Honolulu's small walk-up apartment buildings, mostly built in the 1950s through the 1970s, sit in a sweet spot: still residential financing at five to eight units, but with enough rent from several tenants to carry Oahu prices better than a single house can.
In short: LendingStreet finances 5-8 unit residential buildings in Honolulu and across Oahu 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 LLC borrowers are standard. Max LTV on 5-8 units can be lower than on 1-4 units and varies by program, and the building's condition and rent roll get a close look.
Five- to eight-unit walk-ups cluster in the apartment-zoned parts of town: Makiki, Moiliili, McCully, Kaimuki along Waialae Avenue, Kalihi, Palama and Liliha. Outside town, you find them in Kaneohe, Wahiawa, Waipahu and Aiea. Many are two- or three-story concrete block or wood-frame buildings with open walkways, small units and limited parking.
Tenants range from University of Hawaii students and staff near Moiliili to hospital workers, military families and service workers across town.
These buildings rarely come on the market in large numbers, and many have been held by the same families for decades. That can mean deferred maintenance and below-market rents, which is both the opportunity and the underwriting challenge.
| Area | Typical building | What to check |
|---|---|---|
| Makiki, McCully, Moiliili | 1960s-70s concrete walk-ups | Spalling, plumbing, parking |
| Kalihi, Palama, Liliha | Older wood-frame and block buildings | Termites, roofs, permits |
| Kaimuki, Kapahulu | Small buildings near commercial strips | Zoning, rent levels |
| Kaneohe, Wahiawa, Waipahu | Garden-style walk-ups | Flood zones, tenant mix |
We qualify the building on the combined rent of all units against the full monthly payment, including principal, interest, taxes and insurance. Current leases or a rent roll are used for occupied units, and the appraiser estimates market rent for any vacant ones. A building where some units rent well below market will show a lower ratio until leases turn over.
Unlike 1-4 unit homes, 5-8 unit appraisals often look at income and expenses as well as comparable sales, so a clean operating history helps support the value.
Expect the appraiser to request the rent roll, a year or two of operating statements and copies of leases. Buildings with clean records, deposits held properly and no large deferred repairs move through underwriting faster.
This example is illustrative and not a quote. An investor buys a six-unit building for $2,100,000. Each unit rents for about $2,050, for $12,300 a month. Taxes are budgeted at $700 a month and building insurance, including hurricane coverage, at $900.
With the program allowing 70% LTV on this building, the loan is $1,470,000. Estimated principal and interest on a 30-year loan is about $10,028, and the full payment is about $11,628, a DSCR of about 1.06x. At 65% LTV the payment drops to about $10,912 and the DSCR rises to about 1.13x, a cushion against vacancy or a higher insurance quote.
Note that this building has six separate rents, so a single vacancy reduces income by about one sixth rather than half or all of it. That spread of risk is one reason small buildings can carry Oahu prices better than a single-family home.
| Item | 70% LTV | 65% LTV |
|---|---|---|
| Loan amount | $1,470,000 | $1,365,000 |
| Total monthly payment | $11,628 | $10,912 |
| Combined rent | $12,300 | $12,300 |
| DSCR | About 1.06x | About 1.13x |
Many older Honolulu walk-ups have a single water meter, so the owner pays water and sewer for the whole building, and sewer charges on Oahu are significant. Common-area electricity, trash, pest control and maintenance add up too. These costs are not part of the DSCR payment, but they come out of your cash flow, so budget them carefully and look at the seller's actual bills.
If the building has separate meters for electricity, tenants usually pay their own. Some owners add water submeters or a utility charge in new leases, but check the lease terms and Hawaii rules before changing how utilities are billed.
Salt air and age take a toll on Honolulu buildings. Concrete spalling, where rusting rebar cracks the concrete, is common in older block and concrete structures. Cast iron and galvanized plumbing often needs replacement, and wood-frame buildings need termite inspections.
Repairs on a small concrete building can be expensive, and a spalling problem that is visible on a walkway may extend into the structure. Have a contractor or engineer price the work before you close, and keep reserves for it.
Insuring a multi-unit building in Hawaii means a property policy, liability coverage and usually a separate hurricane policy, plus flood insurance in mapped flood zones such as parts of the Ala Wai area and some windward neighborhoods. The market has tightened, so get quotes early. A higher premium than expected is one of the most common reasons a 5-8 unit ratio drops.
Hawaii's Residential Landlord-Tenant Code governs deposits, notices and repairs statewide. Review every lease, confirm deposits are held properly, and check for any month-to-month tenants. Rentals of less than 30 days are generally not allowed outside resort zones in Honolulu, so underwrite on long-term leases.
Tenants in small Honolulu buildings often stay for years, so long-standing leases at older rents are common. Raising rents to market takes time and must follow the lease terms and state notice rules, so underwrite on the current rents, not your target rents.
Buildings with nine or more units are commercial. For those, see our multifamily loans page. If you own several 5-8 unit buildings or a mix of properties, a blanket portfolio loan can combine five or more under one loan.
Send the address, price, rent roll, tax bill, insurance quotes and utility costs through the form below, or call (877) 298-1001. Our investor loans are business-purpose loans on non-owner-occupied property. We will run the ratio at a few leverage levels.
Residential. We finance 1-8 units with residential DSCR loans; nine or more units is commercial.
It varies by program and is often lower than on 1-4 units.
Current leases for occupied units and market rent for vacant ones.
The DSCR payment includes principal, interest, taxes and insurance (plus any HOA or AOAO dues). Utilities affect your cash flow but are not part of that payment.
Yes, but the ratio is based on current rents, so leverage may be lower until leases turn over.
No. The building qualifies on its rent.
Yes. Rate-and-term and cash-out refinances are available, subject to program limits.
Yes, across Oahu, including Kaneohe, Wahiawa, Waipahu and Aiea.
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