Sacramento has been rewriting its zoning to allow more small multifamily housing, and investors are paying attention. Older duplexes in Midtown and Curtis Park, 1960s fourplexes in Arden-Arcade and new infill units all compete for the same buyers.
In short: LendingStreet finances Sacramento 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, purchases go up to 80% LTV and the standard minimum DSCR is 1.0x. In Sacramento, Prop 13 reassessment on purchase and statewide and city rent rules are the two things to model before you offer.
The grid neighborhoods of Midtown, Downtown and Boulevard Park have Victorian and Craftsman homes split into two to four units, along with 1920s fourplexes and small courtyard buildings. Curtis Park, Land Park and East Sacramento have scattered duplexes on residential streets, often with a cottage or garage unit at the back.
Farther out, Arden-Arcade, Carmichael, North Highlands and Rancho Cordova have blocks of 1960s and 1970s duplexes and fourplexes built as rentals, typically with parking lots, separate meters and simple layouts. Oak Park and Tahoe Park offer lower prices and older duplexes that may need updating.
Sacramento's 2040 General Plan and related zoning changes moved the city toward allowing more housing types, including duplexes up to fourplexes, in many residential areas. California law also makes it easier to add accessory dwelling units. Those changes have encouraged infill building and conversions.
Rules still depend on the parcel. Confirm the zoning and the legal unit count with the city, or with the county or suburban city where the property sits, before you buy. An unpermitted unit may not count in the appraisal.
AB 1482 caps annual rent increases on many California rentals older than 15 years and adds just-cause eviction rules. Unlike some single-family homes, most 2-4 unit buildings owned by investors are covered. The City of Sacramento also has its own tenant protection program with rent increase limits and registration.
The loan uses current rents and market rent for vacant units, so below-market leases matter. If tenants are paying well under market, you can only raise rents within the rules, so underwrite on what you can actually collect.
This example is illustrative and not a quote. A Curtis Park duplex costs $615,000 and rents for $2,150 per side, or $4,300 combined. Prop 13 taxes on the purchase price are about $589 a month and insurance is $190. At 70% LTV the loan is $430,500, estimated principal and interest is about $2,937 and the DSCR is about 1.16x. At 80% LTV the DSCR drops to about 1.04x, barely above the 1.0x minimum with little room for a vacancy or a tax surprise.
A 1960s Arden-Arcade fourplex costs $980,000 with units at $1,825, or $7,300 combined. At 70% LTV the loan is $686,000, the total payment about $5,909 and the DSCR about 1.24x. Fourplexes built as rentals often cash flow better per dollar than converted older homes.
| Item | Duplex at 70% | Duplex at 80% | Fourplex at 70% |
|---|---|---|---|
| Price | $615,000 | $615,000 | $980,000 |
| Loan | $430,500 | $492,000 | $686,000 |
| Combined rent | $4,300 | $4,300 | $7,300 |
| Estimated principal and interest | $2,937 | $3,356 | $4,680 |
| Taxes and insurance | $779 | $779 | $1,229 |
| Total monthly payment | $3,716 | $4,135 | $5,909 |
| DSCR | About 1.16x | About 1.04x | About 1.24x |
Prop 13 resets the assessed value to your purchase price, so budget taxes on what you pay, not on the seller's bill. Sacramento County and the City of Sacramento both charge documentary transfer taxes when property sells, and the amounts depend on location, so confirm them with your title company.
Some newer 2-4 unit and townhome projects sit in Mello-Roos districts, which add a special tax. Look for it on the tax record.
Utilities are another line to check. Many older Sacramento duplexes share one water and sewer account, and city utility bills are significant. Owner-paid utilities do not enter the DSCR calculation, but they reduce your actual cash flow, so know who pays what before you buy.
Converted Victorians and older duplexes can have knob-and-tube wiring, original plumbing, foundation settling and unpermitted additions. Insurers are cautious with older buildings, and California's tight market can make coverage slow to place. Get a quote during escrow.
If the building needs significant work before it can be rented at market, a bridge loan followed by a DSCR refinance may fit better than a DSCR loan at purchase.
Summer heat matters here, too. Tenants in Sacramento expect working air conditioning in every unit, and older window units or a failing central system can lead to vacancy and repair calls in July. Factor replacements into your budget.
Midtown and the older suburbs also have small apartment buildings with five to eight units. They are still residential under our programs, though maximum LTV can be lower and varies by program. See our Sacramento 5-8 unit page.
If you own five or more small multifamily properties, a blanket portfolio loan can put them under one payment.
Infill builders around the city are also delivering new duplexes, triplexes and fourplexes on lots that once held a single house. New units are generally exempt from AB 1482 rent caps for 15 years, which can make them attractive long-term holds. A construction loan covers the build, and a DSCR loan can take it out once the units are leased.
Send the address, price, unit mix, rents and tax information. The team will run the combined-rent ratio at a few loan amounts, including sub-1.0 DSCR programs if the building is close, and come back with options. Use the form below or call (877) 298-1001.
Yes. The loan qualifies on the combined rent of both units, with no W-2s or tax returns.
Prices are high relative to rents, and Prop 13 resets taxes on purchase. Many duplexes clear 1.0x at 70% to 75% LTV rather than 80%.
Most investor-owned 2-4 unit buildings older than 15 years fall under AB 1482, and city rules may also apply.
A permitted ADU can add rent. Unpermitted units usually are not counted by the appraiser.
Yes. LLC borrowers are standard, and you sign for the loan personally.
No. Our investor loans are business-purpose loans on non-owner-occupied property, and we do not finance a unit you live in.
Yes, up to 75% LTV subject to the ratio. Seasoning varies by program.
They are residential under our programs. See our Sacramento 5-8 unit page for details.
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