In Los Angeles, a five to eight unit building is usually a courtyard building, a 1960s stucco walk-up or a Spanish-style multi-unit. Prices are high, rents under the Rent Stabilization Ordinance can be well below market, and both shape how much the rent can carry.
In short: LendingStreet finances 5 to 8 unit rental buildings in Los Angeles with DSCR loans that qualify on the building's rent, with no W-2s or tax returns and LLC borrowers standard. Loans start at $150,000 with no stated maximum and the standard minimum DSCR is 1.0x. In LA, high prices and RSO rents often push leverage well below the maximum, so we size the loan on the leases in place.
Hollywood, Silver Lake, Echo Park and Los Feliz have 1920s and 1930s courtyard buildings and Spanish-style multi-units. Koreatown, Mid-City and Palms have many 1950s and 1960s stucco walk-ups, often with tuck-under parking. Highland Park and Eagle Rock have older bungalow courts and small buildings.
In the San Fernando Valley, North Hollywood, Van Nuys and Sherman Oaks have 1960s and 1970s buildings with more parking and lower prices per unit than the Westside.
Most of these buildings were built before October 1978, which brings them under the city's Rent Stabilization Ordinance.
| Area | Typical 5-8 unit stock | What to check |
|---|---|---|
| Hollywood, Silver Lake, Echo Park | Courtyard and Spanish-style buildings | RSO rents, seismic |
| Koreatown, Mid-City, Palms | 1950s-60s stucco walk-ups | Soft-story retrofit status |
| Highland Park, Eagle Rock | Bungalow courts, small buildings | Unit count, permits |
| North Hollywood, Van Nuys | 1960s-70s buildings | Prices vs rents |
A DSCR loan on a five to eight unit building qualifies on the building's rent, not your income. We add up the leases or market rents for every unit and divide by the full monthly payment: principal, interest, property taxes, insurance and any association dues. The standard minimum is 1.0x, and sub-1.0 programs exist for buildings that fall a little short.
We treat 1 to 8 units as residential, so a six-family is underwritten as a rental, not as a commercial deal. Purchases go up to 80% LTV on some programs, but maximum leverage on 5-8 units is often lower and varies by program and loan size. Cash-out refinances go up to 75% LTV. Loans start at $150,000 with no stated maximum, 30-year terms are available and the minimum credit score is 620. Buildings with nine or more units move to our multifamily program.
Under the RSO, long-term tenants may pay far below market, and increases are limited each year. We underwrite the leases in place, so a building with several low RSO rents may support less leverage than its price suggests.
Under Proposition 13, a property is reassessed to its purchase price when it sells, and the base tax rate plus local levies applies to that value. A seller who owned for decades may have paid a fraction of what you will. Budget taxes on your purchase price.
Los Angeles County and the City of Los Angeles both charge documentary transfer taxes on sales, and Measure ULA adds a large additional city transfer tax on sales above a threshold in the millions that adjusts each year. Larger 5-8 unit buildings on the Westside and in prime areas can cross it. Who pays is set by the contract, and it is usually the seller, but it affects pricing.
The Rent Stabilization Ordinance covers most rental buildings with two or more units that received a certificate of occupancy on or before October 1, 1978. It limits annual increases, requires registration with the city and restricts evictions to specified causes. The city's Just Cause Ordinance extends eviction protections to most other units.
Buildings not covered by the RSO may fall under California's statewide rent cap and just cause law, AB 1482, which applies to many buildings more than 15 years old.
LA's home-sharing ordinance generally limits short-term rentals to a host's primary residence and excludes RSO units, so 5-8 unit buildings are underwritten on long-term leases.
This example is illustrative and not a quote. An investor buys a 6-unit 1960s walk-up in Palms for $2,400,000. The RSO units rent for about $2,400 each on average, or $14,400 a month. Taxes are budgeted at $2,400 a month on the purchase price after reassessment and insurance at $650.
At 65% LTV, the loan is $1,560,000. On a 30-year fixed, principal and interest is about $10,642, the full payment with taxes and insurance is about $13,692, and DSCR is about 1.05x. At 60% LTV, the loan is $1,440,000, principal and interest is about $9,823, the payment is about $12,873 and DSCR is about 1.12x.
Even, the building only just clears 1.0x, which is typical for LA at current prices. At 60% there is more room for about $120,000 more down. A sub-1.0 program is another option if you want more leverage.
| Item | 65% LTV | 60% LTV |
|---|---|---|
| Gross monthly rent | $14,400 | $14,400 |
| Loan amount | $1,560,000 | $1,440,000 |
| Principal and interest | $10,642 | $9,823 |
| Property taxes | $2,400 | $2,400 |
| Insurance | $650 | $650 |
| Total monthly payment | $13,692 | $12,873 |
| DSCR | About 1.05x | About 1.12x |
Los Angeles requires seismic retrofits for many wood-frame soft-story buildings, typically those with tuck-under parking and two or more stories built before 1978. Confirm the building's retrofit status, since an incomplete retrofit is a cost and a compliance issue. Wildfire risk has also made insurance harder to place in some hillside areas.
A complete package gets a faster and clearer answer. Most 5-8 unit files need the following.
Our investor loans are business-purpose loans on non-owner-occupied property. We finance DSCR loans on 5-8 unit rentals across Los Angeles and Los Angeles County.
Send the address, price, rent roll and target leverage through the form below, or call (877) 298-1001. We run the ratio on a realistic tax and insurance figure at a few loan amounts and come back with options. If the building needs work before it can qualify on rent, a bridge loan first and a DSCR refinance after is a common path.
If it has two or more units and a certificate of occupancy issued on or before October 1, 1978, it likely is. Check registration with the city.
Proposition 13 reassesses a property to its purchase price at sale. A long-time owner's bill reflects an older, lower value.
Only if the price is above the ULA threshold, which is in the millions and adjusts each year. Larger buildings can cross it. Check the current threshold.
Residential. We treat buildings of 1 to 8 units as residential and finance them with DSCR loans that qualify on rent. Buildings with nine or more units move to commercial multifamily financing.
At least 20%, and often more. Purchases go up to 80% LTV on some programs, but maximum leverage on 5-8 units is often lower and varies by program, loan size and the building's ratio.
There are options. A lower loan amount raises the ratio, sub-1.0 DSCR programs exist for buildings that are close, and rents that are below market can sometimes be addressed at lease renewal before a refinance.
Yes. LLC borrowers are standard on our DSCR loans. The members usually sign for the loan personally, and we will ask for the LLC's formation documents and operating agreement.
2-3 competing quotes from 30+ capital sources. No credit pull. No commitment.
By clicking, you provide express written consent to be contacted by LendingStreet (NMLS #1734316) via SMS, phone, or email, possibly using automated technology, regarding your loan inquiry. Reply STOP to opt out. Consent is not required to obtain services. See our Privacy Policy and Terms.