McAllen is the hub of a fast-growing border metro with cross-border trade, health care and a university campus nearby. Small apartment buildings here are affordable, but property taxes are high and drainage matters.
In short: LendingStreet finances 5 to 8 unit rental buildings in McAllen, Edinburg, Mission, Pharr and across Hidalgo County with DSCR loans that qualify on rent, with no W-2s or tax returns. Loans start at $150,000 with no stated maximum and a 1.0x standard minimum DSCR. In the Valley, budget property taxes at the full rate, check drainage and flood maps and price wind coverage.
McAllen has small apartment buildings near downtown, along Nolana and Pecan, and near the medical district. Edinburg, home to the University of Texas Rio Grande Valley, has buildings that rent to students and faculty. Mission and Pharr have older and newer small buildings at lower prices.
Weslaco and Mercedes, farther east, have older stock and lower rents.
Much of the Valley's rental stock is single-family homes and fourplexes, so true five to eight unit buildings are a smaller slice of the market. Many were built in the 1980s and 2000s as two-story stucco or brick buildings with surface parking and individual electric meters.
| Area | Typical stock | Tenant base |
|---|---|---|
| Central McAllen | Small buildings, fourplexes | Medical and retail workers |
| Edinburg | Small buildings near UTRGV | Students, faculty |
| Mission and Pharr | Mixed stock | Workforce tenants |
| Weslaco and Mercedes | Older buildings | Lower rents |
McAllen's economy is tied to trade with Mexico through the Pharr-Reynosa and Anzalduas bridges, retail, health care and logistics. Population growth has been strong for decades, and rents have risen with it, though they remain below big Texas metros.
Winter Texans, retirees who spend the cooler months in the Valley, create seasonal demand for RV parks and furnished rentals, but most 5-8 unit buildings rent on 12-month leases to local workers and families.
Health care is a major employer, with several hospital systems and a growing medical school at UTRGV. Medical staff and students support rents near the hospitals in McAllen and Edinburg.
This example is illustrative and not a quote. An investor buys a six-unit building in central McAllen for $600,000. Gross rent is $5,550 a month, an average of $925 for each of the 6 units, and the monthly budget includes $1,200 in taxes and $400 in insurance.
A $450,000 loan (75% LTV) carries estimated principal and interest of about $3,146, a full payment near $4,746 and a ratio of about 1.17x. Dropping to 70% LTV, or $420,000, brings the payment to about $4,537 and the ratio to about 1.22x; the investor needs $30,000 more cash.
Taxes are high relative to rent, which is common in Texas. A building outside a mapped flood zone avoids an added premium that could tip the ratio.
| Item | 75% LTV | 70% LTV |
|---|---|---|
| Purchase price | $600,000 | $600,000 |
| Loan amount | $450,000 | $420,000 |
| Down payment | $150,000 | $180,000 |
| Estimated principal and interest | $3,146 | $2,937 |
| Property taxes (monthly) | $1,200 | $1,200 |
| Insurance (monthly) | $400 | $400 |
| Total monthly payment | $4,746 | $4,537 |
| Gross monthly rent | $5,550 | $5,550 |
| DSCR | About 1.17x | About 1.22x |
Properties are taxed by the county, city, school district, college district, drainage district and sometimes hospital or other districts. Investors do not get homestead exemptions. The Hidalgo County Appraisal District reappraises regularly. Combined rates are high, so budget on your purchase price.
Texas has no transfer tax.
The appraisal district sends value notices each spring, and owners can protest. When you buy, expect the appraised value to move toward your purchase price over the next cycle, and budget accordingly.
The Valley is flat, and heavy rains have caused widespread flooding, as in 2018 and during Hurricane Hanna in 2020. Drainage district improvements continue, but low areas flood. Check the FEMA map, ask about water history and get a flood quote.
Hurricanes and tropical storms can bring wind damage. Ask about roof age and wind deductibles.
Insurers in the Valley often ask about roof age, windstorm mitigation and prior water claims. A building with a newer roof and documented drainage improvements is easier to insure at a reasonable premium.
Each city in the Valley has its own permitting and code rules. Confirm zoning allows the building's unit count. Bilingual property management is common and helpful.
Extreme summer heat makes air conditioning essential. Ask for the age of each unit's HVAC system and budget reserves for replacements, which do not enter the DSCR formula but affect cash flow.
A five to eight unit rental in McAllen qualifies the same basic way as a duplex: the combined rent of every unit has to cover the full monthly payment. Lenders look at the rent roll, current leases and the appraiser's market rents, and use the lower figure where they differ. Your W-2s and tax returns stay out of it.
You can borrow from $150,000 with no stated maximum, up to 80% LTV to buy and up to 75% LTV on a cash-out refinance, though 5-8 unit properties often top out lower depending on the program. The standard minimum ratio is 1.0x with a 620 credit score floor, LLC ownership is normal, and 30-year terms are available. Buildings just below 1.0x can be reviewed for a sub-1.0 program.
Our investor loans are business-purpose loans on non-owner-occupied property. Send the address, price or estimated value, the rent roll and your target leverage through the form below, or call (877) 298-1001. For the statewide view, see our Texas 5-8 unit DSCR page. Buildings with nine or more units move to commercial financing on our multifamily loans page.
Yes, compared with most states. Texas relies on local property taxes, and in Hidalgo County the county, city, school, college and drainage districts all levy taxes. Investors do not get homestead exemptions.
Low areas flood during heavy rain, as in 2018 and 2020. Check the FEMA map, ask about water history and add any flood premium to the payment.
Yes. Student and faculty leases count when supported by the appraiser's market rent.
No. Texas has no state or local real estate transfer tax, which keeps closing costs lower than in many states.
Yes. Tropical storms and hurricanes bring wind and rain risk, so carriers look closely at roof age and wind deductibles.
No. Our investor loans are business-purpose loans on non-owner-occupied property, so every unit must be rented to tenants.
The standard minimum is 1.0x, meaning rent covers the full monthly payment. Sub-1.0 programs exist for some buildings with strong value and reserves.
Loans start at $150,000 with no stated maximum. Purchase leverage goes up to 80% LTV and cash-out up to 75%, but maximum LTV on 5-8 units is often lower and varies by program.
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