Small apartment buildings are scarce in Rapid City compared with single-family rentals, which is part of their appeal. When a sixplex near downtown or South Dakota Mines comes up, it tends to draw local buyers fast.
In short: LendingStreet finances 5-8 unit residential buildings in Rapid City with DSCR loans that qualify on the combined rent of all units, with no W-2s or tax returns. Buildings up to eight units stay in our residential program, starting at $150,000 with no stated maximum. Max LTV on 5-8 units can be lower than on smaller properties and varies by program; the standard minimum DSCR is 1.0x.
Rapid City's small buildings come in a few forms. Near downtown and the West Boulevard area, older houses have been split into five or six apartments. Around South Dakota Mines and Monument Health, small walk-up buildings from the 1960s through the 1980s house students, staff and service workers. Newer five- to eight-unit buildings are less common but appear on the east side and toward Box Elder.
Because there are fewer of these buildings than in larger metros, most sell to local owners who know the area. Prices per door are often lower than for single-family rentals, and spreading rent across several units reduces the impact of any one vacancy.
Tenant demand comes from students and staff at South Dakota Mines, health care workers at Monument Health, and the service and tourism workforce that grows every summer.
| Building type | Where | What to check |
|---|---|---|
| Converted older house | Downtown, West Boulevard area | Legal unit count, fire separation, historic rules |
| 1960s-80s walk-up | Near South Dakota Mines and Monument Health | Roof, heating system, parking |
| Newer small building | East side, toward Box Elder | Construction quality, assessments |
Our DSCR program treats buildings up to eight units as residential. The loan qualifies on the building's rent with a 30-year term option, rather than through commercial underwriting. Nine or more units goes to our multifamily program.
That means the file centers on the building's rent and your credit, not your personal income. For many owners, that makes small apartment buildings easier to finance than they expect.
If you own several small buildings, a blanket portfolio loan can combine five or more properties under one loan with one payment.
We total the rent from all units and compare it with the full payment. Vacant units are usually counted at market rent supported by the appraisal, though some programs look closely at occupancy. Near South Dakota Mines, leases often follow the school year, so a building may show summer vacancies; have a lease history ready that shows the pattern.
Summer vacancies near the college can also be an opportunity. Some owners fill those months with furnished stays for seasonal workers or interns, though nightly rentals depend on zoning and state licensing. For the loan, we focus on the long-term rent the building supports.
A unit that has sat empty for months, or one held off the market for repairs, is treated differently from a short gap between tenants, so explain any long vacancy up front.
This example is illustrative and not a quote. An investor buys a 1970s sixplex near South Dakota Mines for $690,000. Units rent for about $1,060 each, so combined rent is $6,360. Taxes at the non-owner-occupied levy are $850 a month and insurance is $360.
At 75% LTV the loan is $517,500, estimated principal and interest is about $3,530, the payment is about $4,740 and the DSCR is about 1.34x. If the program limits this building to 70% LTV, the loan is $483,000, the payment about $4,505 and the ratio about 1.41x.
Use the DSCR calculator to test your own building's rent, taxes and insurance before you make an offer. Small changes in the insurance quote or the tax figure can move the ratio more than you expect on a building this size.
| Item | 75% LTV | 70% LTV |
|---|---|---|
| Loan amount | $517,500 | $483,000 |
| Estimated principal and interest | $3,530 | $3,295 |
| Taxes and insurance | $1,210 | $1,210 |
| Total payment | $4,740 | $4,505 |
| DSCR at $6,360 rent | 1.34x | 1.41x |
The ratio uses the housing payment, but owners also pay for snow removal on lots and walks, common lighting, trash, often water and sewer, and sometimes heat. Older walk-ups in Rapid City may have a shared boiler. Keep a separate operating budget so you know the building's real cash flow.
A simple written operating budget kept alongside the DSCR calculation will show whether the building cash flows the way the ratio suggests. Include repairs, turnover and a reserve for big items like roofs and boilers.
Small apartment buildings have large roofs, and Rapid City hail can be severe. Insurers look at roof age and claim history, and the wind and hail deductible can be a percentage of the building's value. Get a quote early in the deal.
If the building has had hail claims, ask whether the roof was replaced or repaired, and get copies of the claims. A newer roof helps both the insurance quote and the appraisal.
For converted houses, confirm that the number of units matches what the city approved. Extra units added without permits can reduce value and complicate insurance. In historic areas, exterior changes may need review.
Fire separation, egress windows and smoke detection in converted houses are worth checking during your inspection. Fixing life-safety items after closing can be costly, and insurers ask about them.
Ask the city for the building's permit history if the unit count is unclear.
Send the rent roll, address and price through the form below or call (877) 298-1001. Our investor loans are business-purpose loans on non-owner-occupied property. See our South Dakota 5-8 unit page for statewide notes.
Include current leases, a list of recent capital work like roofs, boilers or windows, and who pays each utility. If you are refinancing, add the current payoff and we will show rate-and-term and cash-out options side by side, along with how the ratio changes at each leverage level.
Residential. Our DSCR program covers 1-8 units; nine or more units moves to multifamily.
It varies by program and is often lower than on 1-4 units.
They can affect the rent used. A lease history showing the school-year pattern helps.
No. The loan qualifies on combined rent compared with the full payment.
Yes, if the five units are legal. Confirm the approved count with the city.
Yes. A bridge loan can buy a building with vacancies, and a DSCR loan can refinance it once leased.
No. Our investor loans are business-purpose loans on non-owner-occupied property.
Yes. Rate-and-term and cash-out refinances are available on 5-8 unit buildings, with leverage that varies by program.
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