Houston has a deep stock of 1970s and 1980s garden apartments, from Gulfton and Sharpstown to Alief and Westchase, alongside newer buildings in Midtown and the suburbs. The building's vintage drives much of the underwriting.
In short: LendingStreet finances Houston apartment buildings with nine or more units, for both stabilized and value-add investors. Loans are sized on NOI from the rent roll and trailing operating statements, with custom terms up to $5M+ and up to 75% LTV on purchases. Buildings with one to eight units use our residential DSCR programs instead.
Southwest Houston, including Gulfton, Sharpstown and Alief, has a large concentration of older garden-style complexes, many built during the 1970s and early 1980s. The Westheimer and Richmond corridors, Spring Branch and parts of north Houston have similar stock. These buildings often trade as value-add deals, with work needed on roofs, plumbing, electrical and parking lots.
Inside the Loop, Midtown, Montrose, the Heights and areas near the Texas Medical Center and the University of Houston have smaller infill buildings and newer construction. Suburbs such as Katy, Cypress, Pearland and The Woodlands have more recent garden communities, often larger than our typical balance.
| Building type | Typical Houston areas | Underwriting focus |
|---|---|---|
| 1970s-1980s garden, value-add | Gulfton, Sharpstown, Alief, Westchase | Deferred maintenance, plumbing, roofs, collections |
| Small infill, 9-30 units | Montrose, the Heights, Midtown, near the Medical Center | Rent levels, parking, deed restrictions |
| Newer suburban garden | Katy, Cypress, Pearland, The Woodlands | Tax rate, MUD assessments, concessions |
If your building has eight or fewer units, it is a residential property for our programs. A fourplex in the Heights or a six-unit building near the Medical Center goes through our Houston DSCR loans or 5-8 unit loans, which use a simpler process. Our commercial multifamily program starts at nine units.
Underwriting starts with the rent roll and trailing operating statements, usually the last 12 months. Gross potential rent is reduced for vacancy, concessions and bad debt, then operating expenses are subtracted: taxes, insurance, utilities the owner pays, repairs, payroll or management, and replacement reserves.
The loan is the lower of the leverage limit and the amount NOI can support at the program's DSCR minimum. Lenders generally use actual trailing expenses, or a market figure if the seller's numbers look light.
Watch for seller statements that leave out items a new owner will pay, such as full-time management, payroll for on-site staff, or a realistic repair and turnover budget for an older complex. Underwriting will add them back, so your own numbers should too.
This example is illustrative and not a quote. An investor buys a 36-unit southwest Houston building for $3,000,000. Average rent is $1,075 a month, or $464,400 a year at full occupancy. Underwriting assumes 8% for vacancy and collection loss, leaving $427,248. Assumed operating expenses, including taxes, insurance and reserves, are $205,000, so NOI is $222,248.
At 70% LTV the loan is $2,100,000. On a 30-year amortization, estimated annual debt service is about $176,202 and DSCR is about 1.26x.
| Item | Amount |
|---|---|
| Units | 36 |
| Gross potential rent | $464,400 |
| Vacancy and collection loss (8% assumption) | -$37,152 |
| Operating expenses (assumption) | -$205,000 |
| NOI | $222,248 |
| Loan at 70% LTV | $2,100,000 |
| Estimated annual debt service | $176,202 |
| DSCR | About 1.26x |
A stabilized building with steady occupancy and clean trailing statements can go to a longer-term commercial loan. A property with high vacancy, units offline or a planned renovation is usually financed first with a bridge loan, then refinanced once the improved rents show up in the trailing numbers.
Be realistic about time. Renovating units, raising rents and building a new trailing history takes many months, so plan reserves for the carry.
Collections are also a key part of the story on older Houston complexes. Underwriting compares the rent roll with actual deposits, so a property with high delinquency may be sized on collected income rather than scheduled rent. Bank statements or a deposit history help close that gap.
Many older Houston complexes sit near bayous and flooded in Harvey or earlier storms. Prior flood claims, flood zone status and ground-floor elevations affect insurance premiums and sometimes whether ground-floor units can be repaired or rebuilt the same way. Older electrical and plumbing systems can also raise premiums or limit coverage.
Get a real insurance quote during due diligence. On Houston apartment deals, insurance is often one of the largest lines after property taxes.
Texas has no state income tax, and apartment owners pay property taxes to several local taxing units based on the Harris Central Appraisal District value, or Fort Bend or Montgomery for those counties. Owners can protest each year. Because Texas is a non-disclosure state, sale prices are not public record, and a sale often leads to a higher value the next year. Underwriting reflects that.
On larger complexes, the tax bill can be the single biggest expense line. When you model a purchase, apply the full combined rate of every taxing unit to a value near your price, and treat any successful protest as upside rather than part of the base case. In suburbs with municipal utility districts, include the MUD tax as well.
Commercial multifamily loans take longer than residential loans. Expect a full appraisal, rent roll and lease review, an environmental report and a property-condition review. Gather these early:
Our investor loans are business-purpose loans on non-owner-occupied property. Use the form below or call (877) 298-1001 with the address, unit count, rent roll and price. The team will size the loan on NOI and come back with custom terms.
Nine units. Buildings with one to eight units use our residential DSCR programs, including 5-8 unit loans.
Yes, when the property cash flows and its condition is documented. Older buildings get closer review of roofs, plumbing, electrical and flood history.
Up to 75% LTV on acquisitions with custom terms up to $5M+. The DSCR test on NOI often sets the final amount.
Yes. Value-add buyers often start with a bridge loan and refinance into a longer-term loan once improved rents show in the trailing statements.
The rent roll and trailing 12-month operating statement, followed by the tax bill, insurance quote and property-condition information.
Yes, mostly through insurance cost and NOI. Prior claims and flood zone status can raise premiums significantly.
Usually several weeks or more, because of the appraisal, environmental report and property-condition review. A complete rent roll and trailing statement up front helps.
Yes, if the building has nine or more units and cash flows. Smaller buildings near the Medical Center use our residential DSCR programs.
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Properties with 5+ units are commercial by definition, so they fall outside Fannie/Freddie residential programs. But at 5-20 units the loan is usually too small for institutional multifamily desks, whose minimums and timelines are built for 50+ unit assets. The result is a financing gap: too big for residential, too small for institutional.
Through DSCR-based and bridge capital sources that underwrite to the property's net operating income rather than agency checklists. Typical structures: purchase or refinance at up to 75% LTV, 5-20 units, $200K-$20M, with bridge-to-perm available for value-add and lease-up plays.
Stabilized small multifamily DSCR loans typically close in 14-21 days. Bridge structures for value-add acquisitions can close in 5-10 days, then refinance into permanent DSCR financing after stabilization.
No. These programs underwrite the property's income (NOI / DSCR), not your tax returns. LLC borrowers are standard, and there is no W2 requirement.
Mixed-use with a residential majority (for example, apartments over retail) can be placed through commercial and mixed-use capital sources through the same LendingStreet application, with custom terms up to $5M+.