Downtown Frederick's small apartment buildings are mostly grand old houses and brick commercial-era buildings, divided into five to eight units long ago. They sit a few blocks from Carroll Creek and the MARC station, and they rarely come up for sale.
In short: LendingStreet finances 5-8 unit residential buildings in Frederick and across Frederick 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, the standard minimum DSCR is 1.0x and the minimum credit score is 620. Maximum LTV on 5-8 units is often lower than on 1-4 units and varies by program.
Most of the city's five- to eight-unit buildings are in and around the historic downtown: Victorian and Federal-style houses on streets near Market Street, Patrick Street and Baker Park, and older brick buildings with apartments over former storefronts. A smaller number sit in Brunswick's older core and in a few other towns.
Tenants include young professionals who work locally or commute on the MARC, staff at Frederick Health and Fort Detrick, and Hood College affiliates. Walkability supports rents, while parking is often limited.
Because so few of these buildings exist, they tend to stay with long-term owners, and many have been owned by the same family for decades. When one sells, deferred maintenance and outdated compliance records are common. Being ready with financing that fits five to eight units, and a clear plan for repairs and lead compliance, can make your offer the one a seller trusts.
Our DSCR programs treat 1-8 units as residential, so a six-unit Frederick building is underwritten on rent much like a duplex, without a full commercial package. Because these buildings trade on income and are less common, maximum LTV can be lower and reserves higher. Nine or more units falls under commercial or multifamily lending. If a building includes ground-floor commercial space, ask early; mixed-use buildings may need a different program.
Investors stepping up from single-family homes and duplexes often find this the most practical way to buy a larger building, since the documentation stays close to what they already know: leases, a rent roll, insurance and entity documents, without the financial statements and full commercial review a larger apartment loan would require. That keeps the process familiar and usually faster.
This example is illustrative and not a quote. An investor buys a six-unit converted Victorian near downtown for $1,050,000. Each unit rents for about $1,550, for combined rent of $9,300 a month. City and county taxes are about $1,164 a month and insurance about $420.
At 75% LTV the loan is $787,500, the total payment about $6,956 and the DSCR about 1.34x. If the program caps leverage at 70%, the loan is $735,000, the payment about $6,598 and the ratio about 1.41x.
The ratio here is comfortable, but the cash flow picture includes items the ratio leaves out: water and sewer, common-area electric, trash, snow removal and turnover costs, which tend to be higher in a six-unit building than in six separate rentals because the owner pays for shared systems. Review two years of operating statements before you set your price.
| Item | 75% LTV | 70% LTV |
|---|---|---|
| Loan amount | $787,500 | $735,000 |
| Estimated principal and interest | $5,372 | $5,014 |
| Taxes and insurance | $1,584 | $1,584 |
| Total monthly payment | $6,956 | $6,598 |
| DSCR at $9,300 rent | 1.34x | 1.41x |
Maryland requires most pre-1978 rental units to be registered with the Maryland Department of the Environment and to pass a lead inspection at tenant turnover. In a six-unit pre-1978 building, that is six registrations and an inspection each time a unit turns over. Ask the seller for the registration records and the most recent certificates, and budget for lead-safe repairs at turnover. Gaps in compliance are a cost and a liability you inherit at closing.
Exterior work on buildings in the historic district, such as windows, porches, roofs and masonry, generally needs Historic Preservation Commission review. That affects how you plan capital projects and what they cost. Interior renovations need standard permits but are not usually reviewed by the commission.
Check these closely before buying an older Frederick building:
Parking is a real constraint downtown. Some buildings have a few spaces in back; many have none. Tenants who need a car may rely on city garages or residential permits, so check what is available nearby and whether it affects rents.
Properties inside city limits pay both city and county taxes. Maryland's Department of Assessments and Taxation reassesses each property every three years and phases increases in over the following years, so a recent sale or renovation can show up in later bills. Use the current bill and the phased-in assessment when you estimate the payment, and remember that utilities paid by the owner sit outside the DSCR but reduce cash flow.
Appraisers use comparable sales and an income approach. With few five- to eight-unit sales in Frederick, comps may come from other parts of the county or nearby markets. Provide a rent roll, leases, a trailing operating statement and a list of capital improvements.
Strong documentation can make a meaningful difference on a building like this, where the appraiser may have only a handful of truly similar sales to work with.
Our investor loans are business-purpose loans on non-owner-occupied property. Send the address, price, rent roll and expenses through the form below. For other Maryland buildings, see our Maryland 5-8 unit page; for Baltimore, see our Baltimore 5-8 unit page.
Under our DSCR programs, 1-8 units is residential. Nine or more units is commercial or multifamily lending.
It varies by program and is often lower than on 1-4 units.
Each pre-1978 rental unit generally must be registered and pass a lead inspection at turnover.
No. The ratio uses principal, interest, taxes, insurance and HOA dues. Utilities reduce cash flow but are not in the ratio.
Mixed-use buildings may need a different program. Tell us the layout up front.
Not directly, but it affects renovation plans and costs, which affect value and cash flow.
Yes. Rate-and-term and cash-out refinances are available, with leverage set by program.
Yes. LLC borrowers are standard, and you sign for the loan personally.
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