Michigan DSCR program
5-10 unit DSCR loans for Michigan small multifamily
Quick answer
Buildings of five to ten units fall outside standard residential DSCR programs, but small-balance commercial DSCR programs can finance them on rental income. Michigan has many of these walk-up buildings in older neighborhoods. Expect lenders to review a rent roll, an operating statement and the building’s physical condition more closely than on a house.
How small-balance programs differ
Small-balance multifamily lenders look at the building more like a business. Beyond rent, they may consider operating expenses such as utilities paid by the owner, repairs and management. Some measure coverage using net operating income rather than gross rent. Leverage and documentation requirements are usually different from 1-4 unit programs.
- Current rent roll with lease dates and deposits
- Trailing operating statement for the building
- Insurance quote covering the full building
- Recent tax bill and an estimate of the uncapped figure
- Description of capital improvements and deferred maintenance
- Entity documents and guarantor information
Michigan building considerations
Many five-to-ten unit buildings in Detroit, Lansing, Grand Rapids and Kalamazoo were built decades ago. Boilers, roofs, electrical service and shared plumbing drive insurance pricing and appraisal condition ratings. Owner-paid heat can materially change operating costs in a Michigan winter, so be ready to document it.
For multiple smaller rentals instead of one building, compare portfolio DSCR.
Have a Michigan rental in mind?
Send the address, the rent and the uncapped tax estimate. We shop the scenario with wholesale lenders and come back with options that fit the property.