As the multifamily lending landscape continues to evolve, brokers and mortgage professionals are in a unique position to capitalize on an increasingly dynamic and underexplored niche: 5–10 unit multifamily properties. While this segment has long existed between the familiar lanes of single-family investment and large-scale commercial multifamily, it’s finally getting the attention it deserves. And for brokers willing to specialize, it represents a scalable, sustainable, and highly lucrative vertical.
5–10 unit properties occupy a powerful middle ground—they’re large enough to benefit from commercial underwriting models like DSCR, yet small enough to remain accessible to the average investor. As single-family rental markets become more competitive and institutional capital continues to dominate large multifamily, brokers who understand this middle tier can offer tremendous value to their clients. DSCR loans are the engine behind that momentum.
Why This Segment Deserves Broker Attention
The 5–10 unit multifamily segment represents one of the most promising growth opportunities for brokers in today’s mortgage landscape. These properties occupy a strategic space in the investment property spectrum—offering a unique mix of scalability, simplicity, and consistent performance that both new and seasoned investors crave. For brokers, this is more than a trend; it’s a high-performing channel that aligns with shifting investor strategies, favorable loan structures, and broad market demand.
- Streamlined DSCR Underwriting: The backbone of this market is the DSCR (Debt-Service Coverage Ratio) loan structure. These loans allow brokers to sidestep traditional underwriting complexity by qualifying borrowers based on the asset’s income, not personal tax returns or DTI ratios. This reduces friction and accelerates time to close, which is critical for investors competing in tight markets.
- Rising Investor Demand: As competition and pricing in the 1–4 unit space tighten, many investors are naturally moving toward the next tier: 5–10 unit buildings. These properties offer more doors per transaction, better economies of scale, and operational efficiency—all with a manageable learning curve.
- Strong National Trends: Demographic shifts, migration patterns, and hybrid workforce trends are pushing renters toward smaller markets where 5–10 unit buildings are more prevalent. That creates more borrower demand in regions brokers already serve.
- Supply-Demand Turnover: A significant portion of the country’s 5–10 unit inventory is owned by aging landlords who are now exiting the market. Brokers who establish themselves in this niche can capture the surge in acquisition financing and refis as new investors step in.
- Higher Ticket Size, Bigger Commission Potential: The average 5–10 unit DSCR loan falls between $600,000 and $1.8 million. That’s significantly higher than the average SFR investor loan, translating to higher compensation per file.
- Flexible Ownership and Program Options: These deals often involve sophisticated structures like LLCs, partnerships, or trusts. DSCR lending accommodates these formats, empowering brokers to serve experienced operators who would otherwise be turned away by conventional lenders.
- Resilience in Challenging Cycles: During times of tightening credit or fluctuating interest rates, 5–10 unit properties remain attractive due to their affordability and stable cash flow. DSCR loans with fixed-rate or IO options help investors weather economic changes and give brokers a durable lending product to offer year-round.
- Pipeline Multiplication: One good investor client in this space can lead to multiple deals annually. Many are acquiring, refinancing, or repositioning their portfolios quarterly. Deliver results once, and you’ll become their go-to lending partner.
If you’re a mortgage professional looking for a channel that balances strong margins, consistent borrower demand, and repeatable deal flow, 5–10 unit DSCR loans check every box. Here’s why this space is ripe for growth:
- Streamlined DSCR Underwriting: Debt-Service Coverage Ratio loans don’t require traditional income verification like W-2s or tax returns. Instead, loan qualification is based entirely on the property’s net opera, larger properties that offer better economies of scale—and 5–10 unit buildings are the logical next step.
- 1031 Exchange Buyers: These borrowers are under pressure. They’ve recently sold a property and must identify a replacement quickly to defer capital gains taxes. DSCR loans—especially when paired with smaller multifamily properties—offer the speed and simplicity they need to meet tight exchange deadlines.
- Value-Add Operators: This group is hunting for upside. They actively seek underperforming buildings where improvements to management, condition, or tenant mix can lead to higher net operating income. These borrowers often use short-term DSCR loans to acquire and stabilize before refinancing.
- Portfolio Builders: These investors are assembling 10, 20, even 50 units at a time—but not all in one place. They prefer to diversify across markets and property types. The 5–10 unit space allows them to scale without going full commercial or institutional.
- Self-Employed Professionals & Alternative Income Earners: These borrowers are frequently disqualified from conventional lending due to irregular income or lack of W-2s. Yet many have high liquidity, strong credit, and deep market knowledge. DSCR products are often their only path to leverage.
- Out-of-State and Remote Investors: These clients may live in high-cost markets like California or New York and invest in more affordable regions like the Midwest or Southeast. They rely on brokers who understand local lending nuances and can execute cleanly from a distance.
Across all borrower types, the common threads are:
- Speed to close matters: Many borrowers are competing for off-market or lightly marketed properties where fast offers win deals.
- Execution is everything: They’re not looking to be educated on investing—they want financing professionals who can anticipate issues and solve them.
- They’re repeat clients: A satisfied 5–10 unit borrower may do 2–5 deals with you per year. That lifetime value makes client retention and long-term relationships a core part of your business strategy.
By understanding the mindset and goals of these investors, brokers can position themselves as essential partners—trusted not just to deliver funding, but to enable their clients’ entire investment strategy.
Product Snapshot: DSCR Loans for 5–10 Unit Properties
For brokers, understanding the basic parameters of DSCR lending will help with prequalification and borrower education. Most programs offer:
- Loan Amounts: $250,000 to $3,000,000+
- LTV: Up to 75% on purchases, 70% on cash-out refinances
- Terms: 30-year fixed and 40 year interest-only options
- DSCR Requirements: Typically 1.10x to 1.25x, depending on LTV and product tier
- Property Types: 5–10 unit apartment buildings, with a variety of vacancy allowances based on loan purpose
- Ownership: LLCs, corporations, trusts, and individuals
Broker Playbook: How to Source and Close More Deals
Want to build a 5–10 unit pipeline? Use these tactics:
- Audit Your CRM: Review your book of closed SFR clients. Who owns 3+ properties? Who has refinanced in the last 12 months? Who expressed interest in scaling up?
- Partner with Real Estate Professionals: Network with agents who specialize in off-market deals, wholesalers, and property managers. Many 5–10 unit deals never hit the MLS.
- Create Targeted Marketing: Build content around “Why Now Is the Time to Buy 5–10 Units” and promote it via email and social media.
- Offer Free Prequalifications: Position yourself as an easy on-ramp for investors exploring small multifamily. Provide soft-pull credit prequals and property-level DSCR analysis.
- Host a Webinar: Educate your audience about how DSCR loans work, what makes a 5–10 unit deal successful, and how they can get started.
- Close One Deal, Ask for Five: Happy investors know other investors. Ask for introductions and referrals—this is a close-knit community.
Top 10 Markets for 5–10 Unit DSCR Lending
As demand for small multifamily investments continues to grow, brokers should know where the opportunity is most active. These markets combine strong rent growth, population inflow, housing supply gaps, and investor-friendly conditions—making them ideal for DSCR-based financing of 5–10 unit properties. Here’s a data-backed look at where brokers should focus in 2025:
- Tucson, Arizona
- Cap Rate Average: ~6.4%
- YoY Rent Growth: 2.8%
- Market Insight: Tucson remains affordable relative to nearby Phoenix and has strong demand for workforce housing. 5–10 unit inventory is common, and DSCR borrowers are actively targeting this value-oriented market.
- Milwaukee, Wisconsin
- Cap Rate Average: ~7.1%
- YoY Rent Growth: 3.5%
- Market Insight: With strong local job growth and a diverse economy, Milwaukee’s multifamily market is booming below the radar. Investors are gravitating toward older Class B/C buildings that qualify for DSCR financing and light rehab.
- Knoxville, Tennessee
- Cap Rate Average: ~6.0%
- YoY Rent Growth: 3.1%
- Market Insight: Low property taxes, favorable landlord laws, and an influx of new residents make Knoxville a hidden gem for small multifamily investing.
- White Plains, New York
- Cap Rate Average: ~5.3%
- YoY Rent Growth: 4.5%
- Market Insight: Located just outside of NYC, White Plains offers investors access to a high-income tenant base and reliable rental demand. Brokers should watch for DSCR buyers transitioning from 1–4 unit assets in Brooklyn and Queens.
- Lexington, Kentucky
- Cap Rate Average: ~6.6%
- YoY Rent Growth: 2.9%
- Market Insight: With strong university-driven demand and limited new construction, Lexington offers a stable pool of renters ideal for DSCR-backed cash-flow investments.
- Columbus, Ohio
- Cap Rate Average: ~6.3%
- YoY Rent Growth: 3.2%
- Market Insight: Ranked consistently as one of the fastest-growing Midwestern metros, Columbus offers a mix of affordable housing stock and steady rent growth.
- Greenville, South Carolina
- Cap Rate Average: ~6.1%
- YoY Rent Growth: 4.0%
- Market Insight: A rising star in the Southeast, Greenville features strong economic development, a revitalized downtown, and growing demand for small apartment rentals.
- Albuquerque, New Mexico
- Cap Rate Average: ~6.8%
- YoY Rent Growth: 3.4%
- Market Insight: Steady growth and relatively low homeownership rates support consistent rental demand. Inventory of 5–10 unit properties is abundant in older neighborhoods.
- Birmingham, Alabama
- Cap Rate Average: ~6.5%
- YoY Rent Growth: 3.6%
- Market Insight: Low acquisition costs and moderate rent growth make Birmingham a cash-flow-focused investor’s dream. DSCR borrowers can often hit 1.25x with conservative underwriting.
- Reno, Nevada
- Cap Rate Average: ~5.9%
- YoY Rent Growth: 3.8%
- Market Insight: Benefiting from the tech spillover from California, Reno offers long-term upside with lower regulatory risk and strong investor interest in sub-20 unit buildings.
Why AHL TPO Is the Right Partner for You
At AHL, we’ve built our DSCR platform specifically for mortgage professionals who want to grow in the investor space. When you work with us, you get:
- Fast quote turnaround
- Deal scenario support and structuring guidance
- Access to underwriters who understand DSCR inside and out
- Programs designed specifically for 5–10 unit properties
- A tech-forward submission and processing experience
We believe that brokers are the heart of this business, and our platform is built to help you move quickly, serve clients better, and close more loans.
Final Thoughts: Specialization Is the Future
Generalist brokers will always have to compete for deals. Specialists get clients for life.
By focusing on 5–10 unit DSCR lending, you’re building a defensible niche. You’re serving a demographic of serious investors who need reliable capital partners. You’re solving real pain points around documentation, speed, and complexity. And you’re earning the kind of business that grows by referral, not just rates.
There’s a reason institutional capital is pouring into small multifamily. It’s cash-flowing, underbuilt, and demographically supported. Now it’s your turn to do the same.