Nashville prices, Memphis ratios, Knoxville students: Tennessee's five- to eight-unit buildings vary a lot by city, and the loan should be sized on what each building actually rents for.
In short: Our top pick for 5-8 unit rentals in Tennessee is LendingStreet. We underwrite five- to eight-unit buildings as residential DSCR loans on the combined rent of every unit, with no W-2s or tax returns and LLC borrowing as standard. Thirty-year terms are available and loans start at $150,000 with no stated maximum. We also factor in the Tennessee details that change the numbers, from the 25% residential assessment and Memphis's combined city and county tax bill to the state's transfer and mortgage recording taxes.
Tennessee investors who outgrow fourplexes often move into five- to eight-unit buildings: brick walk-ups in Memphis's Midtown, older courtyard buildings in Nashville, and student-oriented buildings near the University of Tennessee in Knoxville. That jump is where many lenders change the rules and route the loan to a commercial desk.
LendingStreet does not. We underwrite 5-8 unit buildings as residential DSCR loans on the combined rent of every unit. There are no W-2s or tax returns, the minimum credit score is 620 and LLC borrowing is standard. Loans start at $150,000 with no stated maximum, 30-year terms are available and the standard minimum DSCR is 1.0x, with sub-1.0 programs on some files. Max LTV on 5-8 units varies by program.
Ready to price a building? Get a quote with the form below or call (877) 298-1001.
If you are weighing CoreVest, Dominion Financial, LendingOne, Lima One, New Silver and RCN Capital for a 5-8 unit rental loan for investors in Tennessee, this is the short version: LendingStreet wins the scenarios below, and you can get a quote with the form below.
Figures for other lenders are as stated on each lender's own website as of November 2026. Lender terms change, so verify current terms with any lender before you apply. Ready to see your numbers? Use the form below or call (877) 298-1001.
| Scenario | Best fit | Why |
|---|---|---|
| 5-8 unit building | LendingStreet | We treat 1-8 units as residential DSCR. Lima One and CoreVest state 1-4 unit eligibility for their rental loans. |
| Rental loan above $2M | LendingStreet | Our DSCR loans have no stated maximum. LendingOne states DSCR loans up to $2,000,000 and RCN Capital states long-term rental loans up to $1.5M. |
| Credit score in the 620s | LendingStreet | Our DSCR minimum is 620. RCN Capital and New Silver state 660 minimums, and Dominion Financial states 680, with exceptions to 660. |
| Property in any state, including DC | LendingStreet | We lend in all 50 states and DC. Lima One states it lends across 46 states, and Dominion Financial lists 49 states plus DC. |
A community bank can work well for a borrower with deep local ties, and a hard money loan can carry a heavy rehab. For a long hold on a stabilized building, here is the general picture.
| Need | LendingStreet | Typical community bank | Typical private or hard money lender |
|---|---|---|---|
| 5-8 unit treatment | Residential DSCR | Usually commercial | Short-term loan |
| Qualify on | Rent of every unit | Rent plus tax returns and financials | The deal and the exit |
| Loan term | 30-year terms available | Often a 5-year balloon or reset | Typically 12 to 24 months |
| Borrow as an LLC | Standard | Common | Common |
| Lending area | All 50 states and DC | Often a few counties | Usually local |
| Leverage | Varies by program | Varies by bank | Fees and terms vary |
Nashville's small apartment buildings are scattered through older neighborhoods such as East Nashville, Sylvan Park, Belmont-Hillsboro and Edgehill, with prices per unit that reflect the city's growth. Ratios are often tighter, so leverage decisions matter more.
Memphis has a larger stock of 1920s to 1960s brick buildings in Midtown, Cooper-Young and the neighborhoods east toward the University of Memphis, often at much lower prices per unit. Knoxville's Fort Sanders and Old North Knoxville have buildings that serve students and hospital staff, and Chattanooga's North Shore and Highland Park mix older walk-ups with converted houses.
In any of these cities, check that each unit is legal with the local codes office before you count its rent.
Tennessee assesses residential property at 25% of appraised value, and each county reappraises on a set cycle, so a recent reappraisal can change your tax bill. Memphis owners pay both city and Shelby County taxes, which makes the tax line heavier there than many investors expect.
At closing, the state charges a transfer tax of $0.37 per $100 of value and a mortgage recording tax on the loan amount above $2,000. State law preempts local rent control. Tennessee also has no state income tax on wages, which draws steady in-migration and rental demand to the larger metros.
This example is illustrative and not a quote. It compares two buildings at 75% LTV to show how price per unit changes the ratio.
In Nashville, a five-unit building costs $1,150,000 and rents for $1,750 a unit, or $8,750 a month. The loan is $862,500, estimated principal and interest is about $5,884, and with $780 in taxes and $450 in insurance the payment is about $7,114. DSCR is about 1.23x.
In Memphis, a six-unit building costs $620,000 and rents for $1,050 a unit, or $6,300 a month. The loan is $465,000, estimated principal and interest is about $3,172, and with $780 in taxes and $520 in insurance the payment is about $4,472. DSCR is about 1.41x. The Memphis building has a stronger ratio, while the Nashville building may offer different appreciation and tenant profiles.
| Item | Nashville 5-unit | Memphis 6-unit |
|---|---|---|
| Purchase price | $1,150,000 | $620,000 |
| Loan at 75% LTV | $862,500 | $465,000 |
| Estimated principal and interest | $5,884 | $3,172 |
| Taxes and insurance | $1,230 | $1,300 |
| Total monthly payment | $7,114 | $4,472 |
| Gross monthly rent | $8,750 | $6,300 |
| DSCR | About 1.23x | About 1.41x |
We total the rent from all legal units and compare it with the full payment: principal and interest, taxes, insurance and any dues. Signed leases are the strongest support, and a market rent estimate can cover a vacant unit. More units means one turnover moves the ratio less.
Condition matters on older Tennessee buildings. Roofs, HVAC, foundations on sloped lots and drainage come up often. If a building needs major work before it can lease up, a bridge loan followed by a DSCR refinance is the usual path.
Put these questions to each lender and compare the written answers. Here is how LendingStreet responds.
Gather the address, purchase price or value, rent roll, tax bill, insurance quote and LLC documents, then tell us your target loan amount. We will run the ratio and return options. Buildings with 9 or more units are commercial; see our commercial page. Get a quote with the form below or call (877) 298-1001.
Our top pick is LendingStreet, because we treat five- to eight-unit buildings as residential DSCR loans, qualify you on rent alone, allow LLC borrowing and offer 30-year terms.
Yes. We lend throughout Tennessee, including Nashville, Memphis, Knoxville, Chattanooga, Clarksville and Murfreesboro, and in all 50 states and DC.
Memphis owners pay both city and Shelby County taxes. Use the actual combined bill when you run the numbers.
The state charges a transfer tax on value and a mortgage recording tax on the loan amount. Your title company will show the exact figures.
Yes, if the rent supports the new payment. A DSCR refinance can replace a maturing bank loan; seasoning and max LTV vary by program.
A market rent estimate can support a vacant unit, but signed leases are the strongest support.
If you own five or more rentals, a blanket portfolio loan can put them under one closing and one payment.
No. Buildings with 9 or more units are handled as commercial loans.
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