Small apartment buildings in Bakersfield, often six or eight units in a single-story or two-story garden layout from the 1960s to 1980s, fall in a gap. They are too big for a standard fourplex loan, yet too small for most commercial lenders to care about. Our DSCR program treats them as residential.
In short: LendingStreet finances 5 to 8 unit residential buildings in Bakersfield with DSCR loans qualified on the combined rent of all units, with no tax returns required. Loans start at $150,000 with no stated maximum, the standard minimum DSCR is 1.0x, the minimum credit score is 620, and LLC borrowers are standard. Max LTV on 5-8 unit properties varies by program and is often lower than on 1-4 units.
Most 5-8 unit buildings sit in older parts of town: east and south of downtown, around Bakersfield College in the Northeast, along the older corridors off Chester Avenue and Union Avenue, and in pockets near CSU Bakersfield in the Southwest. Many were built as garden-style courts with carports and shared laundry.
Tenants are a mix of working households, students and medical and service workers. Demand is broad, but condition varies widely from building to building.
Some buildings were originally single-family lots with units added over time. Others are purpose-built courts. The difference matters, because added units need permits for the appraiser to count them.
Buildings near the colleges can see more turnover each summer. Buildings in working neighborhoods often have longer-term tenants but lower rents. Both can work if the rent roll supports the payment.
This example is illustrative and not a quote. An investor buys a six-unit 1970s building for $870,000. Each unit rents for $1,225, so combined rent is $7,350 a month. Taxes are budgeted at about $834 a month on the purchase price and insurance at $520.
At 70% LTV the loan is $609,000, estimated principal and interest is about $4,254, and the total payment is about $5,608, a DSCR of about 1.31x. At 75% LTV the loan is $652,500, the payment is about $5,912 and DSCR is about 1.24x, if the program allows that leverage.
The table shows why leverage matters more on small apartment buildings. A five percent change in LTV changes the monthly payment by hundreds of dollars, and the extra cash at closing can be what moves the ratio above 1.0x.
| Item | 70% LTV | 75% LTV |
|---|---|---|
| Loan amount | $609,000 | $652,500 |
| Estimated principal and interest | $4,254 | $4,558 |
| Taxes and insurance | $1,354 | $1,354 |
| Total monthly payment | $5,608 | $5,912 |
| DSCR at $7,350 | 1.31x | 1.24x |
Apartment buildings more than 15 years old are generally covered by AB 1482, which limits annual rent increases and requires just cause for many evictions. Unlike some single-family homes, multifamily buildings do not get the ownership-based exemption.
That makes the rent roll you buy the rent roll you live with for a while. Underwrite on in-place rents, and treat any value-add plan as a slow, unit-turnover strategy rather than an immediate increase.
Inspect every unit, not a sample. Small buildings are often managed loosely, and one or two units may hide most of the deferred work.
Ask for recent utility bills, repair invoices and any code enforcement history from the city or county. Those records tell you more about how the building was run than the listing does.
Insurance on a small apartment building costs more than on a fourplex, and California carriers have become more selective. Get a quote before you remove contingencies.
Owners often pay water, sewer and trash on older buildings. Those costs do not count in the DSCR payment on most programs but do affect your real cash flow.
Professional management is common on 5-8 unit buildings. A fee does not usually count in the DSCR payment, but it should count in your own budget, along with vacancy and routine repairs.
The DSCR math is the same: combined rent divided by the full monthly payment. Leverage is often lower, appraisals take longer because there are fewer comparable sales, and reserves can be higher.
See our national 5-8 unit guide and the California 5-8 unit page for more. Nine or more units is a commercial loan.
Appraisers often use a mix of sales comparables and an income approach on 5-8 unit buildings. Give them the rent roll and operating statement early.
Owners with an older balloon or adjustable loan on a small building can refinance into a 30-year DSCR loan. Prop 13 means your assessed value does not reset on a refinance.
If units are vacant or need work, a bridge loan can carry the building while you turn units, then refinance.
If the building has an older loan with a balloon date approaching, start the refinance early. Appraisals on small apartment buildings take longer than on single-family homes.
Send the rent roll, the operating statement, photos and the purchase contract. Call (877) 298-1001 or use the form below.
If the building is in an unincorporated area, include any Kern County permit records for added units, since the appraiser will ask which units are legal.
Turning units one at a time as tenants leave is the usual Bakersfield value-add. New flooring, paint, fixtures and individual air conditioning can bring a unit up to market rent without displacing tenants.
Fund this from reserves or plan a later refinance once more units are at market. Do not size the purchase loan on rents you hope to reach.
Yes. Our DSCR program covers 1-8 unit residential properties, so a 5-8 unit building qualifies on combined rent without commercial underwriting.
It varies by program and is often lower than on 1-4 unit properties. The rent, the building's condition and your experience all affect it.
Generally yes, for buildings more than 15 years old. That limits annual increases and requires just cause for many evictions.
A rent roll and operating history help the appraisal. We do not need your personal tax returns.
If occupancy is low, a bridge loan may fit first, then a DSCR refinance once units are leased.
Nine or more units is commercial. See our multifamily loan page for those buildings.
Yes. LLC borrowers are standard, and the members usually sign for the loan personally.
Usually longer than on a single-family home, because there are fewer comparable sales and the appraiser reviews income. Start early.
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