Lexington has a quiet supply of small apartment buildings: 1960s and 1970s brick six-plexes near campus and along the main corridors, converted older houses downtown, and a few newer eight-unit buildings. They are financed as residential property under our programs, which keeps the process closer to a fourplex than to a large apartment complex.
In short: LendingStreet offers DSCR loans on 5 to 8 unit residential buildings in Lexington and central Kentucky, qualified on the combined rent of all units with no W-2s or tax returns. Loans start at $150,000 with no stated maximum, maximum LTV varies by program and is often lower than on 1-4 units, and LLC borrowers are standard. Buildings of nine or more units go to our commercial programs.
Many are near the University of Kentucky and Transylvania University, in the streets between campus and downtown and along corridors such as Euclid Avenue, Woodland Avenue and South Limestone. Others sit along Richmond Road, Tates Creek Road and Versailles Road, where mid-century two-story brick buildings with six or eight units were common. Downtown and the North Limestone area have older houses converted into five or more apartments.
These buildings often trade between local owners. When one comes up, a buyer with a clean rent roll review and financing in hand can move faster than one still searching for a loan.
The building qualifies on the combined rent of all units against the full monthly payment. Expect the appraiser to provide a rent schedule for each unit and to weigh the income approach more than on a single-family home. Lenders will want a rent roll, copies of leases and sometimes an expense history. Leverage varies by program and is usually a step below 1-4 unit maximums.
Appraisers often lean on the income approach because direct sales of comparable six- or eight-unit buildings are limited in Lexington. A rent roll that matches the leases, clean deposit records and realistic market rents for any vacant units help the value hold up.
This example is illustrative and not a quote. An investor buys a six-unit brick building for $780,000. The one- and two-bedroom units rent from $950 to $1,100, totaling $6,200 a month. Taxes are budgeted at $715 a month and insurance at $390.
At 70% LTV the loan is $546,000, estimated principal and interest is about $3,725 and the total payment is about $4,830, for a DSCR of about 1.28x. At 75% LTV, where a program allows it, the loan is $585,000, the payment about $5,096 and the DSCR about 1.22x.
| Unit | Monthly rent |
|---|---|
| Unit 1 | $950 |
| Unit 2 | $1,000 |
| Unit 3 | $1,025 |
| Unit 4 | $1,050 |
| Unit 5 | $1,075 |
| Unit 6 | $1,100 |
| Total | $6,200 |
Small apartment buildings in Lexington tend to sell at prices that leave room between rent and payment, which is why the example clears 1.0x comfortably. That cushion matters, because the DSCR formula does not include owner-paid water, common-area electricity, trash, lawn care or repairs. Budget those separately so the building cash flows in practice, not just on paper.
Check how utilities are metered before you buy. Buildings with separate electric meters and individual water heaters shift more cost to tenants; buildings with a single water meter and a shared boiler leave more with the owner. Converting is possible but takes permits and capital.
Buildings close to campus often rent to students on August-to-July leases. That brings dependable demand but also annual turnover, cleaning and repair costs, and the risk of a unit sitting empty if it misses the leasing window. Lenders typically underwrite on market rent for the legal unit configuration. Keep the lease calendar aligned with the school year and show the history to the appraiser.
Some owners near campus use professional student housing managers who handle the leasing calendar and co-signers on student leases, which can reduce vacancy risk.
Many of these buildings were built in the 1960s and 1970s and are due for roofs, windows, boilers or individual HVAC units, and parking lot repaving. Converted older houses can raise fire separation and egress questions. Ask for any code enforcement history from LFUCG and budget for deferred items before you set your offer.
Have these ready to speed up review.
A clean, organized file tells the underwriter the building is well run, which can matter as much as the numbers on a larger property.
If the building has vacant units or rents well under market, a bridge loan can finance the purchase and renovation, and a DSCR loan can refinance once the units are leased. That two-step plan often produces a stronger long-term loan than trying to size a DSCR loan on depressed current rent.
A building with deferred maintenance can also be a value-add opportunity. Replacing windows, updating kitchens on turnover and improving curb appeal can lift rents over a few lease cycles, and a later refinance can capture that higher value.
Buildings with nine or more units are commercial property and use a different underwriting approach; see our multifamily loans page. For 5-8 units, send the rent roll and address through the form below or call (877) 298-1001. Our investor loans are business-purpose loans on non-owner-occupied property. For statewide notes, see our Kentucky 5-8 unit page.
Under our programs, 1-8 units is residential and qualifies for DSCR financing. Nine or more units is commercial.
It varies by program and is often lower than on 1-4 units. Larger balances can lower it further.
No. The ratio uses principal, interest, taxes, insurance and HOA dues. Utilities affect your cash flow, so budget them separately.
Yes. The loan is underwritten on market rent for the legal unit configuration.
Market rent may be used on some programs, or you can use a bridge loan first and refinance after lease-up.
The program minimum is 620, though stronger credit can help leverage on larger buildings.
Yes. A blanket portfolio loan can include 5-8 unit buildings with other rentals when you own five or more properties.
Yes, throughout central Kentucky, including Richmond, Georgetown and Winchester.
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