Maryland's 5 to 8 unit market runs from Baltimore rowhouses and converted brownstones to small garden buildings in the Washington suburbs. Rents can be strong, but transfer and recordation taxes, lead paint rules and county rent limits make Maryland underwriting more involved than most.
In short: Yes. LendingStreet finances 5 to 8 unit rental buildings in Maryland 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. In Maryland, combined state and county transfer and recordation taxes, the state's lead paint registration rules and rent stabilization in Montgomery and Prince George's counties are the items to check early.
Baltimore has small buildings in Charles Village, Mount Vernon, Bolton Hill and Hampden, many of them large rowhouses or brownstones converted into five to eight units. Highlandtown and Canton have smaller conversions, and the city also has 1950s and 1960s garden buildings on its outer edges.
In the Washington suburbs, Silver Spring, Takoma Park, Hyattsville and Langley Park have small apartment buildings at higher price levels. Frederick, Hagerstown and Salisbury have older small buildings at lower prices.
LendingStreet treats 1 to 8 units as residential, so a five-, six-, seven- or eight-unit building in Maryland 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. Baltimore and the DC suburbs have regular small multifamily sales, but block-by-block differences in Baltimore can be large, so the appraiser's comparable selection matters.
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.
Maryland charges a state transfer tax, and counties add their own transfer and recordation taxes. Combined, these can be one of the larger closing costs in the country, and Baltimore City's rates are among the highest. Ask your title company for exact figures.
Some Baltimore properties are still subject to ground rent, a small annual payment to a separate ground owner. Title will identify it. Baltimore City's property tax rate is also high, so use the actual bill.
Insurance in Maryland is mostly about building age and construction. Carriers ask about wiring, plumbing, roofs and fire separation in converted rowhouses.
The Eastern Shore and parts of Anne Arundel County near the Chesapeake have flood and wind exposure. A whole-building quote is the number to use.
This example is illustrative and not a quote. An investor buys a Baltimore six-unit converted rowhouse for $780,000. Each of the 6 units rents for $1,350 a month, for $8,100 in total. Property taxes are budgeted at $17,500 a year and the whole-building insurance quote is $7,500 a year.
At 75% LTV the loan is $585,000, leaving $195,000 down before closing costs. On 30-year amortization, principal and interest is about $4,090 a month. Adding $2,083 for taxes and insurance brings the payment to about $6,174, so the DSCR is about 1.31x, above the 1.0x standard minimum. If taxes came in $3,000 a year higher after reassessment, the ratio would fall to about 1.26x.
| Item | Amount |
|---|---|
| Purchase price | $780,000 |
| Units and gross monthly rent | 6 units, $8,100 |
| Loan at 75% LTV | $585,000 |
| Principal and interest (30-year) | About $4,090 |
| Taxes and insurance per month | About $2,083 |
| Total monthly payment | About $6,174 |
| DSCR | About 1.31x |
Maryland requires owners of pre-1978 rental units to register them with the state and meet lead risk reduction standards at turnover. Baltimore City requires rental licenses with inspections. Ask the seller for registration and inspection certificates.
Montgomery County and Prince George's County adopted rent stabilization laws that cap annual increases on many units, and Takoma Park has its own rules. Underwriting uses the rents you can collect.
Having these together before you apply keeps the appraisal and underwriting on schedule.
These loans fit investors in Maryland 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 Maryland 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.
Some Baltimore properties have a separate ground owner who collects a small annual rent. Title will identify it, and the lender will want it handled properly at closing.
For pre-1978 units, yes. Maryland requires registration and lead risk reduction standards. Ask the seller for current certificates.
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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