Oregon changed the rules for small multifamily in 2019, when it required larger cities to allow duplexes, triplexes, fourplexes and townhomes in areas once zoned for single houses. Salem has updated its code since, and investors now find both older 2-4 unit buildings and new middle housing across the city.
In short: LendingStreet finances Salem 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 Salem, statewide rent rules, the age of the building and Measure 50 taxes all affect the numbers.
Older duplexes and fourplexes cluster near downtown and the Capitol, around Willamette University, and in the Grant, Highland, Northeast Neighbors and Southeast Salem neighborhoods. Many are 1950s to 1970s buildings with simple layouts and off-street parking, while others are older houses split into units.
Lansing, the Lancaster Drive corridor and parts of Keizer have rows of 1970s and 1980s duplexes and fourplexes built as rentals. New middle housing, including side-by-side duplexes, triplexes and townhome groups, is showing up on infill lots across South and West Salem.
Oregon's House Bill 2001 requires cities over 25,000 people to allow middle housing in residential areas, and Salem adopted code changes to comply. In many neighborhoods, a duplex, triplex or fourplex is now allowed where only a single house was before, subject to design and lot standards.
That does not mean every building is legal as it stands. Confirm the permitted unit count with the city, especially for older conversions, because an appraiser may not count an unpermitted unit.
Keizer, Woodburn, Silverton and other nearby cities have their own codes. Smaller cities face different state requirements than Salem, so a triplex that is allowed in Salem may not be allowed on a similar lot in a neighboring town.
Oregon's statewide rent stabilization caps annual increases on most rentals older than 15 years, with the cap set each year by a formula and limited by law. Buildings first occupied within the last 15 years are exempt from the cap, which makes new middle housing attractive to long-term holders.
After the first year of a tenancy, ending it generally requires a cause or a qualifying landlord reason, and some reasons require relocation payments. The DSCR loan uses current rents, so a building with below-market leases may take time to reach market rent.
This example is illustrative and not a quote. A newly built South Salem triplex costs $565,000 and rents for $1,525 a unit, or $4,575 combined. Taxes are about $410 a month and insurance $180. At 75% LTV the loan is $423,750, estimated principal and interest is about $2,891 and the total payment about $3,481, a DSCR of about 1.31x.
A 1970s duplex in northeast Salem costs $420,000 with units renting at $1,650. At 75% LTV the loan is $315,000, the total payment about $2,589 and the DSCR about 1.27x. The older duplex is cheaper per unit, but its rents fall under the annual cap, while the new triplex is exempt for its first 15 years.
| Item | New triplex | 1970s duplex |
|---|---|---|
| Price | $565,000 | $420,000 |
| Loan at 75% LTV | $423,750 | $315,000 |
| Combined rent | $4,575 | $3,300 |
| Estimated principal and interest | $2,891 | $2,149 |
| Taxes and insurance | $590 | $440 |
| Total monthly payment | $3,481 | $2,589 |
| DSCR | About 1.31x | About 1.27x |
Oregon taxes are based on a property's assessed value, which can grow by no more than 3% a year and does not reset on sale. On an older duplex, the current bill is usually a good guide. On a new building, the assessed value is set when construction is added to the rolls, so the first full bill may be higher than a partial-year bill.
Ask the Marion County or Polk County assessor for the current record, and for new construction, ask how the improvement value was set.
Many older Salem duplexes share water and sewer service, and the landlord often pays those bills. They do not enter the DSCR calculation, but they reduce your actual cash flow. Separately metered buildings are easier to manage.
Older buildings may need roofs, siding, windows and drainage work after decades of wet winters. Get an inspection and an insurance quote early. If the building needs real work, a bridge loan first and a DSCR refinance later may fit better.
Some investors build their own triplexes and fourplexes on infill lots now that zoning allows them. A ground-up construction loan covers the build, sized on loan-to-cost with funds released through a draw schedule, and a DSCR loan can refinance the finished building once units are leased.
For buildings with five to eight units, see our Salem 5-8 unit page. Maximum LTV can be lower on those and varies by program.
Building makes the most sense on lots where the new units can rent at the top of the market, such as near the hospital, downtown or the university, and where utility connections and parking are straightforward. Plans, permits, a realistic budget and an experienced builder are what make a construction loan possible.
Salem buyers often compare an older duplex near downtown with a new triplex on the edge of town. Bring both to us if you are deciding; running them side by side on the same assumptions usually makes the choice clear.
Send the address, price, unit mix, rents, year built and tax bill. The team will run the combined-rent ratio at a few loan amounts, including sub-1.0 DSCR programs if a 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 all three units, with no W-2s or tax returns.
Oregon's rent cap does not apply to buildings first occupied within the past 15 years. Other tenant rules still apply.
Salem's code allows middle housing in many residential areas, subject to standards and permits. Confirm with the city before you plan a conversion.
Under Measure 50, the assessed value generally carries over to the buyer. New levies or improvements can still raise it.
Up to 80% LTV on a purchase, subject to the property clearing the minimum DSCR.
No. Our investor loans are business-purpose loans on non-owner-occupied property.
Yes. Rate-and-term and cash-out refinances are available, with cash-out up to 75% LTV. Seasoning varies by program.
Yes. They are residential under our programs. See our Salem 5-8 unit page.
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