San Diego's small apartment buildings, many of them 1960s and 1970s two-story boxes on a single lot, are some of the most sought-after rentals in California. High prices mean most 5-8 unit loans here are large balances, and the ratio usually needs a bigger down payment to work.
In short: LendingStreet finances 5-8 unit buildings across San Diego County with DSCR loans that qualify on combined rent, with no W-2s or tax returns and LLC borrowers allowed. Loans start at $150,000 with no stated maximum, and leverage on 5-8 units and large balances varies by program. In San Diego, plan for Prop 13 reassessment, city tenant protections and a ratio that often needs lower leverage or a sub-1.0 program.
North Park, South Park, Normal Heights and University Heights have many small two-story buildings with tuck-under parking. Hillcrest, City Heights and Kensington add more, and Pacific Beach and Ocean Beach have small buildings near the coast at higher prices.
Clairemont, Linda Vista and the College Area near San Diego State have 1960s and 1970s buildings. East County cities such as La Mesa and El Cajon, plus Chula Vista and Oceanside, offer lower prices per unit.
| Area | Typical building | Note |
|---|---|---|
| North Park and Normal Heights | 1960s-70s two-story buildings | High demand, high prices |
| Pacific Beach and Ocean Beach | Small buildings near the coast | Coastal zone and STR rules |
| College Area | Walk-ups near SDSU | Student leasing |
| La Mesa, El Cajon, Chula Vista | Garden buildings | Lower price per unit |
A purchase reassesses the building at the price you pay. The base tax rate is about 1% plus voter-approved bonds and special assessments, so budget a bit above 1% of price. A long-time seller's bill is not a useful guide.
San Diego County charges a documentary transfer tax on sales. There is no separate state mortgage tax in California.
Many San Diego buildings were bought decades ago and carry very low tax bills. That makes a long-time owner's operating statement look better than your numbers will after the sale.
A building with five to eight units is still residential for our DSCR programs, so it qualifies on the property's rent rather than your personal income. There are no W-2s or tax returns to collect, LLC borrowers are standard and the minimum credit score is 620. Loans start at $150,000 with no stated maximum, and 30-year terms are available.
The ratio is the combined monthly rent of every unit divided by the full monthly payment: principal, interest, taxes and insurance. The standard minimum is 1.0x, and sub-1.0 programs exist for buildings that fall a little short. Maximum LTV on 5-8 unit buildings can be lower than the 80% purchase and 75% cash-out ceilings that apply to smaller rentals; it varies by program.
Expect the appraiser to review the rent roll unit by unit and compare each rent with similar units nearby. Leases well above the local market can be questioned, and vacant units need a supportable rent figure, so a clean rent roll matters as much as the purchase price.
California's statewide rent cap covers most buildings more than 15 years old, limiting annual increases to a set percentage plus inflation, with a ceiling. The City of San Diego has its own tenant protection ordinance with just-cause rules and relocation assistance that can apply from the start of a tenancy.
The city also requires a Rental Unit Business Tax certificate for residential rentals. Whole-home short-term rentals are licensed and capped by tier, so most 5-8 unit buildings are underwritten on long-term leases.
This example is illustrative and not a quote. An investor buys a 1960s six-unit building in North Park for $2,600,000. The two-bedroom units rent for $2,500 each, for a combined $15,000 a month. Taxes are budgeted at $2,600 a month and insurance at $700.
At 65% LTV the loan is $1,690,000, estimated principal and interest is about $11,817 and the total payment is about $15,117, for a DSCR of about 0.99x. At 55% LTV the loan drops to $1,430,000, the payment to about $13,299 and the DSCR rises to about 1.13x. Even at 65% LTV the building is just under 1.0x. At 55% it clears comfortably. This is typical of coastal California pricing.
| Item | 65% LTV | 55% LTV |
|---|---|---|
| Purchase price | $2,600,000 | $2,600,000 |
| Combined monthly rent | $15,000 | $15,000 |
| Loan amount | $1,690,000 | $1,430,000 |
| Estimated principal and interest | $11,817 | $9,999 |
| Taxes and insurance | $3,300 | $3,300 |
| Total monthly payment | $15,117 | $13,299 |
| DSCR | About 0.99x | About 1.13x |
California carriers have tightened underwriting, and older wood-frame buildings can be harder to insure. Wildfire risk matters in inland and canyon areas, while some coastal and low-lying areas such as parts of Mission Valley and the Tijuana River valley are in flood zones.
Earthquake coverage is usually optional and priced separately. Get a full-building quote early in escrow.
High prices relative to rent are the main challenge. Many investors buy with 35% to 45% down, use a sub-1.0 DSCR program, or target East County and North County buildings where rents are closer to prices.
Large balances get more review and maximum LTV can be lower. See our jumbo DSCR page for San Diego for more on larger loans.
Have these on hand when you request a quote.
Our investor loans are business-purpose loans on non-owner-occupied property. To get a quote, use the form below or call (877) 298-1001 with the address, units, current rents and price.
The LendingStreet team will check the ratio against a realistic tax and insurance budget and show what loan amount the rent supports. Investors comparing markets can also read our California 5-8 unit DSCR page.
Prices are high relative to rent. Most buyers put more down or use a sub-1.0 program.
A City of San Diego tax on residential rental units. Owners need a certificate. Confirm current requirements with the city.
Only with a valid city license, and licenses are capped. Most 5-8 unit buildings are underwritten on long-term leases.
Yes. We finance 5-8 unit buildings throughout San Diego County.
Yes. DSCR loans have no stated maximum, but larger balances get more review and maximum LTV can be lower.
On our DSCR programs, 1 to 8 units is residential. Nine or more units is commercial and is covered on our multifamily pages.
No. A DSCR loan qualifies on the property's rent. We do not collect W-2s or tax returns. The credit score minimum is 620.
You can bring more cash to lower the loan amount, or look at a sub-1.0 DSCR program if the numbers are close.
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