Colorado Springs has a modest but real inventory of small apartment buildings tucked into its older neighborhoods: brick walk-ups near downtown, converted Victorians in the north end and 1960s buildings along the arterial streets. They qualify as residential for DSCR purposes when they have eight units or fewer.
In short: LendingStreet finances 5-8 unit residential buildings in Colorado Springs 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, the standard minimum DSCR is 1.0x, the minimum credit score is 620 and LLC borrowers are standard. Maximum LTV on 5-8 unit properties can be lower than on 1-4 units and varies by program. Nine or more units are commercial.
Most 5-8 unit buildings in Colorado Springs are in the older core: around downtown and Colorado College, the Old North End and Patty Jewett edges, Hillside, Knob Hill, the Westside and Old Colorado City, and along corridors such as Platte Avenue and Nevada Avenue. Many were built from the 1950s to the 1970s; some are older houses converted into several units.
Tenants include students and staff at Colorado College and UCCS, hospital workers, downtown employees and junior enlisted service members who prefer an apartment to a house.
Few of these buildings trade in a given year, and many are sold by long-time owners who kept simple records. Expect to rebuild the rent roll from leases and bank deposits, and verify any expense numbers the seller provides.
Some converted Victorians in the north end have units that were added decades ago. Confirm with the Pikes Peak Regional Building Department and city zoning records that the unit count is legal; an appraiser may value a building on its legal unit count.
Because so few of these buildings come to market, investors often find them through off-market conversations with owners, property managers and local agents who specialize in small multifamily. Being ready with financing terms helps when one appears.
The ratio is the same idea, but the inputs are more detailed.
| Item | 1-4 unit rental | 5-8 unit building |
|---|---|---|
| Income | Lease or market rent | Full rent roll for every unit |
| Max LTV | Up to 80% purchase | Often lower; varies by program |
| Owner-paid costs | Usually few | Common: water, sewer, trash, common-area power, sometimes heat |
| Appraisal | Residential comps | Small income property comps and rent survey |
| Condition items | Roof, systems | Roof, boiler, fire safety, stairs, parking, snow removal |
This example is illustrative and not a quote. An investor buys a 1960s seven-unit brick building near downtown for $1,225,000. Units rent for about $1,350 each, so gross rent is $9,450 a month. Taxes are budgeted at about $531 a month, insurance at $640 and owner-paid water, sewer, trash and common electric at $450.
At 70% LTV the loan is $857,500, with estimated principal and interest of about $5,966. The monthly payment used here totals about $7,587, and DSCR is about 1.25x, above the 1.0x standard minimum. The same building with heat included in rent and an older boiler would carry higher owner costs and a lower ratio.
Owners often add value in this size range by submetering utilities, adding coin-free laundry or covered parking, or renovating units at turnover. Those improvements can raise both rent and value over time, which helps a future refinance.
Older Colorado Springs buildings often have a central boiler, so the owner pays for heat. Winter cold snaps make those bills, and the boiler's age, real underwriting concerns. Ask for a year of utility bills and the boiler's service history.
Snow removal on walks, stairs and parking is the owner's job on most small buildings. Budget for it and for ice-melt damage to concrete over time.
Colorado's 2024 just-cause eviction law applies to many residential tenancies, and the state has strengthened its warranty of habitability rules in recent years. State law still prevents local rent control. On a building with several below-market leases, plan to raise rents gradually at renewal, and keep units in good repair to stay on the right side of habitability rules.
A flat or low-slope roof on a 1960s building may need more frequent attention, and hail damage to roofs, windows and siding is common. Insurance on a 5-8 unit building costs more than on a house and may carry a percentage-based hail deductible. Get the quote early in your due diligence.
A fourplex uses 2-4 unit rules, often with higher leverage; a fiveplex moves into the 5-8 unit category. Some investors buy two fourplexes instead of one eightplex; others prefer one building, one roof and one tax bill. Price out both before you commit.
Parking can also be a constraint near downtown and Colorado College. Buildings with off-street spaces tend to lease faster, and some tenants will pay extra for a reserved space.
Mixed portfolios are common too: an investor may own a fourplex and a six-unit building on the same street, each financed on its own rent under the matching program.
Many small Colorado Springs buildings have been owned by the same person or family for decades. Long ownership often means below-market rents, deferred capital work and informal management. That is an opportunity, but it also means the current rent roll may not support the loan you want. If several units are vacant or far below market, consider a bridge loan to stabilize the building, then a DSCR refinance once the leases reflect the market.
Ask for a list of tenants with move-in dates, current rent, deposits held and any concessions. Colorado law sets rules for security deposits, and those deposits transfer with the building at closing.
Our investor loans are business-purpose loans on non-owner-occupied property. Send the rent roll, leases, a year of expenses and the price through the form below, or call (877) 298-1001. We will size the loan on combined rent and tell you where leverage lands.
For our DSCR programs, 5-8 units are residential. Buildings with nine or more units are commercial; see our multifamily loans page.
Combined rent of all units divided by principal, interest, taxes, insurance and other payment items. Owner-paid utilities may also be considered on some programs.
Maximum LTV on 5-8 unit properties is often lower than on 1-4 units and varies by program.
It means the owner pays heat, which raises expenses. Provide utility bills and service records.
Yes. LLC borrowers are standard.
A bridge loan to stabilize the building first, then a DSCR refinance, is often the better path.
No. Our investor loans are business-purpose loans on non-owner-occupied property, so the home must be rented to a tenant, not lived in by you.
Yes, if the unit count is legal and the building is 5-8 units. Confirm the permitted unit count before you buy.
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