Kentucky's small multifamily market includes grand Victorian homes split into apartments in Old Louisville, brick buildings in the Highlands and student buildings in Lexington. Moderate taxes and a modest transfer tax help; older building systems are the thing to inspect.
In short: Yes. LendingStreet finances 5 to 8 unit rental buildings in Kentucky 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. Kentucky's modest transfer tax and moderate property taxes help, so building age, flood exposure near the Ohio River and the rent roll usually decide the ratio.
Louisville's Old Louisville neighborhood has one of the largest collections of Victorian homes in the country, many converted into five to eight apartments. The Highlands, Germantown and Crescent Hill have brick buildings and smaller conversions.
Lexington near the University of Kentucky has student buildings, and Bowling Green near Western Kentucky has small buildings. Covington and Newport in northern Kentucky have older buildings near Cincinnati.
LendingStreet treats 1 to 8 units as residential, so a five-, six-, seven- or eight-unit building in Kentucky 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. Louisville and Lexington have reasonable small multifamily sales; converted Victorians can be harder to compare.
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.
Kentucky charges a real estate transfer tax on deeds, usually paid by the seller. It is modest compared with many states, and buyers mainly pay recording, title and lender costs.
Kentucky property taxes are moderate. The state's homestead exemption applies only to qualifying owner-occupants, so budget a rental at its full assessment. Property valuation administrators can revisit value after a sale, so use a figure based on your price.
Louisville and the northern Kentucky river cities have flood zones near the Ohio River, and some neighborhoods sit behind the floodwall system. If flood coverage is required, it goes into the DSCR payment.
Old Louisville Victorians and other older buildings draw questions about wiring, plumbing, roofs and fire separation between units, and some carriers want updated electrical service before they will quote. Get a whole-building quote before you set your offer.
This example is illustrative and not a quote. An investor buys an Old Louisville six-unit Victorian for $660,000. Each of the 6 units rents for $1,050 a month, for $6,300 in total. Property taxes are budgeted at $6,900 a year and the whole-building insurance quote is $8,200 a year.
At 75% LTV the loan is $495,000, leaving $165,000 down before closing costs. On 30-year amortization, principal and interest is about $3,461 a month. Adding $1,258 for taxes and insurance brings the payment to about $4,719, so the DSCR is about 1.33x, above the 1.0x standard minimum. If underwriting counted one unit as vacant with no market rent support, the ratio would drop to about 1.11x, which is why signed leases and the appraiser's rent analysis matter.
| Item | Amount |
|---|---|
| Purchase price | $660,000 |
| Units and gross monthly rent | 6 units, $6,300 |
| Loan at 75% LTV | $495,000 |
| Principal and interest (30-year) | About $3,461 |
| Taxes and insurance per month | About $1,258 |
| Total monthly payment | About $4,719 |
| DSCR | About 1.33x |
Louisville Metro and Lexington have adopted Kentucky's Uniform Residential Landlord and Tenant Act, which sets rules on deposits, notices and entry. In places that have not adopted it, the rules can be different. Kentucky does not have rent control.
Lexington buildings near the University of Kentucky usually run on academic-year leases, and Louisville has rental registration requirements. Old Louisville is a preservation district, so exterior work may need approval; factor that into any renovation plans.
Having these together before you apply keeps the appraisal and underwriting on schedule.
These loans fit investors in Kentucky 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 Kentucky 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.
Yes. Kentucky charges a modest real estate transfer tax on deeds, usually paid by the seller.
Yes, if it is 5 to 8 units of investment property. Historic district rules may affect exterior work.
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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