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Multifamily Financing for Real Estate Investors
By Jason Taken · Principal, Jaken Finance Group
Multifamily underwriting — rent roll, DSCR 5.75%–10.5%, bridge 8.99%–13.5% IO for value-add, unit economics, and BRRRR exit on non-owner-occupied deals.
Multifamily scales investor cash flow across doors — but underwriting still anchors on rent roll, investor NOI, and DSCR, not brochure cap rates. Jaken Finance Group finances non-owner-occupied multifamily nationwide: 8.99%–13.5% interest-only bridge for value-add and lease-up, 5.75%–10.5% DSCR permanent when executed leases support the ratio. This guide covers unit economics, product selection, BRRRR mechanics, and the file package that closes on qualified acquisitions.
Small multifamily — investor scope
| Product | Typical doors | Bridge role | Permanent role |
|---|---|---|---|
| Duplex–fourplex | 2–4 | Turn, systems, vacancy | DSCR when leased |
| Small apartment | 5–20 | Value-add, reposition | DSCR or sale |
| Mixed-use (resi-heavy) | Varies | Residential unit turns | DSCR on stabilized NOI |
DSCR hub · Scale portfolio 1–10 doors · Bridge loans hub.
Unit economics — reconcile rent roll before LOI
| Line | Seller pro forma trap | Investor file |
|---|---|---|
| Gross rent | Market on vacant units | In-place or conservative market |
| Vacancy | 3% always | 5%–8% on turnover product |
| Property tax | Seller homestead or stale | Investor/landlord bill from treasurer |
| Insurance | Owner policy | Landlord quote on submission |
| Management | Self-managed at 0% | 8%–10% if third-party |
| Repairs / capex | Understated | $250–$400/door/yr reserve line |
DSCR = NOI ÷ PITIA. Permanent debt at 5.75%–10.5% sizes on actual rent and investor expenses — not the OM.
Bridge vs DSCR — decision at LOI
| Signal at purchase | Start with | Why |
|---|---|---|
| Vacant units, deferred maintenance | Hard money IO | Collateral not DSCR-ready |
| Full rent roll, clean T-12 | DSCR | No IO carry burn |
| Light cosmetic, 45-day lease plan | Bridge + refi letter | Speed now, permanent at seasoning |
| Heavy reposition (systems, layout) | Bridge through CO | Appraisal reflects post-scope value |
| Owner-occupied intent | Neither | Jaken Finance Group — non-owner-occupied only |
Mis-matching product is expensive — IO at 8.99%–13.5% on a stabilized building you could have bought on DSCR at 5.75%–10.5% destroys year-one cash flow.
Worked example — 4-unit value-add BRRRR
Assumptions: $520,000 purchase + $80,000 rehab = $600,000 all-in. Post-CO rent $4,800/mo gross ($57,600/yr). Bridge 80% LTC → $480,000 at 11% IO ≈ $4,400/mo during 6-month rehab + 60-day lease-up ≈ $29,333 carry.
| Line | Post-stabilization |
|---|---|
| Gross rent | $57,600/yr |
| Vacancy (7%) | −$4,032 |
| OpEx (tax, ins, maint, mgmt) | −$18,000 |
| NOI | ~$35,568 |
| Appraised value (7.5% cap) | ~$474,000 — stress lower |
| DSCR refi 75% LTV on $650,000 appraised | $487,500 note at 7.5% ≈ $3,650/mo PITIA |
| DSCR | ~1.08 at modeled NOI |
Confirm appraisal supports refi LTV and seasoning (6–12 months from bridge note date) before you close bridge — refi denial with maturing note is the multifamily BRRRR failure mode.
Worked example — 8-unit turnkey hold
Assumptions: $1,100,000 purchase, fully leased, NOI $72,000/yr. DSCR 75% LTV → $825,000 note at 7.25% ≈ $5,640/mo PITIA.
| Line | Amount |
|---|---|
| NOI | $72,000/yr ($6,000/mo) |
| PITIA | ~$5,640/mo |
| DSCR | ~1.06 |
| Monthly cash flow (after vacancy/ops in NOI) | Thin — verify reserves |
Turnkey multifamily with thin DSCR needs rate buy-down, higher equity, or rent upside documented — not optimistic pro forma alone.
Rent roll diligence
| Check | Why it matters |
|---|---|
| Lease execution | Verbal tenancy fails DSCR |
| Rent vs market | Below-market roll may cap value |
| Subsidized / Section 8 | Program rules affect exit |
| RUBS vs gross | Normalize expenses across comps |
| Delinquency | Trailing collections signal management risk |
| Security deposits | Transfer at closing per state law |
Request T-12 operating statement plus current rent roll with lease end dates — rollover concentration in one quarter adds vacancy risk in your model.
Value-add scope — multifamily rehab
| Project type | Bridge fit | Scope requirement |
|---|---|---|
| Unit turns (kitchen/bath) | Yes | Per-unit budget + timeline |
| Roof / mechanical | Yes | Engineer bid if warranted |
| ADU / illegal unit cure | Yes with permit plan | ARV credit only post-permit |
| Cosmetic only, occupied | Maybe DSCR with reserves | Light scope |
Holdback releases on inspection milestones — same 3–5 business day draw cadence as SFR flip. 10%–15% contingency on aggregate scope is mandatory.
See hard money for buy-and-hold · rehab loans for investment property.
DSCR sizing — permanent debt bands
| Parameter | Typical qualified range |
|---|---|
| Rate band | 5.75%–10.5% |
| DSCR floor | ≥1.0 (program-specific) |
| LTV purchase | Up to 85% select markets |
| LTV cash-out | Up to 80% qualified |
| Seasoning | 6–12 months from note date (bridge exit) |
Use DSCR calculator against your tax bill and insurance — not seller disclosures.
Portfolio stacking — 1 to 10 doors
Multifamily accelerates door count vs SFR:
| Stage | Financing pattern |
|---|---|
| Doors 1–2 | Bridge value-add → DSCR hold |
| Doors 3–6 | Overlapping bridge + permanent mix |
| Doors 7–10 | IO reserve on two active bridges minimum |
Bottleneck is file completeness, not rate — sponsors with pre-built entity docs and comp folders close faster and stack more acquisitions per year.
Entity and asset management
| Document | Multifamily-specific defect |
|---|---|
| LLC operating agreement | Wrong entity on rent deposits |
| Separate LLC per building vs series | Match lender cross-collateral policy |
| Property management agreement | Required if third-party |
| Bank account | Commingled personal/rent |
Insurance: landlord policy with appropriate unit count and loss-of-rent coverage — not owner-occupied HO-3.
Exit paths — hold, sell, or recap
| Exit | When it fits | Underwriting note |
|---|---|---|
| DSCR hold | Stable NOI, long-term cash flow | Confirm ratio at permanent rate |
| Sale | Reposition complete, cap compression | Model 6%–8% commercial-style costs on 5+ units |
| Cash-out DSCR | Seasoned equity, rising rents | 80% LTV cash-out caps apply |
| 1031 | Portfolio reallocation | Coordinate with QI before close |
Bridge without documented exit — sale or refi — becomes indefinite IO carry.
Risks to model honestly
- IO carry during lease-up — each month at 8.99%–13.5%
- Vacancy clustering — one empty 3-bedroom ≠ one empty studio in NOI hit
- Rent control / ordinance — local rules cap upside
- Deferred capex — roofs and boilers blow pro forma after close
- Appraisal vs pro forma — income approach may land below OM
- Seasoning mismatch — bridge matures before DSCR eligible
When multifamily bridge is the wrong tool
- Fully leased, stabilized with clean T-12 — start with DSCR
- Owner-occupied duplex hack — outside Jaken Finance Group scope
- STR-only income without documented seasoning
- Negative DSCR at conservative rent — pass or add equity
Related resources
- Using hard money to invest in real estate
- DSCR loan for investment property
- Scale rental portfolio with DSCR
- Hard money vs conventional
- Submit scenario · Pre-qualify
Multifamily Financing for Real Estate Investors — next step (2026)
Permanent 5.75%–10.5% DSCR sizes on executed lease rent with investor tax and insurance in NOI — not seller bills or STR pro forma.
Submit scenario · Pre-qualify · (833) 264-7776.
Rates, terms and conditions offered only to qualified borrowers and are subject to change at any time without notice. Closing times are in business days and commence upon receipt of appraisal payment and satisfaction of borrower conditions. Closing times may be delayed due to appraiser property access . All loans are subject to full underwriting for loan approvals. Jaken Finance Group only finances non-owner occupied investment properties.
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Jaken Finance Group, 2300 Barrington Road, Suite 400, Hoffman Estates, IL 60196