Los Angeles has one of the country's largest stocks of small multifamily buildings: Spanish-style duplexes, 1920s courtyard triplexes, 1950s and 1960s fourplexes on Valley side streets. They are always in demand. The challenge is that rents are low relative to prices, so the loan amount is usually set by the rent, not by the maximum LTV.
In short: LendingStreet offers DSCR loans for 2 to 4 unit rentals in Los Angeles, qualified 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. In Los Angeles, most 2-4 unit purchases clear that minimum at lower leverage, often around 60% to 70%, depending on the rents.
Duplexes and triplexes fill neighborhoods like Mid-City, Koreatown's edges, Hollywood, East Hollywood, Echo Park, Highland Park, Eagle Rock, West Adams, Jefferson Park and Leimert Park. On the Westside, Palms, Mar Vista and Sawtelle have 1950s and 1960s fourplexes. In the San Fernando Valley, North Hollywood, Van Nuys and Reseda have small buildings on larger lots, many now with ADUs added behind them.
Many of these buildings are decades old, which brings strong locations and character along with old plumbing, wiring and foundations. Expect inspection and insurance questions.
In the City of Los Angeles, buildings with two or more units built before October 1978 are generally covered by the Rent Stabilization Ordinance, which caps annual increases. Newer buildings are often covered by the statewide Tenant Protection Act instead. Under state law, a rent-stabilized unit can generally be re-rented at market when it becomes vacant, but buyouts and relocation payments are tightly regulated.
The lender uses the lower of current lease rent and market rent for each unit. If you buy a triplex with two long-term tenants paying well below market, those two units count at their current rent. Buying a building with one or more vacant units can help the ratio, because vacant units are usually counted at market rent.
Unpermitted units are common in Los Angeles: garage conversions, basement apartments and back houses built without permits. Only legal units count toward rent for the loan, and an appraiser will compare the listing to the certificate of occupancy and Los Angeles Department of Building and Safety records.
Permitted ADUs are different. State law has made ADUs much easier to add, and many LA duplexes now have one or two. A permitted ADU usually counts as a unit and adds rent. Note that a duplex plus two ADUs is four units, and a fourplex plus ADUs can move past four, which changes the program; see /dscr-loans-5-8-units-los-angeles-ca.html.
This example is illustrative and not a quote. An investor buys a 1920s triplex in Mid-City for $1,350,000. All three units are leased at market, $3,100 each, for $9,300 a month. Under Proposition 13, property tax is roughly 1.2% of the price including local charges, about $1,350 a month, and insurance is budgeted at $300.
At 60% LTV, the loan is $810,000, estimated principal and interest is about $5,664, the total payment is about $7,314 and the DSCR is about 1.27x. At 70% LTV, the loan is $945,000, the payment is about $8,258 and the DSCR is about 1.13x. Both clear 1.0x here because all three units are at market. With two below-market tenants, the 70% loan would likely fall short.
| Item | 60% LTV | 70% LTV |
|---|---|---|
| Loan amount | $810,000 | $945,000 |
| Estimated principal and interest | $5,664 | $6,608 |
| Property tax and insurance | $1,650 | $1,650 |
| Total monthly payment | $7,314 | $8,258 |
| Combined rent | $9,300 | $9,300 |
| DSCR | 1.27x | 1.13x |
Proposition 13 resets the assessed value to your purchase price, so the seller's old tax bill is not a guide. Expect about 1% of the price plus local bonds and assessments, and a supplemental tax bill for the rest of the current year after closing.
Long-held buildings refinanced by the same owner keep their low tax bases, which is one reason rate-and-term and cash-out refinances often show better ratios than purchases. See /dscr-rate-and-term-refinance-los-angeles-ca.html.
If you are adding an ADU or legalizing a unit, the higher rent only counts after the work is permitted, finaled and leased, so time any refinance for after those steps are done.
Insurance in California has become harder to place since several carriers pulled back, and after the January 2025 wildfires, hillside and wildland-adjacent properties can be especially difficult. Some owners combine a California FAIR Plan fire policy with separate coverage for liability and other risks.
Older wood-frame buildings may need a seismic retrofit, and the City of Los Angeles has required retrofits on certain soft-story buildings. Earthquake coverage is a separate decision. Get quotes before your contingencies expire.
Los Angeles County charges a documentary transfer tax on sales, and the City of Los Angeles adds its own. Sales above a threshold of about $5 million, adjusted each year, also pay the Measure ULA tax, which rarely applies to a single 2-4 unit building but matters if you later sell a larger one.
Other cities in the county have different transfer taxes and rent rules, so a fourplex in Long Beach, Inglewood or Glendale needs its own local check.
Send the address, price or value, each unit's rent and lease date, whether the building is RSO, and any permit records for ADUs through the form below, or call (877) 298-1001. We will show you the loan amount the rents support. If you own several LA rentals, see /blanket-portfolio-loans-los-angeles-ca.html.
The program allows up to 80% LTV on purchases, but the rent has to cover the payment at 1.0x or better. In Los Angeles, rents are low relative to prices, so the ratio usually caps the loan at lower leverage.
They can. Units with below-market rent are counted at their current rent, which lowers the ratio. Vacant units are usually counted at market.
Usually not. Only legal units count. Permitted ADUs generally do.
Yes, four units in total is still a 2-4 unit property. More than four moves into the 5-8 unit program.
About 1% of the purchase price plus local charges under Proposition 13, plus a supplemental bill after closing.
Yes. A refinance keeps your Prop 13 tax base, which often helps the ratio. Cash-out goes up to 75% LTV.
No. Our investor loans are business-purpose loans on non-owner-occupied property.
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