In Salem, a 5-unit property does not always look like an apartment building. Some of the most common are older lots near downtown with a fourplex in front and a cottage behind, or a house with several units added over the decades. Alongside the classic 1960s and 1970s six- and eight-plexes, they make up the city's small residential income market.
In short: LendingStreet finances 5 to 8 unit residential properties in Salem and Keizer with DSCR loans that qualify on the combined rent of all units, not your personal income. Loans start at $150,000 with no stated maximum, the standard minimum DSCR is 1.0x and the minimum credit score is 620. Maximum LTV on 5-8 unit properties can be lower than on single-family homes and varies by program.
The test is the number of legal units on the property, not the number of buildings. A fourplex plus a permitted detached cottage is five units. A house split into three units with a duplex behind it is five. Two separate parcels with four units each are two fourplexes, not an 8-unit property, and would be financed as two loans or as part of a portfolio.
Units added without permits are a common problem on older Salem lots. The appraisal and the loan generally count only legal units, so confirm permit history with the City of Salem before you rely on every unit's rent.
Older mixed lots are most common in NE Salem, Grant, Highland and the neighborhoods around the Capitol and Willamette University. Purpose-built 6-8 unit buildings line parts of the Lancaster Drive and Market Street corridors, South Commercial Street and the blocks near Salem Hospital. West Salem and Keizer have fewer older small buildings and more newer townhome-style projects.
| Type | Typical location | Common issues |
|---|---|---|
| Fourplex plus cottage | NE Salem, Grant, Highland | Permit history, shared utilities |
| House with added units | Near downtown and the Capitol | Legal unit count |
| 1960s-1970s walk-up | Lancaster, Market, South Commercial | Roofs, wiring, stairs |
| Newer townhome building | West Salem, Keizer, South Salem | HOA or common-area costs |
This example is illustrative and not a quote. An investor buys a NE Salem lot with a fourplex and a detached two-bedroom cottage for $935,000. The fourplex units rent for about $1,310 each and the cottage for $1,675, $6,915 a month in total. Taxes are about $700 a month and insurance $330.
At 70% LTV the loan is $654,500, estimated principal and interest is about $4,354, and the payment is about $5,384 for a DSCR of about 1.28x. At 65% LTV the ratio rises to about 1.36x. Maximum leverage on 5-8 units varies by program, so the deal is sized at the leverage the program allows and the rent supports.
| Item | 70% LTV | 65% LTV |
|---|---|---|
| Loan amount | $654,500 | $607,750 |
| Estimated principal and interest | $4,354 | $4,043 |
| Taxes and insurance | $1,030 | $1,030 |
| Total monthly payment | $5,384 | $5,073 |
| DSCR at $6,915 rent | About 1.28x | About 1.36x |
The appraiser values the whole property and builds a rent schedule for each unit. The loan is sized on combined rent against principal and interest, taxes, insurance and any HOA. On mixed lots, the appraiser may need comparable rents for both apartment units and detached cottages, which can take more digging in Salem's older neighborhoods. Signed leases at market rent help support the numbers. Have these items ready.
Rent rules shape the upside on any older Salem property. Most 5-8 unit properties in Salem are well over 15 years old, so Oregon's annual cap on rent increases applies to existing tenancies, and just-cause rules apply after the first year. Newer buildings are exempt from the cap for their first 15 years. Underwrite on the rent roll you are buying, and treat below-market units as upside that comes with turnover.
Walk-ups from the 1960s and 1970s often have flat or low-slope roofs, older electrical service, exterior stairs and single-pane windows. Older mixed lots may have heating oil tanks, clay sewer lines and large trees, all of which insurers ask about after the 2021 ice storm. Get the insurance quote before you finalize your offer; on these properties it can change the ratio noticeably. Ask whether the insurer will write all buildings on one policy and whether older wiring or roofs limit coverage.
Up to 8 units is residential. A fourplex on its own often gets higher leverage than a 5-8 unit property, which is worth knowing if a fifth unit on the lot is not permitted. In that case, you may have a choice: legalize the fifth unit through the city and finance five units, or finance the four legal units and treat the extra space as storage or an office until it is permitted. Buildings with 9 or more units are commercial, covered on our multifamily loans page.
A fourplex-plus-cottage lot runs differently from a single building. The cottage often rents to a different tenant, such as a couple or a small family who want a detached home, and it may turn over less often than the apartments. Parking, yard space and trash areas are shared, and clear lease terms about common areas prevent friction. Owner-paid water, sewer, garbage and common electricity are common on older Salem multi-unit lots. They are not part of the DSCR formula, but they affect your cash flow, so ask for twelve months of utility bills. Many owners hire a local property manager at this size; get a quote before you buy.
Send the address, price, rent roll, leases and permit history through the form below, or call (877) 298-1001. If the property has a unit whose permit status is unclear, say so up front; the team can show how the loan looks with and without it, so you know before the appraisal whether the deal still works. For statewide terms, see our Oregon 5-8 unit page.
Yes, if both are on one property and the cottage is a legal unit. It qualifies as a 5-unit residential property.
Residential. Buildings with 1 to 8 units qualify for residential DSCR loans.
Maximum LTV can be lower than on smaller properties and varies by program.
It is generally not counted for rent or value. A property that drops to four legal units may be financed as a fourplex.
No. The loan qualifies on combined rent.
For most buildings older than 15 years, yes. Increases on existing tenants are capped each year.
Yes. Rate-and-term and cash-out are available, with cash-out leverage that can be lower.
Yes. LLC borrowers are standard.
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.