Memphis has long attracted rental investors with low prices and high rent-to-price ratios. For 5-8 unit buildings, the details that matter are how Shelby County classifies the property and how well the building is managed.
In short: LendingStreet finances 5 to 8 unit rental buildings across Memphis and Shelby County with DSCR loans that qualify on rent, not tax returns. Loans start at $150,000 with no stated maximum and a 1.0x standard minimum DSCR. In Memphis, confirm how the assessor classifies the building, budget Tennessee transfer and mortgage taxes, and look closely at management and collections history.
Midtown neighborhoods such as Cooper-Young, Central Gardens and Crosstown have small brick buildings from the 1920s through the 1960s. Binghampton and Orange Mound offer lower prices and more renovation work. Raleigh, Frayser, Whitehaven and Hickory Hill have small garden buildings.
Cordova, Bartlett, Germantown and Collierville are mostly single-family. Southaven and Olive Branch across the Mississippi line in DeSoto County have newer rentals.
Many Midtown buildings are two-story brick walk-ups with four to eight units and surface parking behind. Some have been renovated with new kitchens and HVAC, while others still have original systems and window units.
| Area | Typical stock | Investor note |
|---|---|---|
| Midtown, Cooper-Young, Crosstown | 1920s-1960s brick buildings | Stronger rents, older systems |
| Binghampton and Orange Mound | Older stock | Value-add, renovation |
| Raleigh, Frayser, Hickory Hill | Small garden buildings | Management intensive |
| DeSoto County, MS | Newer rentals | Mississippi rules apply |
Tennessee assesses residential property at 25% of appraised value and commercial property at 40%. How a five to eight unit apartment building is classified can depend on its use and size, so ask the Shelby County assessor how the parcel is classified; a commercial classification would raise the bill substantially.
Shelby County reappraises every four years, with the most recent in 2025. Budget on your purchase price and current rates.
This example is illustrative and not a quote. An investor buys an eight-unit 1950s brick building in Midtown for $680,000. Taxes are budgeted conservatively in case the parcel is classified as commercial. The 8 units rent for an average of $950 each, or $7,600 a month in total. Taxes are budgeted at $1,050 a month and insurance at $520.
At 75% LTV the loan is $510,000, estimated principal and interest on a 30-year term is about $3,566, and the full payment is about $5,136, for a DSCR of about 1.48x. At 70% LTV the loan drops to $476,000, the payment to about $4,898 and the DSCR rises to about 1.55x, with $34,000 more brought to closing.
Even with a conservative tax figure, the building clears 1.0x. Collections history matters as much as the ratio here.
| Item | 75% LTV | 70% LTV |
|---|---|---|
| Purchase price | $680,000 | $680,000 |
| Loan amount | $510,000 | $476,000 |
| Down payment | $170,000 | $204,000 |
| Estimated principal and interest | $3,566 | $3,328 |
| Property taxes (monthly) | $1,050 | $1,050 |
| Insurance (monthly) | $520 | $520 |
| Total monthly payment | $5,136 | $4,898 |
| Gross monthly rent | $7,600 | $7,600 |
| DSCR | About 1.48x | About 1.55x |
Tennessee charges a transfer tax of $0.37 per $100 of value and a mortgage tax of $0.115 per $100 of loan amount above $2,000. The buyer customarily pays both, so include them in your cash to close.
On a $510,000 loan, for example, the mortgage tax is a little under $590, and transfer tax on a $680,000 purchase is about $2,516. Neither affects DSCR, but both add to the cash you need at closing alongside title, recording and lender fees.
Memphis neighborhoods vary a lot block by block. A strong local manager, a clean rent roll and a history of on-time collections make a difference in both underwriting and returns. Ask for 12 months of rent records.
Insurance premiums reflect location, building age and claims history. Get quotes early.
Property condition varies widely. Order a full inspection, including roof, foundation, sewer line and electrical, and ask for repair invoices. Vacant units should be inspected in person, not just from photos.
Some parts of the city have higher crime rates, which affects tenant retention, insurance pricing and resale. Look at the block, not just the zip code.
FedEx's global hub, St. Jude Children's Research Hospital, the medical district and logistics jobs along I-40 and I-55 support steady demand. Buildings near Midtown, the medical district and major employers tend to perform best.
Rent levels in Memphis are modest, but so are prices. That combination is why investors from other states buy here, and why the city has a large share of rental housing owned by out-of-town investors.
A building with five to eight units is still residential financing, so it qualifies on rent the way a single-family rental does. In Memphis, the appraiser's rent schedule and any signed leases set the income, and the ratio compares that income with principal, interest, taxes, insurance and any association dues. No W-2s or tax returns are needed.
Loans start at $150,000 with no stated maximum. Purchases can reach 80% LTV and cash-out refinances 75% LTV, but on 5-8 units the top leverage is often lower and varies by program. The standard minimum DSCR is 1.0x, the minimum credit score is 620, LLC borrowers are standard and 30-year terms are available. If the ratio lands just under 1.0x, a sub-1.0 DSCR program may fit.
Get a quote with the form below or by calling (877) 298-1001. Our investor loans are business-purpose loans on non-owner-occupied property, and every 5-8 unit file is reviewed on the building's own cash flow. Compare with our Tennessee 5-8 unit DSCR page for state-level rules, and note that nine units and up is a commercial loan.
Residential property is assessed at 25% of appraised value and commercial at 40%. Classification depends on use and the assessor's review, so ask the Shelby County assessor how your parcel is classified.
Shelby County reappraises every four years, most recently in 2025. Values can change significantly from one cycle to the next.
By custom the buyer pays both the transfer tax on the price and the mortgage tax on the loan amount.
Very. Collections, turnover and maintenance vary widely by neighborhood, and a strong local manager often makes the difference between a building that performs and one that struggles.
Those cities are in DeSoto County, Mississippi, where Mississippi rules and tax rates apply. Our DSCR program also lends in Mississippi.
The appraiser's market rent can support vacant units on some programs, but a building with weak occupancy usually gets more scrutiny. A bridge loan can carry a lease-up before a DSCR refinance.
No. The loan qualifies on the building's rent, not your personal income, so W-2s and tax returns are not required. A 620 minimum credit score applies.
Yes, up to 75% LTV on a cash-out refinance, often lower on 5-8 units. Seasoning requirements vary by program, and the rent must still cover the new payment.
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