THE LEVER
Buyers in the 5 to 9 unit band still think the loan is hard to get. It isn't. That's the gap, and this is part one of a series on closing it.
Four units is residential. Five is commercial. The DSCR loan you already use works on five to nine units. Sometimes 10. Rarely 11, on an exception basis.
Let's run a live listing near me in Charlotte: 2213 Alma Ct, Charlotte NC 28206.
1964 full brick sixplex. Six 2/1s, about 776 square feet each. Tenant-paid utilities, new roof, new HVAC. Five of six leased. On a purchase, the lender will usually let you use market rent on the vacant unit. Asking $1 million. Let's see if it pencils.
Step one is rent. Pull a rent report and you'll see 2-bed averages around $2,000. Those are the new 2/2 amenity buildings up the street. Different tenant, different finish. On this street, standard 2/1s lease at $1,100 and renovated ones at $1,250 to $1,395. Underwrite at $1,300. A seller rent roll would settle it. We're working without one.
Step two is the loan. 25% down. $750,000 at 6.99%, 30-year.
Step three is the underwrite. DSCR = Gross Rent ÷ PITI. Six units at $1,300 is $7,800. $7,800 over $6,049 is 1.29. Most lenders call 1.20 to 1.25 excellent. It clears, and the lender gave you market rent on the empty unit. Back of napkin: check.
The lender counts the empty unit. Your bank account doesn't until it's leased. Live MLS listing, modeled at the day's terms. Rents from street comps. Taxes from the 2026 Mecklenburg County bill. Insurance estimated. Not a quote.
Now the part the listing doesn't show. I pulled the county tax record. Took two minutes. In March, the assessor bumped the value from $501,700 to $861,800 for "remodeled improvements." The new roof and renovations the listing brags about are why the tax bill went from about $5,000 to $8,267 a year. Run this deal on last year's taxes and you get a $723 cushion. Run it on this year's and you get $451. Same building, same rents. Nobody put that in the brochure.
Second thing on that record: by county records, it looks like the seller is behind on property taxes, going back a few years. If so, that gets settled out of their proceeds at closing, so it's not your problem. It is your negotiating position. Seven months on market makes more sense now.
Pick a 5 to 9 unit listing in your market. Pull the street rents, not the neighborhood average. Pull the actual tax bill, not last year's. Run gross rent over PITI at 25% down. If it clears, send it to me and I'll run it with you.
THE W
Back to back record months for the company. My team is up about 15% month over month. That's you. Thanks.
THE L
Too many nights in the office the last few weeks. Good problem, still a problem. I'm working on getting back to the gym and home for dinner.
ON THE RADAR
- Above 10 units, the underwriting changes. The lender stops looking at gross rent and starts looking at NOI: real expenses, real reserves, usually a shorter amortization with a balloon. Same building math, harder questions. That's part two.
- A reader wrote in last week. He's moving from SFR into self storage, office, and retail. If you feel the same pull, reply. It tells me what part two should be.
- Mecklenburg revalues again in 2027. If you buy that sixplex at $1M, plan on the tax bill moving toward $9,300. Price it in now.
Cheers,
Wyatt
The Leverage Letter | When you know the game, nobody can play you.
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Subscribe to The Leverage LetterModeled on a live public listing at the time of writing; terms shown are illustrative, not a quote or a commitment to lend. All loans subject to credit approval and underwriting. Also in the archive: the 2026 BRRRR math nobody runs.