Lincoln's small apartment buildings tend to be brick walk-ups within a mile or two of the Capitol, many built before the 1970s. They cash flow well on paper; the boiler, the roof and the water bill decide what is left.
In short: LendingStreet finances 5-8 unit residential buildings in Lincoln and across Nebraska with DSCR loans qualified on the combined rent of all units. Loans start at $150,000 with no stated maximum, there are no W-2s or tax returns, and LLC borrowers are standard. Maximum LTV on 5-8 unit properties varies by program and can be lower than on 1-4 unit rentals.
The densest supply of small buildings is in the neighborhoods around downtown and the Capitol: the Near South, Everett, Clinton, Hawley and the blocks near the Haymarket and the Telegraph District. You will find 1910s and 1920s brick walk-ups with six or eight units, large old houses converted into five or six apartments, and 1960s two-story buildings with outdoor stairs. Smaller clusters sit near Nebraska Wesleyan in University Place and along the main corridors like O Street.
Tenants are students, state employees, hospital staff and young workers who want to be near downtown. Units are mostly studios, one-bedrooms and two-bedrooms, with rents below what new apartment complexes on the edge of town charge.
That rent gap is part of the appeal. Tenants who want to walk to campus, the Capitol or the Haymarket will often choose an older unit with character over a newer one farther out, which keeps vacancy low in well-run buildings. Parking, laundry and updated kitchens are the features that let owners push rents toward the top of the range.
For our programs, buildings of 5 to 8 units are still residential, so they qualify on rent like a smaller rental instead of going through full commercial underwriting. Leverage, reserves and appraisal requirements can differ from 1-4 unit loans and vary by program. Nine units and up is commercial; see our multifamily page for larger buildings.
This example is illustrative and not a quote. An investor buys an eight-unit brick building in the Near South for $640,000. Each one-bedroom rents for $825, so gross rent is $6,600 a month. Taxes on the purchase price are budgeted at $1,015 a month and insurance at $450.
At 75% LTV, if the program allows it, the loan is $480,000, estimated principal and interest is about $3,356, the total payment is about $4,821 and DSCR is about 1.37x. At 65% LTV the loan is $416,000 and DSCR is about 1.51x. The building clears 1.0x comfortably at each level, which leaves room for the expenses that the ratio does not count, such as heat, water and repairs.
| LTV | Loan | Est. principal and interest | Total payment incl. taxes and insurance | DSCR |
|---|---|---|---|---|
| 75% | $480,000 | $3,356 | $4,821 | 1.37x |
| 70% | $448,000 | $3,132 | $4,597 | 1.44x |
| 65% | $416,000 | $2,909 | $4,374 | 1.51x |
DSCR compares rent with principal, interest, taxes, insurance and any HOA dues. On an older Lincoln building, the owner often pays much more than that: a central boiler's gas bill, water and sewer on a single meter, common-area electric, snow removal, trash and the occasional sewer line repair. These do not count against the DSCR, but they count against your cash flow.
Ask for twelve months of utility bills and the owner's repair history, and price replacements into your offer.
Lincoln's building and fire codes apply to multi-unit rentals, including smoke detection, egress and fire separation between units. Converted houses sometimes have units that were added without permits, and the appraiser and title review will look at whether the legal unit count matches the actual one. Check the city's records before you count rent from a unit that may not be legal. The county assessor's record also lists the building type and unit count, which should match what you are buying.
Small apartment buildings in Nebraska are valued by the county assessor, often using an income approach, and taxed at the full local levy. After a sale, expect the value to move toward the price you paid. Budget the tax line on your purchase price and review the most recent valuation notice; owners can protest a value during the county's protest period in early summer.
Many Lincoln buildings carry rents below market because a long-time owner never raised them. Renovating units as they turn over, adding coin or card laundry, or billing back water can lift income. A bridge or fix and flip loan can fund the work, followed by a DSCR refinance on the stabilized rent roll.
Most owners of 5-8 unit buildings either self-manage nearby or hire a local manager familiar with student and downtown tenants. Turnover clusters in late spring and August, so plan make-ready budgets and vacancy around the school calendar.
Winter is the season that tests an older building. Frozen pipes, ice dams and boiler failures are the calls you will get in January, so service the heating system each fall and keep a reliable plumber and HVAC contractor on call. A documented maintenance history also helps when you refinance or sell.
Send the address, price, rent roll, utility bills and an insurance quote through the form below or call (877) 298-1001. Our investor loans are business-purpose loans on non-owner-occupied property. Our Nebraska 5-8 unit page covers buildings elsewhere in the state.
For our programs, 5-8 unit buildings are residential and qualify on rent. Nine units and up is commercial.
Maximum LTV varies by program and is often lower than on 1-4 units. Loans start at $150,000 with no stated maximum.
They are not part of the DSCR payment, but they reduce your cash flow. Budget them separately.
Yes, if the units are legal. Confirm the permitted unit count with the city before you buy.
Often. After a sale, the assessed value tends to move toward the purchase price. Budget on what you paid.
Yes. Leases in place, checked against the appraiser's market rents, set the qualifying income.
Yes. LLC borrowers are standard, and you sign for the loan personally.
Yes. We lend on 5-8 unit buildings across Nebraska, including Omaha, Grand Island and Kearney.
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