Mobile has low property taxes and historic neighborhoods full of converted homes. Its position on the Gulf makes wind insurance the cost that decides most deals.
In short: LendingStreet finances 5 to 8 unit rental buildings across Mobile County and nearby Baldwin 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. Alabama assesses rentals at a 20% assessment ratio, but taxes are low; coastal wind insurance is the line to price first.
Midtown, Oakleigh Garden District, Old Dauphin Way and De Tonti Square have historic homes converted to apartments and small brick buildings. Spring Hill near the colleges has a few small buildings.
West Mobile and Tillman's Corner have 1970s and 1980s garden buildings. Across the bay, Daphne, Fairhope and Spanish Fort have mostly single-family rentals.
Many of these historic homes were divided in the mid-1900s, and the quality of conversions varies. Check that each unit has its own entrance, kitchen and bath, and that electrical service was updated when the units were created.
Garden buildings in West Mobile are typically two-story brick or siding buildings with surface parking. They lease to workers at the port, shipyard, hospitals and the growing aerospace sector.
| Area | Typical stock | What to check |
|---|---|---|
| Midtown and Oakleigh | Converted historic homes | Historic review, unit count |
| De Tonti Square and downtown | Older brick buildings | Condition, parking |
| West Mobile | 1970s-1980s garden buildings | Roof age, wind coverage |
| Baldwin County | Mostly single-family | Higher wind premiums |
Alabama assesses rentals at a 20% assessment ratio, double the 10% for owner-occupied homes, but millage rates are low. Budget using the Mobile County revenue commissioner's records.
Alabama charges a deed tax and a mortgage recording tax at closing.
Mobile County's revenue commissioner handles assessment and collection. Rates vary somewhat by city and school district, but the combined bill on a rental is still modest compared with most coastal states.
Ask for the current bill and confirm it reflects the rental class, not an owner-occupied homestead from a prior owner.
Alabama property taxes are due each fall for the prior assessment, so confirm there are no unpaid prior-year taxes or tax sale certificates on the parcel before closing. Your title company will check, but it is worth asking the seller early.
This example is illustrative and not a quote. An investor buys a converted historic home in Midtown Mobile with six apartments for $570,000. Gross rent is $6,000 a month, an average of $1,000 for each of the 6 units, and the monthly budget includes $300 in taxes and $700 in insurance.
A $427,500 loan (75% LTV) carries estimated principal and interest of about $2,989, a full payment near $3,989 and a ratio of about 1.50x. Dropping to 70% LTV, or $399,000, brings the payment to about $3,790 and the ratio to about 1.58x; the investor needs $28,500 more cash.
Insurance is more than twice the tax bill here. A FORTIFIED roof could lower the premium and improve the ratio.
| Item | 75% LTV | 70% LTV |
|---|---|---|
| Purchase price | $570,000 | $570,000 |
| Loan amount | $427,500 | $399,000 |
| Down payment | $142,500 | $171,000 |
| Estimated principal and interest | $2,989 | $2,790 |
| Property taxes (monthly) | $300 | $300 |
| Insurance (monthly) | $700 | $700 |
| Total monthly payment | $3,989 | $3,790 |
| Gross monthly rent | $6,000 | $6,000 |
| DSCR | About 1.50x | About 1.58x |
Mobile is exposed to Gulf hurricanes, including Frederic in 1979, Ivan in 2004 and Sally in 2020. Wind premiums are high. The Alabama Insurance Underwriting Association offers coverage in coastal areas where private carriers decline.
Alabama requires insurers to offer discounts for IBHS FORTIFIED roofs, and the Strengthen Alabama Homes program has helped fund upgrades on owner-occupied homes.
Much of Mobile near the bay, Dog River and the Mobile River is in mapped flood zones. Flood insurance is generally required there on a financed building. Ask whether the building has an elevation certificate.
The Port of Mobile, Austal shipyard, Airbus's final assembly line, the University of South Alabama and its health system support demand.
Rents in Mobile are moderate, but so are prices, which is why many buildings clear 1.0x even after paying for wind coverage. Buildings close to downtown, the University of South Alabama and the hospitals lease fastest.
Exterior changes in Mobile's historic districts need review by the architectural review board. Confirm zoning allows the building's unit count.
Mobile has updated its zoning code in recent years. Older buildings with more units than current zoning allows may be legal nonconforming uses, which can limit rebuilding after a major loss. Ask the city for a zoning verification letter.
Older buildings downtown and in Midtown may also sit inside the city's historic districts, so exterior repairs after a storm can require approval before work begins. Factor that into recovery time when you plan reserves.
Because the Mobile building has eight units or fewer, the file is reviewed under residential DSCR guidelines. Income comes from the rent roll and the appraiser's market rent opinion, and the payment side includes principal, interest, taxes and insurance. Personal income documents are not part of the qualification.
Program basics: $150,000 minimum with no stated maximum, up to 80% LTV on purchases, up to 75% LTV on cash-out, a 1.0x standard minimum ratio, a 620 minimum credit score and 30-year terms. On five to eight units, maximum LTV is frequently below the headline numbers and varies by program, so plan your down payment conservatively.
Tell us the address, unit count, rents and what you want the loan to do, using the form below or (877) 298-1001. Our investor loans are business-purpose loans on non-owner-occupied property. The financing team runs the ratio at a few loan amounts so you can see the tradeoff between leverage and DSCR. See also our Alabama 5-8 unit DSCR page.
Yes. Rentals are assessed at a 20% assessment ratio, double the owner-occupied ratio, but millage is low, so bills are modest compared with most coastal markets.
Gulf hurricane exposure drives wind premiums, and some properties need coverage through the Alabama Insurance Underwriting Association.
It is a roof built to the IBHS FORTIFIED standard to resist high winds. Alabama requires insurers to offer premium discounts for these roofs.
Yes. Exterior changes in Oakleigh, De Tonti Square, Old Dauphin Way and other districts need architectural review board approval.
Yes, though 5-8 unit buildings are less common there and wind premiums are often higher close to the bay and Gulf.
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.
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.
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