Wilmington has a stock of large Victorian and early 20th century houses divided into five, six or eight apartments, plus small brick apartment houses. These buildings sit in a sweet spot: still residential for financing, with the rent of several units behind one loan.
In short: LendingStreet finances 5-8 unit residential buildings in Wilmington and New Castle County with DSCR loans that qualify on the combined rent of all units, with no W-2s or tax returns. Loans start at $150,000 with no stated maximum and LLC borrowers are standard. Maximum LTV can be lower on 5-8 unit properties than on 1-4 units and varies by program, and the city's per-unit licensing and the building's actual legal unit count are key items to verify.
The largest concentration is in the neighborhoods around downtown: Midtown Brandywine, Trinity Vicinity, Quaker Hill, Cool Spring and the Highlands, where big houses were divided into apartments decades ago. Smaller brick apartment buildings appear along main corridors and in older parts of Elsmere and Newport.
Many of these buildings lease to young professionals, hospital staff and downtown employees, and well-kept units near Trolley Square and Rockford Park tend to draw stable tenants.
Buildings in this size range trade less often than rowhomes, and many have been held by the same owner for decades. That can mean below-market rents and deferred maintenance, which is both the opportunity and the risk for a new buyer.
Five to eight units is still residential in our programs, but underwriters look more closely at the rent roll, expenses and condition. Leverage can be lower than on a single-family rental, and reserve requirements can be higher, varying by program. Buildings with nine or more units move to commercial or multifamily financing.
The appraisal on a 5-8 unit building usually includes a closer look at rents and operating expenses. Have a current rent roll, leases, a 12-month history of income and expenses and a list of capital work completed.
| Item | 1-4 units | 5-8 units |
|---|---|---|
| Qualifies on | Rent | Combined rent of all units |
| Purchase LTV | Up to 80% | Often lower; varies by program |
| Valuation | Residential appraisal | Appraisal with rent roll review |
| Common Wilmington stock | Rowhomes, twins, duplexes | Converted mansions, small apartment houses |
This example is illustrative and not a quote. An investor buys a six-unit building for $720,000. Each unit rents for about $1,150, for a total of $6,900 a month. At 75% LTV, the loan is $540,000.
Estimated principal and interest on a 30-year term is about $3,776. Taxes are budgeted at $560 a month on the current bill and insurance at $420. The total payment is about $4,756, for a DSCR of about 1.45x. If the owner pays water and sewer for all units, the investor should budget that separately, since it cuts into cash flow even though the ratio uses taxes, insurance and debt payment.
The same building at 80% leverage would still clear 1.0x in this example, but many programs cap 5-8 unit purchases lower, so test the ratio at the leverage your program allows.
| Line item | Monthly |
|---|---|
| Rent, six units | $6,900 |
| Estimated principal and interest | $3,776 |
| Taxes | $560 |
| Insurance | $420 |
| Total payment | $4,756 |
| DSCR | About 1.45x |
In older conversions, the number of units in use does not always match the number the city recognizes. Check the rental license for each unit and the zoning record. A unit that is not legal may be excluded from rent and can create insurance and code problems.
When the city recognizes fewer units than are rented, plan for the cost of either legalizing the extra unit or combining it back, and size the loan on the legal count.
Converted buildings combine old structures with decades of changes. Before you buy, look closely at these items:
A professional inspection by someone who knows older multi-unit buildings is worth the cost. Ask for a written report on the building envelope, heating plant, electrical panels and fire separation, and use it to negotiate or plan capital work.
Multi-unit buildings saw tax changes when the countywide reassessment values took effect for 2025. Use the current bill. Insurance on an older 6- or 8-unit building can be higher than owners expect, especially if the heating system or wiring is dated.
Ask for the boiler service history and the roof age before making an offer. Insurers often ask the same questions, and a dated system can raise the premium or limit coverage options.
A building bought vacant or with below-market rents may start on a bridge loan, then refinance into a DSCR loan after units are leased. Owners of several small buildings can combine them on a blanket portfolio loan.
Rent increases on renewal can lift the DSCR over time. A building bought with below-market rents may qualify for a better refinance a year or two after purchase.
Wilmington's rental licensing applies to each rental unit, and inspections can be triggered by complaints, sales or the licensing cycle. Keep records of smoke and carbon monoxide detector checks, heat and hot water service, and repairs. Good records help with renewals, insurance and the appraisal when you refinance.
Self-managing six or eight units in an older building takes time. Many owners hire a local property manager, and the management fee should be part of your cash flow budget even though the DSCR ratio itself uses rent against the debt payment, taxes and insurance.
Send the address, price or value, rent roll and expense details. Our investor loans are business-purpose loans on non-owner-occupied property. Call (877) 298-1001 or use the form below.
Include the number of legal units and whether any are vacant.
In our programs, 5-8 units are financed as residential DSCR loans. Nine or more units are commercial.
It can be lower than on 1-4 unit properties and varies by program, the building and the loan size.
Wilmington requires rental properties to be licensed. Confirm each unit is properly licensed and recognized by the city.
It varies. Many older buildings have shared water or heat paid by the owner. Budget those costs separately.
Yes, often with a bridge loan first, then a DSCR refinance after the units are leased.
No. The loan qualifies on the rent of all units.
Yes, if the units are legal rentals under Newark rules and the rent supports the payment.
The DSCR ratio uses rent against principal, interest, taxes, insurance and HOA dues. Management fees still affect your real cash flow, so budget them.
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