Multifamily Calculator
5+ unit / commercial multifamily analysis with DSCR and per-unit metrics.
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Sam's Take
Commercial multifamily (5+ units) plays by different rules. Lenders care about DSCR — debt service coverage ratio — almost more than they care about your personal credit. Below 1.25, most lenders walk. The trick at this asset class isn't finding cash-flowing deals; it's finding assets where you can raise rents toward market and improve DSCR through operations. That's where my returns came from — buying buildings with under-market rents and bringing them current.
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The line at 5 units — where residential ends and commercial begins
In real estate financing, the world splits at 5 units. Anything 1-4 units is "residential" — the same kind of mortgage you'd use for a single-family home, just with the option of multiple tenants. Once you cross to 5 units, you're in commercial real estate, and almost everything changes.
Commercial financing is a different animal. Down payments are 25-30% (vs 3.5-25% on residential). Amortization is usually 20-25 years (vs 30). And the loan typically has a balloon at year 5 or 7 — meaning the full remaining balance is due at that point, and you have to refinance or sell. That balloon is real risk: if rates have moved or your NOI has dropped, refinancing can be hard.
The other big shift: commercial lenders evaluate the property as much as they evaluate you. On a single-family loan, your income and credit are most of what gets you approved. On a 12-unit, the bank wants to see that the building itself can pay its own debt — which is where DSCR comes in.
DSCR — the number commercial lenders care about
DSCR stands for Debt Service Coverage Ratio. It's the property's net operating income divided by the annual mortgage payment. A DSCR of 1.25 means the property generates $1.25 in NOI for every $1 of mortgage payment — a 25% cushion before the building can't pay its own loan.
Most commercial lenders won't lend below 1.20-1.25 DSCR. If your deal pencils at 1.10, you have three choices: bring more equity (which raises DSCR by lowering the loan), negotiate a lower price, or find a way to raise rents to grow NOI. If none of those work, the deal doesn't work — at least not at that financing.
Per-unit metrics — how to compare deals fast
When you're sourcing deals, "price per unit" and "rent per unit" are the fastest way to compare across different sizes. A 4-unit at $400,000 and a 12-unit at $1,200,000 are both $100K per unit — same basis, even though the total prices look completely different.
My personal filter sequence on a new commercial deal: price per unit (in line with the market?) → cap rate (above 6%?) → DSCR at the financing terms I'd actually get (above 1.25?) → full underwriting. Three quick checks knock out 80% of the deals on the market in 5 minutes. Saves hours of work on properties that were never going to pencil.