Texas apartment deals are sized on NOI, and two Texas expenses move NOI more than anywhere else: the property tax bill after a sale and the insurance quote. Getting those two lines right is most of the work.
In short: LendingStreet finances 9+ unit apartment buildings across Texas with multifamily loans sized on the property's NOI, DSCR and LTV, with custom terms up to $5M+ and up to 75% LTV on acquisitions. We look at value-add and stabilized properties, using the rent roll and trailing operating statements. Our investor loans are business-purpose loans on non-owner-occupied property, and LLC borrowers are standard.
Commercial multifamily starts at 9 units. That includes older garden-style complexes, small mid-century walk-ups near urban cores, and newer infill buildings. Properties with 5 to 8 units are underwritten as residential; see our Texas 5-8 unit DSCR page. For 2 to 4 units, see the metro 2-4 unit and DSCR pages.
We look at both stabilized buildings with steady occupancy and value-add buildings where an investor plans renovations or better management. A value-add building that is not yet cash-flow positive may fit a commercial bridge loan first, with a permanent loan after stabilization.
Every Texas metro has a different mix of tenants, supply and expenses. This table compares them in general terms; it is not a forecast, and local conditions change.
| Metro | Common apartment stock | Underwriting focus |
|---|---|---|
| Dallas | Garden-style complexes, Uptown and East Dallas infill | Tax rate by school district, supply of new units nearby |
| Fort Worth | Older garden-style, Near Southside infill | Tax rate, hail-exposed roofs |
| Houston | Large garden-style inventory, Heights and Montrose infill | Flood zone, windstorm and flood insurance |
| Austin | Newer infill and suburban complexes, East Austin small buildings | Rent trends, concessions, new supply |
| San Antonio | Older garden-style, Medical Center area | Deferred maintenance, tax rate |
| Smaller cities | Student and workforce housing in Lubbock, College Station, Waco; energy-linked demand in Midland-Odessa | Tenant concentration, local employer base |
On a 9+ unit building, the lender builds its own NOI from the rent roll and trailing 12-month operating statement. Underwriting applies its own vacancy and credit-loss allowance, replaces the seller's tax bill with an estimate based on the new value, adds a realistic insurance quote, and includes management and replacement reserves even if the seller self-manages.
The loan amount is the smaller of what the LTV limit allows and what the NOI supports at the required DSCR. In many Texas deals the DSCR limit is the one that binds, because taxes and insurance consume a large share of income.
This example is illustrative and not a quote. Every figure is an assumption for a hypothetical 24-unit Texas building bought for $2,400,000.
At an average rent of $1,300, gross potential rent is $374,400. An assumed 7% vacancy and credit loss leaves effective gross income of $348,192. Expenses are assumed at $188,800: property taxes $52,800 based on the expected new appraised value, insurance $36,000, and $100,000 for management, payroll, repairs, utilities and reserves. NOI is $159,392.
A loan of $1,560,000 is 65% LTV. Estimated annual debt service is about $124,545, for a DSCR of about 1.28x. Higher leverage was available on paper, but the ratio, not the LTV cap, set this loan.
| Line | Amount |
|---|---|
| Units and average rent | 24 units at $1,300 |
| Gross potential rent | $374,400 |
| Effective gross income | $348,192 |
| Operating expenses | $188,800 |
| NOI | $159,392 |
| Loan amount | $1,560,000 (65% LTV) |
| Estimated annual debt service | $124,545 |
| DSCR | 1.28x |
A stabilized building has steady occupancy, leases at market rents and an operating history that supports the NOI. That is the profile for a permanent multifamily loan, where the loan is sized on in-place income.
A value-add building might have below-market rents, units offline for renovation, deferred maintenance or weak management. Lenders size those deals more carefully. If the building is still cash-flow positive, a permanent loan may work at lower leverage. If the plan depends on renovating units and raising rents before the income can carry permanent debt, a short-term commercial bridge loan with an exit to a permanent loan is usually the better fit.
Texas has no state income tax, so cities, counties, school districts and special districts rely on property taxes. The county appraisal district sets the value and each taxing unit sets its rate. A sale often leads the appraisal district to raise the value, so the seller's bill is rarely a good guide.
Owners can protest the appraised value every year, and many apartment owners do. Underwriting will not assume you win a protest, so use the higher figure in your numbers and treat any reduction as upside. Confirm current rates with the appraisal district or county tax office.
Hail and wind events affect insurance pricing across Texas, and older complexes with many roofs can be costly to cover. In Houston and other Gulf Coast markets, flood zone status and windstorm coverage can change the budget significantly.
Ask for an insurance quote during due diligence and share it with us. The deductible structure matters too, since high wind or hail deductibles affect reserves.
Because Texas does not require public disclosure of sale prices, apartment comps come from appraiser data and market participants rather than public records. A full commercial appraisal is required, and the appraiser will lean heavily on the income approach, so clean operating statements help the value as much as the comps do.
Multifamily loans take longer than residential loans. Expect a full appraisal, rent roll and lease review, and often environmental and property-condition reports. Unit inspections may be part of the review on older buildings. On a purchase, build that review time into your contract dates, and ask the seller early for leases, operating statements, utility bills and service contracts so the file is not waiting on paperwork.
Starting early with complete documents is the best way to keep a closing date. Call (877) 298-1001 or use the form below to get a quote and a document checklist.
Nine units. Buildings with 5 to 8 units are underwritten as residential rentals and have their own DSCR program.
Up to 75% LTV on acquisitions, with custom terms up to $5M+. The final amount is often set by the DSCR the NOI can support.
In Texas, taxes and insurance often take a large share of income, so the NOI supports less debt than the LTV cap would allow. The lower of the two limits sets the loan.
Yes. Stabilized buildings can go straight to a permanent loan. Buildings that need renovation or lease-up may start with a commercial bridge loan.
No. Expect taxes to be estimated on the post-purchase value. You can protest the appraised value each year, but underwriting does not assume a win.
They can. In student or energy-linked markets, we look closely at tenant concentration and the local employer base.
Yes. Multifamily loans need a full commercial valuation, and in Texas the lack of public sale prices can make that step take longer.
LLCs and other entities are standard. Experience, liquidity, and the property's rent roll and operating history all matter. Recourse varies by program.
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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+.