Hawaii's small apartment buildings are mostly Honolulu walk-ups from the 1960s and 1970s, in Makiki, McCully-Moiliili, Kaimuki and Kalihi. Rents are high, but prices are higher, so many 5-8 unit files here work at lower leverage than the program maximum.
In short: Yes. LendingStreet finances 5 to 8 unit rental buildings in Hawaii with DSCR loans that qualify on the building's rent, starting at $150,000 with no stated maximum and LLC borrowers standard. Purchases can go up to 80% LTV and cash-out up to 75%, though maximum leverage on 5-8 units varies by program. In Hawaii, high prices, the higher conveyance tax rate on non-owner-occupied property, general excise tax on rents and leasehold land are the items to understand before you size a 5-8 unit loan.
Most of Hawaii's 5 to 8 unit buildings are on Oahu, especially in Honolulu's Makiki, McCully-Moiliili, Kaimuki, Palolo and Kalihi neighborhoods, where 1960s and 1970s concrete walk-ups line the side streets. Some buildings sit on leasehold land, where the owner holds the building and a ground lease rather than the land.
On Maui, the Big Island and Kauai, small multi-unit buildings are fewer and pricing is very local. Investors there often face limited comparable sales.
LendingStreet treats 1 to 8 units as residential, so a five-, six-, seven- or eight-unit building in Hawaii is underwritten as a rental property rather than a commercial loan. The loan qualifies on the building's rent: total monthly rent divided by the full monthly payment, including principal, interest, taxes, insurance and any association dues.
Standard programs look for 1.0x or better, and sub-1.0 programs exist for buildings that come up a little short. Maximum leverage on 5-8 unit properties is often lower than on a single-family rental and varies by program and loan size.
A 5 to 8 unit building is usually appraised with more weight on the income approach than a house would be. The appraiser compares its rents with similar small buildings nearby and reconciles that with sales comparables. Honolulu has small apartment sales but not a large volume, and leasehold buildings can appraise very differently from fee simple ones.
Underwriting works from the rent roll and the leases. Expect to provide a current rent roll showing each unit, its rent and lease dates, plus copies of the leases. Vacant units are usually counted at the appraiser's market rent, and some programs use the lower of actual and market rent.
Hawaii's conveyance tax is tiered by price and is higher for property that the buyer will not occupy, which includes a rental building. It is usually paid by the seller, but confirm with your escrow company.
Honolulu's property tax rates are low per dollar of value, but values are high, and non-owner-occupied property may fall into a higher-rate class above a value threshold. Owners also pay general excise tax on rental income, which is not in the DSCR payment but affects cash flow.
Hurricane coverage is often separate from the main policy in Hawaii, and carriers ask about roof and building age. Low-lying areas have flood zones, including parts of Waikiki and Kakaako.
On the Big Island, lava zones affect insurability. Get a full quote for the building before you finalize your offer.
This example is illustrative and not a quote. An investor buys a Honolulu six-unit walk-up for $2,100,000. Each of the 6 units rents for $2,350 a month, for $14,100 in total. Property taxes are budgeted at $16,000 a year and the whole-building insurance quote is $9,600 a year.
At 65% LTV the loan is $1,365,000, leaving $735,000 down before closing costs. On 30-year amortization, principal and interest is about $9,544 a month. Adding $2,133 for taxes and insurance brings the payment to about $11,678, so the DSCR is about 1.21x, above the 1.0x standard minimum. At 75% LTV the loan would be $1,575,000 and the ratio would drop to about 1.07x, which shows why buyers here often bring a larger down payment.
| Item | Amount |
|---|---|
| Purchase price | $2,100,000 |
| Units and gross monthly rent | 6 units, $14,100 |
| Loan at 65% LTV | $1,365,000 |
| Principal and interest (30-year) | About $9,544 |
| Taxes and insurance per month | About $2,133 |
| Total monthly payment | About $11,678 |
| DSCR | About 1.21x |
On leasehold buildings, the ground lease term, rent and renegotiation dates affect financing. Many programs need the lease to run well beyond the loan term. Provide the full ground lease early.
Honolulu requires a 90-day minimum stay for most rentals outside resort-zoned areas, and Maui has moved to phase out short-term rentals in many apartment districts. Hawaii's landlord-tenant code governs deposits and notices.
Having these together before you apply keeps the appraisal and underwriting on schedule.
These loans fit investors in Hawaii who want to qualify on the building's income instead of personal tax returns, hold title in an LLC and finance on a 30-year term. Our investor loans are business-purpose loans on non-owner-occupied property, so a building where you plan to live in one of the units is not eligible.
If the building needs heavy renovation or has several vacant units, a short-term bridge loan and a later refinance into a DSCR loan can be the better path. Buildings with nine or more units are commercial; see our multifamily loans page for those. Call (877) 298-1001 or use the form below to get a quote.
Yes. LendingStreet finances 5 to 8 unit investment buildings in Hawaii with DSCR loans from $150,000, qualified on the building's rent with LLC borrowers standard.
LendingStreet treats 1 to 8 units as residential, so a 5 to 8 unit building is underwritten as a rental property on its rent. Nine or more units is commercial lending.
Sometimes. It depends on the ground lease's remaining term, rent and renegotiation schedule. Many programs want the lease to extend well beyond the loan term, so send the full ground lease early.
Yes. The rate is tiered by price and is higher when the buyer will not occupy the property. It is usually paid by the seller, but your escrow company will confirm.
No. Our investor loans are business-purpose loans on non-owner-occupied property, so the building has to be fully used as a rental.
Vacant units are usually counted at the appraiser's market rent, and some programs use the lower of actual and market rent. Several vacancies can reduce the loan amount, and a bridge loan may be the better first step.
Yes, up to 75% LTV on standard programs, often lower on 5-8 units. The rent still has to cover the new payment, and seasoning rules vary by program.
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