What It Actually Costs to Finance a 12 Unit Building in El Segundo Right Now

Published July 25, 2026

Current commercial multifamily rates run 5.70% to 6.11% depending on loan size. Here is what that means for an El Segundo portfolio purchase.

Commercial lenders are currently quoting two different rate bands for apartment buildings, split at the $6 million loan mark. Loans over $6 million are pricing around 5.70% to 5.76%. Loans under that line run 6.07% to 6.11%, a gap of roughly 35 to 40 basis points. For an El Segundo owner buying or refinancing a small multifamily building, which side of that line the loan lands on changes the monthly payment by real money.

The two rate bands, as published this week

As of July 24, 2026, Select Commercial's published multifamily rate sheet shows fixed rates over $6,000,000 at 5.70% (5 year), 5.76% (7 year), and 5.72% (10 year), all with up to 75% loan to value. Below $6,000,000, the same lender quotes 6.11%, 6.09%, and 6.07% across the same three terms, with loan amounts starting at $1,500,000 and LTV up to 80%.

That is not a small spread. On a $3 million loan, the difference between 6.07% and 5.72% works out to roughly $650 a month, or about $7,800 a year, just from crossing the size threshold. Most El Segundo small multifamily buyers will land in the under $6 million tier on a single building. The interesting question is what happens when an owner is buying more than one building at once.

An illustrative example: financing a 12 unit portfolio here

This is a hypothetical example built from realistic ranges, not a specific real listing. Two adjacent six unit buildings on E. Imperial Avenue in El Segundo, priced at $2,250,000 each, for a combined $4,500,000 across 12 units, roughly $375,000 per unit, is a plausible small multifamily portfolio for this submarket given how tight coastal El Segundo pricing runs.

Say an owner buys both buildings together under one blanket loan at 75% loan to value. That is a $3,375,000 loan, still inside the under $6 million tier, so the 10 year fixed quote applies at 6.07%. On a 30 year amortization, that loan carries a monthly payment of about $20,385, or roughly $244,600 a year in debt service alone.

Lenders underwriting apartment loans typically want a debt service coverage ratio, DSCR, of around 1.25 or better, meaning net operating income needs to run about 25% above the debt payment. On this loan, that puts the qualifying NOI bar at roughly $305,800 a year, which works out to a 6.8% return on the $4,500,000 purchase price before the mortgage. Against the compressed cap rates typical of tight coastal El Segundo multifamily deals, that is a real gap, and it is the first thing a lender's underwriter will flag. It does not mean the deal cannot work. It means the down payment, rent roll, or purchase price has to close that gap, not the rate.

Why the $6 million line matters for portfolio strategy

If that same buyer aggregated further, say a third building bringing total value toward $8,000,000, a 75% LTV loan of roughly $6,000,000 would cross into the better priced tier. At 5.72% instead of 6.07%, the payment on a $6,000,000, 30 year loan drops from about $36,240 a month to about $34,930, saving close to $15,700 a year just from the rate tier, before counting the extra income from the additional units.

This is the practical case for portfolio or blanket loan structures in a market like El Segundo, where per unit pricing is high and land constrained supply keeps individual buildings small. An owner scaling from one building to a small portfolio is not just buying more doors. Crossing the loan size threshold on a combined purchase is its own lever, separate from rent growth or cap rate compression, and it is one a broker can model before an offer goes out.

What lenders want to see before quoting a rate

The published rates above are starting points, not guarantees. Select Commercial's own page notes final pricing depends on underwriting and property specifics, and most quotes come with a written preapproval within 24 hours once financials are submitted. For a stabilized El Segundo building, that generally means two years of operating statements, a current rent roll, and a DSCR that clears the lender's floor once vacancy and reserves are stress tested. Closings on these loans typically run 30 to 60 days once terms are agreed, with no upfront application fee at several commercial shops quoting in this range.

None of this is unique to El Segundo, but the market here amplifies it. Tight cap rates mean the DSCR math is tighter than in less expensive submarkets, so an owner buying here should run the debt service numbers against the actual trailing NOI before assuming a quoted rate translates into an approved loan.

Common questions

Does the $6 million threshold apply to the purchase price or the loan amount?

The loan amount. A $4,500,000 building financed at 75% LTV produces a $3,375,000 loan, which stays in the under $6 million tier even though the property itself is worth well over $6 million.

Can two buildings be combined into one loan to hit a better rate?

Often yes, through a blanket or cross collateralized commercial loan, which is common for portfolio purchases. The lender underwrites the combined income and value, and if the resulting loan clears $6,000,000, the better priced tier can apply. Structure and eligibility vary by lender.

What DSCR does a lender typically require in El Segundo?

Most commercial multifamily lenders look for roughly 1.25 or better, meaning net operating income needs to cover the mortgage payment by about 25%. Given how tight cap rates run here, that number deserves a careful look before assuming a purchase will qualify at the quoted rate.

Last verified: July 25, 2026. Rates and terms cited are published starting rates from a single commercial lender and are subject to change; the 12 unit portfolio above is an illustrative example built from realistic ranges for this submarket, not a specific real listing. This is general information for property owners, not investment or legal advice. Confirm current pricing and terms with a broker, lender, or licensed professional before acting.

Kellie

Schofield Properties

323 Richmond Street, El Segundo, CA 90245

Topics: investing, el-segundo, south-bay, financing

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Schofield Properties is a family run property management company at 323 Richmond St, El Segundo, CA 90245. We have managed the South Bay since 1972 and personally oversee about 186 doors today. Book a call to talk about your property.