Minnesota's small multifamily market includes Minneapolis brick walk-ups and fourplexes, St. Paul buildings and student buildings in Duluth and Mankato. Deed tax, mortgage registry tax and St. Paul's rent stabilization are the local items to check.
In short: Yes. LendingStreet finances 5 to 8 unit rental buildings in Minnesota 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 Minnesota, the state deed tax and mortgage registry tax, St. Paul's rent stabilization and winter-related insurance are the items to check alongside the rent roll.
Minneapolis has small brick walk-ups from the 1910s and 1920s in Whittier, Stevens Square, Uptown and Powderhorn, plus fourplexes across the city. St. Paul has small buildings in Frogtown, Summit-University and the West Side.
Duluth near the University of Minnesota Duluth, Rochester near the Mayo Clinic, St. Cloud and Mankato have small buildings at lower prices.
LendingStreet treats 1 to 8 units as residential, so a five-, six-, seven- or eight-unit building in Minnesota 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. The Twin Cities have regular small multifamily sales; smaller markets may require broader searches.
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.
Minnesota charges a state deed tax on transfers, usually paid by the seller, and a mortgage registry tax on new mortgages, which falls on the borrower. On a 5-8 unit purchase the registry tax is a real closing line, so include it in your cash to close.
Minnesota property taxes depend on classification. Apartment buildings with four or more units are classified differently from smaller rentals and from homesteads, and rates in Minneapolis and St. Paul are higher than in many suburbs. Use the actual bill and confirm the class.
Minnesota winters bring ice dams, frozen pipes and heavy snow loads, and carriers ask about roof age, insulation and heating systems on older brick walk-ups. Many older buildings have shared boilers, which carriers want to see maintained.
Hail and wind claims are common in summer. A whole-building quote is the number that goes into the DSCR payment.
This example is illustrative and not a quote. An investor buys a Minneapolis six-unit walk-up for $780,000. Each of the 6 units rents for $1,300 a month, for $7,800 in total. Property taxes are budgeted at $13,500 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 $1,750 for taxes and insurance brings the payment to about $5,840, so the DSCR is about 1.34x, above the 1.0x standard minimum. If the insurance quote came in $250 a month higher, the ratio would fall to about 1.28x, which is why a firm quote matters before you set your offer.
| Item | Amount |
|---|---|
| Purchase price | $780,000 |
| Units and gross monthly rent | 6 units, $7,800 |
| Loan at 75% LTV | $585,000 |
| Principal and interest (30-year) | About $4,090 |
| Taxes and insurance per month | About $1,750 |
| Total monthly payment | About $5,840 |
| DSCR | About 1.34x |
St. Paul has a rent stabilization ordinance that limits annual increases on many units, with exemptions for newer construction and some adjustments since it was first adopted. Minneapolis requires rental licenses with inspections, and both cities have tenant protection rules on notices and screening.
Underwriting uses the rents you can collect, so know the rules before you price a St. Paul building. Duluth and Rochester have their own rental licensing programs.
Having these together before you apply keeps the appraisal and underwriting on schedule.
These loans fit investors in Minnesota 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 Minnesota 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.
Yes. Minnesota's mortgage registry tax applies to new mortgages and falls on the borrower.
It can. The ratio is based on rents you can collect, so capped increases matter.
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.
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.