In DC, a 2-4 unit rental usually looks like a rowhouse: an owner's floor and an English basement apartment, a two-level flat, or a rowhouse converted into three units. Combined rent is what makes the payment work, so the legal unit count matters more than the number of doors.
In short: LendingStreet finances DC two-, three- and four-unit rentals 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 with no stated maximum, purchases go up to 80% LTV, cash-out refinances up to 75% LTV, and the standard minimum DSCR is 1.0x. Each unit has to be legal under DC zoning and licensing, and occupied buildings come with tenant purchase rights that affect timing.
Most 2-4 unit rentals in the District are rowhouses. In Petworth, Columbia Heights, Bloomingdale, Eckington, Trinidad and Capitol Hill, many have a basement unit with its own entrance below a two- or three-story upper unit. Some were built as flats with one unit per floor, and others were converted more recently into three or four condos or rental units.
East of the Anacostia River, in Congress Heights, Hillcrest and Anacostia, there are also small garden-style buildings and semi-detached houses with two units at lower prices.
Investors buy these for different reasons. A Petworth or Bloomingdale two-unit appeals to tenants who want rowhouse space near Metro, while a three- or four-unit conversion spreads a high purchase price across more rent. East-of-the-river buildings tend to have lower prices and stronger rent-to-value, with more management time.
| Type | Where common | Main thing to check |
|---|---|---|
| Rowhouse with English basement unit | Petworth, Bloomingdale, Capitol Hill | Basement is a legal, permitted unit |
| Two-level flat | Columbia Heights, Park View, Trinidad | Separate meters and egress |
| Three- or four-unit conversion | Petworth, Eckington, Brightwood | Zoning approval, permits, certificate of occupancy |
| Small garden or semi-detached building | Congress Heights, Hillcrest | Condition, rental licensing, voucher leases |
Much of DC's rowhouse fabric is in RF (residential flat) zones, which generally allow a rowhouse to hold two units. Converting a building to three or more units in those zones comes with added zoning requirements and, in many cases, Board of Zoning Adjustment review. Rules have changed over the years, so confirm current zoning with the DC Office of Zoning and the permit history with the Department of Buildings.
For lending, each counted unit has to be legal. A basement apartment built without permits, or a third unit added without approval, usually will not count toward rent and may affect value.
Every DC rental unit needs a rental housing business license and must meet the housing code. Many older units fall under DC's rent stabilization program, with exemptions that depend on building age and ownership. Moving a building from your name into an LLC can affect some exemptions, so check with DC counsel before you change title.
Underwriting relies on in-place leases or market rent. English basement units usually rent for less than the main unit, and documented voucher rent counts like any other lease.
This example is illustrative and not a quote. An investor buys a permitted three-unit rowhouse conversion for $1,200,000. The units rent for $2,500 each, $7,500 combined. Taxes are budgeted at $850 a month and insurance at $250.
At 70% LTV the loan is $840,000, with estimated principal and interest of about $5,589. The total payment is about $6,689 and the DSCR is about 1.12x.
Compare a two-unit rowhouse with a basement apartment at $1,050,000, renting for $5,400 combined. At 70% LTV the DSCR is about 0.93x. At 60% LTV, with a loan of $630,000, the total is about $5,136 and the DSCR is about 1.05x. The third unit is what lets the conversion carry more leverage.
| Item | Three-unit at 70% | Two-unit at 70% | Two-unit at 60% |
|---|---|---|---|
| Price | $1,200,000 | $1,050,000 | $1,050,000 |
| Loan amount | $840,000 | $735,000 | $630,000 |
| Estimated principal and interest | $5,589 | $4,890 | $4,191 |
| Taxes and insurance | $1,100 | $945 | $945 |
| Total monthly payment | $6,689 | $5,835 | $5,136 |
| Combined rent | $7,500 | $5,400 | $5,400 |
| DSCR | About 1.12x | About 0.93x | About 1.05x |
DC's Tenant Opportunity to Purchase Act gives tenants in many rental buildings, including 2-4 unit properties, the right to receive an offer and a chance to buy before the owner sells to someone else. The seller has to deliver the required notices, and tenants have set periods to respond. That can add weeks or months to a closing.
Build TOPA timing into your contract, deposit and financing plans so deadlines do not lapse while tenants consider their rights. Vacant buildings and some single-family homes have different rules, so confirm what applies with a DC settlement attorney.
DC charges both a deed recordation tax and a transfer tax on sales, with rates that step up above a price threshold, and the recordation tax can apply to a deed of trust on a refinance. The Office of Tax and Revenue reassesses every year. Property classified as vacant or blighted is taxed at much higher rates, so keep units leased or properly registered during any renovation.
Rowhouses share party walls, often have flat roofs and may have older wiring or plumbing. Basement units can take on water in heavy storms. A thorough inspection and a quote that reflects the number of units help avoid surprises in the ratio.
Converted buildings should have separate electric meters and, ideally, separate heating systems for each unit. Shared systems raise the owner's operating costs, and an appraiser will note them.
DC buildings with five to eight units fall under our 5-8 unit DSCR programs, where max LTV can be lower and varies by program. Owners of an existing two-unit or conversion can refinance with cash out up to 75% LTV, or up to 80% on rate-and-term on some programs, with seasoning that varies by program. Owners with five or more DC rentals can also combine them in a blanket portfolio loan.
Send the address, price or loan balance, rent roll, permit records and any TOPA status. The financing team will run the ratio at a few leverage levels. Call (877) 298-1001 or use the form below. See also our DC 2-4 unit page.
If it is a legal, permitted unit with its own entrance and license, yes. Unpermitted basements usually do not count.
Possibly, but RF zones add requirements for three or more units. Check zoning before you buy based on a conversion plan.
Tenants in many 2-4 unit buildings have a right to an offer before a third-party sale, which can add time to closing.
Yes. Documented voucher rent counts toward combined rent.
Rent from two units often does not cover the payment at high leverage on DC values. A third legal unit or a larger down payment helps.
That falls under our 5-8 unit DSCR programs.
Yes. Every rental unit needs a rental housing business license.
No. Our investor loans are business-purpose loans on non-owner-occupied property.
2-3 competing quotes from 30+ capital sources. No credit pull. No commitment.
By clicking, you provide express written consent to be contacted by LendingStreet (NMLS #1734316) via SMS, phone, or email, possibly using automated technology, regarding your loan inquiry. Reply STOP to opt out. Consent is not required to obtain services. See our Privacy Policy and Terms.