
| Insurance | $220 |
| Total monthly payment | $3,470 |
| Combined rent (3 units) | $3,750 |
| DSCR | 1.08x |
Every rental unit in Baltimore City needs a rental license, which requires an inspection by a Maryland-licensed home inspector. Multi-unit buildings are licensed and inspected on their own schedule. Lenders will want to see that licenses are current.
Most of these buildings were built long before 1978, so Maryland's lead law applies. Each unit must be registered with the Maryland Department of the Environment and meet lead risk reduction standards at turnover. Budget for lead inspections and any required work.
Fire safety is the other big item. Multi-unit rowhomes need working smoke and carbon monoxide alarms and safe exits for each unit, and older conversions sometimes fall short. Inspection findings can require work before a license is issued, so get a pre-purchase inspection focused on code items.
Baltimore City's property tax rate is higher than surrounding counties, and investors do not get the homestead credit. Maryland reassesses every three years. Buyers in Baltimore City also pay transfer and recordation taxes at closing that are among the higher in the state, along with state transfer tax. Ask your title company for the full figure early.
If the building has a ground rent, title will identify it, and you will pay it annually or can redeem it.
Maryland's closing process uses title companies and settlement attorneys, and recordation tax applies to the deed and, in some cases, the new loan. Ask whether any recordation tax exemption applies to a refinance with the same owner.
A 120-year-old building converted into apartments needs a careful look.
Rowhomes and small buildings with five to eight units are still residential for our DSCR programs, with max LTV that can vary by program; see /dscr-loans-5-8-units-baltimore-md.html. Buildings with nine or more units fall under commercial lending.
Our investor loans are business-purpose loans on non-owner-occupied property. Send the address, price, rent roll, use and occupancy permit and rental licenses, and we will run the ratio on actual and market rent. Call (877) 298-1001 or use the form below.
Yes, if the use and occupancy permit and zoning recognize three units. Otherwise it may be valued as fewer units.
Baltimore City requires rental licenses and inspections. Lenders expect them to be current.
They are a large part of the payment. Use the full city rate on your purchase price.
Yes, to pre-1978 rentals. Units must be registered and meet lead standards at turnover.
No. These loans are for investment property only.
The program minimum is 620.
Yes. Rate-and-term goes up to 80% LTV on some programs and cash-out up to 75%.
They qualify the same way and are taxed at the county rate, which is lower than the city's.
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