Nashville's growth has pushed prices up faster than rents, so small apartment buildings here are about leverage discipline. Davidson County's 2025 reappraisal is the other number to get right.
In short: LendingStreet finances 5 to 8 unit rental buildings across Nashville, Davidson County and the surrounding Middle Tennessee counties 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 Nashville, check how the assessor classifies the building, budget taxes on post-reappraisal values and do not count on short-term rental income in most residential zones.
Older small buildings from the 1950s and 1960s are scattered through East Nashville, Inglewood, Madison and Antioch, often two-story brick with surface parking. Sylvan Park and The Nations on the west side have a few small buildings among new infill. North Nashville and areas near Fisk, Meharry and TSU have older buildings with value-add potential.
Germantown, 12South and Wedgewood-Houston have mostly new townhomes and small mixed-use buildings, where prices per unit are high. Suburban Murfreesboro, Smyrna, Hendersonville and Gallatin offer garden buildings at lower prices.
| Area | Typical stock | Investor note |
|---|---|---|
| East Nashville and Inglewood | 1950s-1960s brick buildings | Strong rents, older systems |
| Madison and Antioch | Older garden buildings | Lower prices, workforce tenants |
| North Nashville | Older buildings near universities | Value-add, rising demand |
| Murfreesboro and Smyrna | Garden buildings | Rutherford County taxes |
Rents in Nashville rose quickly in the late 2010s and early 2020s, and a wave of new apartment construction followed. That supply has slowed rent growth while prices for small buildings stayed high. As a result, many 5-8 unit buildings only clear 1.0x at lower leverage.
Underwriters use the appraiser's market rent. In submarkets with many new buildings offering concessions, the appraiser may support a lower rent than the seller's pro forma.
A rent roll with signed 12-month leases and little concession history carries more weight with the appraiser than a pro forma built on the newest buildings' asking rents.
This example is illustrative and not a quote. An investor buys a six-unit 1960s brick building in East Nashville for $1,350,000. Rents average $1,650 per unit across all 6 units, for $9,900 of gross monthly rent. The budget carries $900 a month for taxes and $480 for insurance.
With a 75% LTV loan of $1,012,500, estimated principal and interest runs about $7,080 and the total payment about $8,460, which puts DSCR near 1.17x. Cutting leverage to 70% LTV, a $945,000 loan, lowers the payment to about $7,988 and lifts DSCR to about 1.24x, at the cost of $67,500 more down.
The ratio clears 1.0x at both leverage levels, but only because rents are strong. If the assessor treated the building as commercial at the 40% ratio, the tax line would rise and the margin would shrink.
| Item | 75% LTV | 70% LTV |
|---|---|---|
| Purchase price | $1,350,000 | $1,350,000 |
| Loan amount | $1,012,500 | $945,000 |
| Down payment | $337,500 | $405,000 |
| Estimated principal and interest | $7,080 | $6,608 |
| Property taxes (monthly) | $900 | $900 |
| Insurance (monthly) | $480 | $480 |
| Total monthly payment | $8,460 | $7,988 |
| Gross monthly rent | $9,900 | $9,900 |
| DSCR | About 1.17x | About 1.24x |
Davidson County reappraises every four years, and the 2025 reappraisal raised values sharply across much of the county. Tennessee then adjusts the tax rate so the reappraisal itself does not raise total revenue, but individual bills can still go up or down depending on how a property's value changed.
Tennessee assesses residential property at 25% of appraised value and commercial at 40%. Ask the Metro assessor how a five to eight unit building is classified, because the class changes the bill a lot. Budget on your purchase price.
Tennessee charges a transfer tax of $0.37 per $100 of value and a mortgage tax on the loan amount, both customarily paid by the buyer.
Metro Nashville requires STR permits and limits non-owner-occupied short-term rentals in most residential zoning districts. Many buildings that operated as nightly rentals before the rules changed now rely on long-term leases. Unless a building sits in a zone that allows non-owner-occupied STRs and has a valid permit, underwriters will use long-term rent.
Tennessee markets where STRs are more widely allowed, such as parts of the Smoky Mountains region, are covered on our Tennessee pages.
Middle Tennessee sees tornadoes, including the March 2020 tornado that hit North Nashville, Germantown and East Nashville, and severe flooding like the May 2010 flood along the Cumberland River and its tributaries. Check flood maps near the river, Mill Creek and the Harpeth, and ask about roof age and storm history.
A building with five to eight units is still residential financing, so it qualifies on rent the way a single-family rental does. In Nashville, 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.
Values rose sharply in much of the county. The tax rate was adjusted, but individual bills changed based on each property's new value. Budget on your purchase price.
Usually not. Metro limits non-owner-occupied STRs in most residential zones. Only a building with a valid permit in an allowed zone can use STR income.
It depends on how the assessor classifies it. Residential is assessed at 25% and commercial at 40%. Ask before you buy.
Prices rose faster than rents, so the ratio is tighter at high LTV.
Yes. The program covers Middle Tennessee, including Rutherford and Sumner counties.
Yes. LLC borrowers are standard on our DSCR loans, and you sign for the loan personally as part of the process.
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.
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