In Santa Fe, a five- or six-unit property is as likely to be a cluster of adobe casitas around a courtyard as a two-story apartment building. Both qualify the same way: on the combined rent of every legal unit.
In short: LendingStreet finances 5-8 unit residential properties in Santa Fe and across New Mexico with DSCR loans qualified on the combined rent of all units. Loans start at $150,000 with no stated maximum, there are no W-2s or tax returns, and LLC borrowers are standard. Maximum LTV on 5-8 unit properties varies by program and can be lower than on 1-4 unit rentals.
Santa Fe's small multi-unit stock comes in two forms. The first is the courtyard compound: several casitas, often of different ages and sizes, sharing a lot near downtown, in the older barrios like Agua Fria and Canyon Road's side streets, or off Cerrillos Road and Old Pecos Trail. The second is the conventional small apartment building, usually a one- or two-story building from the 1960s to the 1980s along the Cerrillos Road, St. Michael's Drive and St. Francis Drive corridors.
Tenants include hospital staff at Christus St. Vincent, state employees, restaurant and hotel workers and young professionals priced out of buying. With a tight rental market, well-kept units lease quickly.
Small multi-unit properties rarely come to market in Santa Fe, and many trade privately between families and long-time investors. When one does list, buyers who have their financing lined up and know how to handle the legal unit count question tend to win.
Prices per unit are high by New Mexico standards, so these properties usually work at moderate leverage, as the example below shows.
Compounds grow over decades, and not every casita was permitted. The appraiser and title review will compare the units on the ground with city or county records. Rent from a unit that is not legal may not count toward DSCR, and an illegal unit can complicate insurance. Before you offer, check the permit history and the zoning, and ask whether units share utilities or have separate meters.
If a unit needs to be legalized, a bridge loan can give you time to do that before a long-term refinance; see our Santa Fe bridge page.
For our programs, properties with 5 to 8 units are residential, so they qualify on rent without full commercial underwriting. Leverage, reserves and appraisal requirements can differ from 1-4 unit loans, and they vary by program. Nine units and up is commercial lending; see our multifamily page for larger properties.
This example is illustrative and not a quote. An investor buys a six-unit property for $1,200,000. Each one-bedroom rents for $1,350, so gross rent is $8,100 a month. Taxes on the reset value are budgeted at $800 a month and insurance at $500.
At 75% LTV, if the program allows it, the loan is $900,000 and DSCR is about 1.07x. At 70% LTV, the loan is $840,000, estimated principal and interest is about $5,873, the total payment is about $7,173 and DSCR is about 1.13x. The property clears 1.0x at each level, though owner-paid expenses like water, trash and landscaping still come out of cash flow.
Moderate leverage also helps when the appraisal is uncertain. Compounds can be hard to value because few similar properties sell each year, and a lower loan amount leaves room if the value comes in under the price.
| LTV | Loan | Est. principal and interest | Total payment incl. taxes and insurance | DSCR |
|---|---|---|---|---|
| 75% | $900,000 | $6,293 | $7,593 | 1.07x |
| 70% | $840,000 | $5,873 | $7,173 | 1.13x |
| 65% | $780,000 | $5,454 | $6,754 | 1.20x |
New Mexico taxes property on one-third of its assessed value. Annual increases on residential property are capped while the same owner holds it, but a sale resets the value to market. A family that owned a compound for decades may have paid very little, so budget on your purchase price, not the seller's bill, and confirm with the Santa Fe County Assessor.
Compounds with several separate buildings mean several roofs, several heating systems and more exterior stucco to maintain. Budget for regular roof recoating and stucco repair, and for the freeze-thaw damage that Santa Fe winters cause. Shared courtyards and parking need clear rules in the leases.
Short-term rental use is limited by city permit caps for non-owner-occupied units in residential zones, so most 5-8 unit properties here are underwritten on long-term leases.
Insurance for a compound may be written as one policy or several, depending on how the buildings are arranged. Ask your agent to quote the whole property, including liability for the shared areas, and include the full premium in your numbers.
Many older properties carry below-market rents. Updating units as they turn, legalizing a casita, or separating utilities can raise income. A bridge or fix and flip loan can fund the work, followed by a DSCR refinance on the stabilized rent roll.
Send the address, price, rent roll, unit details and an insurance quote through the form below, or call (877) 298-1001. We will run the ratio at a few loan amounts and flag any unit-count questions early. Our investor loans are business-purpose loans on non-owner-occupied property. Our New Mexico 5-8 unit page covers Albuquerque and other markets.
For our programs, properties with 5 to 8 units are residential and qualify on rent. Nine units and up is commercial.
Yes, if they are on one parcel and title and the units are legal.
Maximum LTV varies by program and is often lower than on 1-4 units. Loans start at $150,000 with no stated maximum.
Its rent may not count, and it can complicate insurance. Legalize it first or plan the loan on the legal units. A short-term bridge loan can give you time to work through the city or county permit process.
Usually. The county reassesses at market value after a sale, and New Mexico taxes one-third of that value. Budget on your purchase price, since a long-time owner's bill can be far lower than yours will be.
Yes. Leases in place, checked against market rents, set qualifying income.
Yes. LLC borrowers are standard, and you sign for the loan personally.
Yes, including Albuquerque, Las Cruces and Taos.
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