Small apartment buildings are scarce in Missoula. Most were built in the 1960s through the 1980s near the university, along the main arterials and on the Northside, and when one trades, buyers who can close on residential terms have an edge.
In short: LendingStreet finances 5-8 unit residential buildings in Missoula with DSCR loans that qualify on the combined rent of all units, with no W-2s or tax returns. Loans start at $150,000 with no stated maximum, a 620 minimum credit score and LLC borrowers standard, and 30-year terms are available. Max LTV on 5-8 unit buildings can be lower than on 1-4 units and varies by program. Buildings with 9 or more units are commercial.
A building with five to eight units sits between a fourplex and a commercial apartment complex. Many lenders treat it as commercial, with shorter terms and a review of your personal finances. Our DSCR program keeps it residential: the loan is sized on the building's rent, and the term can be 30 years.
For Missoula investors, that matters because the buildings that come up for sale are usually small and older, owned for decades by a single landlord, and priced on the rent they produce. A residential-style DSCR loan lets you buy one with the same kind of financing you used on your duplex or fourplex.
The 5-8 unit buildings in the valley are mostly two-story walk-ups with exterior stairs or a shared hallway, built of wood frame or block. You find them in the University District, near the Southgate area and along Russell, Higgins and Brooks, on the Northside and Westside, and in older parts of Orchard Homes.
Because so few of these buildings exist, many sell off-market to neighbors or longtime local investors. Having financing lined up before you approach an owner makes your offer more credible. A pre-review of the rent roll and expenses can tell you in advance what loan size the building supports.
| Common type | Where found | Things to check |
|---|---|---|
| 1960s-70s walk-up | University District, Brooks corridor | Roof, siding, original windows |
| Converted older house with added units | Northside, Westside, near downtown | Permits for each unit, fire separation |
| 1980s block building | Arterials and Orchard Homes | Boiler or baseboard heat, parking |
| Newer townhome-style building | Edges of town, Mullan Road area | HOA or plat, separate meters |
Older Missoula buildings often have a single boiler or electric baseboard, and some are master-metered for water, sewer and garbage. When the owner pays utilities, those costs come out of your cash flow, even though a DSCR ratio on most programs focuses on principal, interest, taxes, insurance and HOA dues.
Know what the tenants pay and what you pay before you set your offer. Separately metered units are easier to run and usually easier to finance and sell.
This example is illustrative and not a quote. An investor buys a six-unit 1970s walk-up near the University of Montana for $1,150,000. Each unit leases for $1,250, or $7,500 a month. Taxes are budgeted at $950 a month and insurance at $450.
At 75% LTV the loan is $862,500, with estimated principal and interest of about $5,884 and a total payment of about $7,284, for a DSCR of about 1.03x. At 70% LTV the loan is $805,000, the total payment is about $6,892 and the DSCR is about 1.09x. Because max LTV on 5-8 units varies by program, 70% is a realistic planning number, and the extra cushion helps if the owner pays heat or water.
| Item | 75% LTV | 70% LTV |
|---|---|---|
| Loan amount | $862,500 | $805,000 |
| Estimated principal and interest | $5,884 | $5,492 |
| Taxes and insurance | $1,400 | $1,400 |
| Total monthly payment | $7,284 | $6,892 |
| DSCR at $7,500 rent | 1.03x | 1.09x |
Some Missoula properties listed as five or six units are older houses that were divided over the years. Before you buy, confirm with the city that each unit is legal. An unpermitted unit may be left out of the rent an appraiser counts, which can change both the value and the ratio.
Fire separation, egress windows and parking requirements are the usual problems. A building that is really a legal fourplex with two extra units is financed as a fourplex.
Appraisers value 5-8 unit buildings using comparable sales and the income the building produces. In Montana, sale prices are not disclosed on deeds, and small apartment sales in Missoula are infrequent, so the appraiser may look at sales from a wider area or a longer time frame.
A current rent roll, copies of leases, a year of operating expenses and a list of recent improvements help the appraiser support the value and the rents.
Insurance on an older multi-unit building in western Montana has been rising, and carriers look closely at roof age, wiring, heating systems and fire separation. Exterior stairs and walkways need snow and ice management in winter, which is both a cost and a liability issue.
Get a quote early and ask whether the policy requires updates such as new electrical panels. Those upgrades can be part of your plan after closing.
Older buildings near campus also see more turnover, which means more painting, carpet and appliance replacement between tenants. Budget a realistic annual amount for turns and capital items, even though the DSCR ratio itself does not include it. A building that clears 1.0x on paper but has a failing roof or boiler is a building that will need cash soon.
Having these ready speeds up the review.
Our investor loans are business-purpose loans on non-owner-occupied property. Send the address, price, rent roll and expenses, and we will show the ratio at more than one loan size. For buildings with nine or more units, see our multifamily loans page. Call (877) 298-1001 or use the form below.
Yes. Our DSCR program covers 5-8 unit residential buildings and qualifies them on combined rent, with 30-year terms available.
Max LTV can be lower than on 1-4 units and varies by program. Planning around 70% to 75% is realistic for many files.
Most programs focus the ratio on principal, interest, taxes, insurance and HOA dues, but owner-paid utilities still reduce your cash flow and can affect the appraisal.
It may be left out of the rent and value. Confirm each unit is legal with the city before you buy.
Yes. LLC borrowers are standard.
No. The loan qualifies on the building's rent, not your personal income.
Those are commercial properties and are covered on our multifamily loans page.
Yes, with a DSCR cash-out refinance, subject to the program's LTV limit and the rent covering the new payment.
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