Dallas multifamily lending

Short answer: Stabilized 5–20 unit multifamily in Dallas–Fort Worth trades at roughly 5.5%–6.75% cap rates with rent growth around +2.8% YoY. DSCR lenders here want about 1.25, and Texas year-2 tax reassessment at sale price is the number that most often breaks an otherwise-clean underwrite.

What's actually trading in Dallas

The Dallas–Fort Worth small multifamily market is the largest 5–20 unit ecosystem in the country and the deepest pool of qualified investor-buyers. As of the most recent quarter, going-in cap rates for stabilized 1980s-vintage class C product cluster between 5.5% and 6.75%, with newer (post-2005) garden product compressing toward the low end. Rent growth has cooled from the 7%+ peak to a more sustainable +2.8% YoY.

The DSCR math right now

At today's DSCR-loan rates (~7.4% on a 30-year amort), a stabilized DFW 8-unit at a 6.0 cap underwrites to a DSCR of roughly 1.21–1.28 at 75% LTV. That's right at the lender floor. Deals priced inside a 5.75 cap require either a rate buy-down, a larger equity check, or an immediate value-add story to clear underwriting.

What are lenders flagging on Dallas deals?

• Tax reassessment. Texas reassesses at sale price; year-2 tax can be 40–80% above the seller's T-12 number. Underwrite year-2 carefully.
• Insurance. DFW has lower wind exposure than the coast but hail claims are real. Premiums up 8–15% YoY.
• Submarket variance. Pleasant Grove, Oak Cliff, and parts of Garland trade at 75–125 bps wider than uptown / Lakewood. Use micro-comps.

Underwrite a Dallas deal

Plug the rent roll into PathIQ. Select TX as the state and the year-2 reassessment toggle will flow into the DSCR. Export the 1003 once your borrower lines up financing.

Frequently asked questions

What are cap rates in Dallas–Fort Worth right now?

Stabilized 5–20 unit product is trading around 5.5%–6.75%, with newer post-2005 garden product near the low end and older class C toward the high end. Submarkets like Pleasant Grove and Oak Cliff price 75–125 bps wider than uptown or Lakewood.

Why does Texas property tax matter so much when underwriting Dallas deals?

Texas reassesses at the sale price, so year-2 taxes can run 40–80% above the seller's trailing-12 number. That single line can push a DSCR below the lender floor, so PathIQ's year-2 reassessment toggle flows the higher tax straight into the DSCR.

What DSCR do Dallas lenders want?

Most DSCR lenders here want about 1.25. At a 6.0 cap and current rates, a stabilized DFW 8-unit underwrites to roughly 1.21–1.28 at 75% LTV — right at the floor — so deals inside a 5.75 cap usually need a rate buy-down, more equity, or a value-add story.

How much is insurance rising on Dallas multifamily?

DFW has lower wind exposure than the coast, but hail claims are real and premiums have risen roughly 8–15% YoY. Always underwrite with a current quote rather than the seller's premium.