In Honolulu, a 2-4 unit rental might be a 1960s three-story walk-up in Makiki, a duplex in Kapahulu, or a Kaimuki house with a permitted ohana unit behind it. They share one challenge: values are high, and the rent has to carry a large loan.
In short: LendingStreet finances Honolulu duplexes, triplexes, fourplexes and homes with a permitted second unit with DSCR loans that qualify on the combined rent of all units, with no W-2s or tax returns. Loans start at $150,000 with no stated maximum, purchases go up to 80% LTV and the standard minimum DSCR is 1.0x, though on Oahu many 2-4 unit properties clear that only at lower leverage. The minimum credit score is 620.
Older walk-up apartment buildings, typically two or three stories with a handful of units, are scattered through Makiki, McCully-Moiliili, Kapahulu, Palolo and Kalihi, many built in the 1950s through the 1970s on lots zoned for apartments. Duplexes and side-by-side two-unit homes appear across town, including Kaimuki, Kalihi and Nuuanu.
The most common 2-unit property on Oahu, though, is a single-family lot with a second dwelling: an ohana unit or accessory dwelling unit. Multigenerational living is common in Waipahu, Pearl City, Kalihi and Aiea, and many homes were built or expanded to house two households.
True fourplexes are less common, but they exist in older apartment-zoned blocks and in parts of Kalihi and Kapahulu. Because land is so valuable, buildings that put more units on one lot usually produce better rent per dollar than a single house, which matters a great deal for the DSCR.
Walk-ups sit in apartment-zoned districts, and their unit count should match the building permit record. For homes with a second unit, confirm that the ohana or ADU was permitted. Honolulu has allowed ADUs on many residential lots since 2015, with conditions, and some permits limit how the unit can be used, including minimum rental terms. An unpermitted unit may not count toward rent and can complicate valuation.
Check tenure as well. A few walk-up buildings and homes are on leasehold land, which lenders review closely.
This example is illustrative and not a quote. A three-unit walk-up in Makiki costs $1,450,000, with three two-bedroom units at $2,500, $7,500 a month. Taxes are about $450 and insurance $300 a month. At 60% LTV the loan is $870,000, estimated principal and interest is about $5,935, the payment is about $6,685 and the DSCR is about 1.12x.
A Kaimuki house with a permitted ohana unit costs $1,350,000, with the main house at $3,600 and the ohana at $2,400, $6,000 a month. Taxes are about $420 and insurance $230. At 60% LTV the loan is $810,000, the payment is about $6,176 and the DSCR is about 0.97x, just short of 1.0x. At 55% the loan is $742,500, the payment is about $5,715 and the DSCR is about 1.05x. Sub-1.0 DSCR programs are another option where they fit.
| Item | Makiki walk-up, 60% | Kaimuki with ohana, 60% | Kaimuki with ohana, 55% |
|---|---|---|---|
| Price | $1,450,000 | $1,350,000 | $1,350,000 |
| Combined rent | $7,500 | $6,000 | $6,000 |
| Loan amount | $870,000 | $810,000 | $742,500 |
| Estimated principal and interest | $5,935 | $5,526 | $5,065 |
| Taxes and insurance | $750 | $650 | $650 |
| Total payment | $6,685 | $6,176 | $5,715 |
| DSCR | 1.12x | 0.97x | 1.05x |
Honolulu has some of the highest property values in the country, and rents, while high, have not kept pace with prices. As a result, many 2-4 unit properties do not reach 1.0x at 75% or 80% LTV. Walk-ups with several units tend to do better than single-family lots with an ohana, because more units share one land value. Plan for a larger down payment and check the ratio at several loan amounts before you write an offer.
Rental demand comes from military families and civilians at Joint Base Pearl Harbor-Hickam, Tripler Army Medical Center and Schofield Barracks, staff at Queen's and the other hospitals, University of Hawaii at Manoa students and faculty near McCully-Moiliili and Manoa, and the many residents who rent long-term because buying is out of reach. Military housing allowances on Oahu are high, which supports rents near the bases.
Hawaii's Residential Landlord-Tenant Code governs deposits, notices and entry, and lenders look for signed leases and rent history. A unit that is vacant or leased to a family member at a low rent can reduce the qualifying rent, depending on the program, so try to close with arm's-length leases on every unit.
Hawaii's general excise tax applies to residential rent, including long-term leases, so register with the Department of Taxation and file on your rental income. Property tax is set by class; non-owner-occupied homes above a value threshold fall in a higher-rate class than owner-occupied homes.
Insurance for walk-ups and homes often includes a separate hurricane policy, and properties in low-lying areas may need flood insurance. Get quotes early, since older walk-ups with original wiring or plumbing can be harder to insure, and the premium goes straight into the payment.
Larger walk-ups with five to eight units are still residential for our DSCR programs, with maximum LTV that can be lower and varies by program; see our Honolulu 5-8 unit page. Nine or more units is commercial lending.
If you own several Oahu rentals, including condos, houses and small buildings, a blanket portfolio loan can put five or more of them under one loan and one payment, qualified on their combined rent.
Send the address, price or current balance, unit mix, rents, tenure and permits through the form below, or call (877) 298-1001. We will run the combined-rent DSCR at a few loan amounts and show where it clears.
For a refinance, include the current mortgage statement and any recent work, such as termite treatment, plumbing, roofing or unit renovations. For a purchase, include the seller's rent roll and the ohana or ADU permit if the property has a second unit.
Yes. The loan qualifies on the combined rent of all units, with no personal income documents.
A permitted ohana or ADU can count toward rent. An unpermitted unit may not.
Oahu values are high relative to rents, so many properties need lower leverage to clear 1.0x.
Yes. Hawaii's general excise tax applies to residential rental income.
Possibly, depending on the remaining lease term and terms. Fee simple is simpler.
No. Our investor loans are business-purpose loans on non-owner-occupied property.
Yes, sub-1.0 programs exist for some properties.
Yes, up to 75% LTV if the rent supports the new payment.
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