Billings has a good stock of small apartment buildings: six-plexes and eight-plexes built in the 1970s and 1980s across Midtown, the Heights and the West End. Their combined rent makes them some of the strongest DSCR properties in the city.
In short: LendingStreet finances 5-8 unit residential buildings in Billings and Yellowstone County with DSCR loans that qualify on the combined rent of all units, with no W-2s or tax returns. Loans start at $150,000 with no stated maximum and LLC borrowers are standard. Maximum LTV can be lower than on 1-4 unit properties and varies by program. Because rents on a six- or eight-plex add up, these buildings often clear 1.0x more easily than single-family homes in Billings.
Most 5-8 unit buildings in Billings are two-story walk-ups with one- and two-bedroom units, off-street parking and a shared laundry room. Many were built during the energy booms of the 1970s and early 1980s. They are scattered through Midtown, the Heights, the area around MSU Billings and older parts of the West End, and they draw working tenants, students and medical staff.
Because they trade less often than houses, sellers are often long-time owners, and rents may be below market.
Some buildings near MSU Billings and Rocky Mountain College lease heavily to students, which brings turnover each spring and summer. Buildings near the downtown hospitals tend to draw longer-term medical staff.
These buildings are residential in our programs, but underwriting goes deeper into the rent roll, leases, operating history and condition. Expect possible lower maximum LTV and higher reserves, varying by program. Nine or more units move to commercial or multifamily financing.
Have 12 months of income and expenses, the current rent roll, every lease and a list of capital work ready. If the seller kept informal records, bank deposits can show rent collection.
| Item | Single-family rental | 6- or 8-plex |
|---|---|---|
| Rent used | One lease | Full rent roll |
| Typical Billings DSCR at 75% LTV | Often near 1.0x | Often well above 1.0x |
| Purchase LTV | Up to 80% | Often lower; varies by program |
| Main operating issues | Turnover, roof | Heat, utilities, parking, snow removal |
This example is illustrative and not a quote. An investor buys an eight-plex in Midtown for $880,000. Each unit rents for about $975, $7,800 in total. At 75% LTV, the loan is $660,000.
Estimated principal and interest on a 30-year term is about $4,615. Taxes are budgeted at $600 a month and insurance at $450, for a total payment of about $5,665 and a DSCR of about 1.38x. Owner-paid utilities and snow removal are not in the ratio but reduce cash flow, so budget them separately.
At 80% leverage the example would still clear 1.0x, but many programs cap 5-8 unit leverage lower, so test the ratio at the leverage your program allows.
| Line item | Monthly |
|---|---|
| Rent, eight units | $7,800 |
| Estimated principal and interest | $4,615 |
| Taxes | $600 |
| Insurance | $450 |
| Total payment | $5,665 |
| DSCR | About 1.38x |
Older Billings buildings often have a central boiler or owner-paid heat, plus owner-paid water, sewer and trash. Snow removal on parking lots and walks is a real cost from November through March. These do not enter the DSCR ratio, but they decide whether the building actually cash flows. Ask the seller for 12 months of utility and operating bills.
Converting owner-paid heat to individual units or adding separate meters can improve cash flow over time, but plan the cost and coordinate it with lease renewals.
Have an inspector experienced with small apartment buildings check:
Ask for the age of each furnace and water heater. Replacing several at once is expensive, so spread replacements into a capital plan.
Small apartment sales are not public in Montana, so appraisers rely on MLS and their own records. Provide the rent roll, operating history and any sales of similar buildings you know about. Income and expenses matter more on a 5-8 unit appraisal than on a house.
If the building has had recent rent increases, include the new leases and a rent ledger that shows tenants paying the higher amounts. Appraisers and underwriters give more weight to rents that are actually being collected.
Yellowstone County bills follow values set by the Montana Department of Revenue, which reappraises residential property on a set cycle. Recent state changes tax primary homes, qualifying long-term rentals and other residential property at different rates, and an owner may have to apply for long-term rental treatment. Check your property's current classification with the Department of Revenue before you rely on a tax figure.
A lower bill under the long-term rental classification can lift the ratio on a building with eight units, where taxes are a large line.
Buildings with several vacancies or deferred maintenance can start on a bridge loan and refinance into a DSCR loan after lease-up. Montana has no transfer tax, so the purchase and later refinance avoid that cost.
If several units rent well below market, a bridge loan also gives time to raise rents at renewal before the DSCR refinance.
Send the address, price, rent roll and operating expenses. Our investor loans are business-purpose loans on non-owner-occupied property. Call (877) 298-1001 or use the form below.
Mention any owner-paid utilities, vacant units and recent capital work so the review is accurate from the start.
In our programs, 5-8 units are financed as residential DSCR loans. Nine or more units are commercial. Larger buildings move to multifamily financing.
It can be lower than on 1-4 unit properties and varies by program. The DSCR on the payment also limits the loan, though eight-plexes in Billings often have room above 1.0x.
No. The ratio uses rent against principal, interest, taxes, insurance and HOA dues. Utilities still affect cash flow.
Leases, rent roll, 12 months of income and expenses and utility bills. Ask for bank deposits if records are informal, and get copies of any service contracts for boilers or snow removal.
Yes, often with a bridge loan first, then a DSCR refinance. Leasing up vacant units and bringing rents to market before the refinance usually produces the strongest DSCR and value.
No. The loan qualifies on the building's rent. You still need a 620 or higher credit score, reserves and the down payment, and LLC borrowers are standard.
No. Montana does not have a real estate transfer tax. Closing costs are mainly lender fees, title insurance, escrow and recording.
Yes, across Yellowstone County and Montana. Laurel buildings are reviewed with Laurel rents and comparables, which may differ from Billings.
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