California has a huge stock of duplexes, triplexes and fourplexes, from Los Angeles courtyard buildings to Sacramento fourplexes. The challenge is that prices are high relative to rents in much of the state, so the DSCR math has to be done honestly.
In short: You can finance a California duplex, triplex or fourplex with a LendingStreet DSCR loan that qualifies on the building's combined rent, with no tax returns. Loans start at $150,000 with no stated maximum, leverage goes up to 80% LTV on purchases and 75% on cash-out, and the standard minimum is a 1.0x ratio with 620 credit. In California, the items that decide most 2-4 unit files are the reassessed tax bill after purchase, rent limits that may cap increases, and whether the property can get insurance at a workable premium.
In Los Angeles, duplexes and fourplexes are common in Mid-City, Koreatown, Highland Park, Long Beach and the San Fernando Valley, often as 1920s-1960s buildings. The Bay Area has two- to four-unit Victorians and postwar fourplexes in Oakland, San Jose and the East Bay, and San Diego has small buildings in North Park, Normal Heights and City Heights.
Inland markets such as Sacramento, Fresno, Bakersfield, Stockton and the Inland Empire offer lower prices and ratios that more often clear 1.0x. State laws such as SB 9 and broad ADU rules have also made it easier to add units to single-family lots, which has created new two- to four-unit rentals.
| Area | Typical 2-4 unit stock | What to check |
|---|---|---|
| Los Angeles and Long Beach | 1920s-1960s duplexes, courtyard fourplexes | Local rent control by building age; earthquake retrofit |
| Bay Area | Victorian conversions; postwar fourplexes | Very high prices vs rents; local just-cause rules |
| San Diego | Small buildings in older neighborhoods | Tight ratios; STR rules near the coast |
| Sacramento, Fresno and Inland Empire | Fourplexes and duplexes at lower prices | Wildfire or heat; insurance availability |
Every unit's rent counts. The underwriter adds up the leases or market rents for all units, then divides by the monthly payment: principal and interest plus taxes, insurance and any association dues. If the result is at least 1.0x, the building meets the standard minimum; sub-1.0 programs exist for files that fall short.
Your personal income is not part of the calculation. Instead of W-2s and tax returns, the file rests on the rent roll, the appraisal, a 620 or higher credit score, reserves and, if you use one, your LLC documents.
Because the payment drives the ratio, small cost changes matter. A California building that clears 1.0x on the seller's tax bill and an old insurance renewal can fall short once the bill is reassessed and a new policy is written, so price both before you commit.
Under Proposition 13, the base property tax is about 1% of assessed value plus local voter-approved bonds and special assessments, and the assessed value can rise only slightly each year while you own the property. When the building sells, it is reassessed to the purchase price. A seller who has owned for decades may pay a fraction of what you will.
Always budget taxes on your purchase price times the full local rate, including any Mello-Roos or special assessments shown on the county bill. Counties charge a documentary transfer tax, and some cities, including Los Angeles, San Francisco and Oakland, add their own transfer taxes that can be significant on higher-priced sales.
This example is illustrative and not a quote. It compares two purchases. A Sacramento fourplex costs $900,000 and rents for $1,750 per unit, or $7,000 a month. A Los Angeles-area triplex costs $1,500,000 and rents for $2,800 per unit, or $8,400 a month. Taxes are budgeted at about 1.15% to 1.2% of price, reflecting reassessment at purchase.
In the Sacramento fourplex, 80% LTV column, the loan is $720,000, estimated principal and interest is about $4,790, taxes are $862 a month and insurance is $350, for a total payment of about $6,002 and a DSCR of about 1.17x. In the LA-area triplex, 75% LTV column, the loan is $1,125,000, estimated principal and interest is about $7,485, taxes are $1,500 a month and insurance is $500, for a total payment of about $9,485 and a DSCR of about 0.89x. The inland fourplex clears 1.0x at 80% LTV. The coastal triplex falls below 1.0x even at 75% LTV, so it needs a larger down payment or a sub-1.0 DSCR program. That gap is common in California.
| Item | Sacramento fourplex, 80% LTV | LA-area triplex, 75% LTV |
|---|---|---|
| Purchase price | $900,000 | $1,500,000 |
| Combined monthly rent | $7,000 | $8,400 |
| Loan amount | $720,000 | $1,125,000 |
| Estimated principal and interest | $4,790 | $7,485 |
| Property taxes (monthly) | $862 | $1,500 |
| Insurance (monthly) | $350 | $500 |
| Total monthly payment | $6,002 | $9,485 |
| DSCR | About 1.17x | About 0.89x |
California's insurance market has tightened, with several major carriers limiting new policies in wildfire-prone areas. Some owners end up on the state's FAIR Plan plus a separate policy for other coverage, which can cost more. Earthquake coverage is separate and often expensive, and many Los Angeles and Bay Area cities require seismic retrofits for soft-story wood-frame buildings. Get an insurance quote before you remove contingencies.
The statewide Tenant Protection Act (AB 1482) caps annual rent increases on many rentals at 5% plus inflation, with an overall cap of 10%, and requires just cause for many evictions. Buildings newer than 15 years and some other properties are exempt. Cities such as Los Angeles, San Francisco, Oakland, Berkeley and others have stricter local rent stabilization, often for buildings built before a set year.
Rent limits matter for DSCR: if current rents are below market and the building is covered, you may not be able to raise them quickly. Underwrite on the rent you can legally collect.
A duplex, triplex and fourplex all qualify the same way, on combined rent, with up to 80% LTV on purchases and up to 75% on cash-out. The practical difference is risk: a duplex with one vacant unit loses half its income, while a fourplex loses a quarter.
If you are looking at a five- to eight-unit building, it is still a residential loan, but expect closer review and possibly lower leverage, which varies by program. Buildings of nine units or more move to commercial financing.
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Our investor loans are business-purpose loans on non-owner-occupied property, and we finance duplexes, triplexes and fourplexes throughout California. Tell us the address, purchase price or value, current rents and your goal, and the team will size the loan on the property's actual numbers. Use the form below to get a quote, or call (877) 298-1001.
Prop 13 reassesses a property to its purchase price when it sells. Budget on about 1% of price plus local bonds and assessments, not the seller's bill.
It can. If the building is covered by AB 1482 or a local ordinance, rent increases are limited, so the loan is sized on rent you can legally collect.
Often yes, if the units are permitted and legally rentable. Permitted ADU rent can count toward the combined rent; unpermitted units usually cannot.
Los Angeles' added tax on higher-priced sales is generally paid by the seller, but it can affect pricing. Confirm who pays each transfer tax with escrow.
No. The ratio is built from the property's rent and payment. Credit of 620 or higher, reserves and entity documents for an LLC are the main borrower items.
The vacant unit is usually counted at the appraiser's market rent, though some programs adjust for vacancy. A signed lease on that unit before closing can make the file stronger.
No. Our investor loans are business-purpose loans on non-owner-occupied property, and every unit must be a rental.
Yes. Cash-out goes up to 75% LTV, and the rent has to cover the new, larger payment at the program minimum. Seasoning varies by program.
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