The line between 4 units and 5 units changes everything.
It looks like one more unit. To the market, it's a different asset class — a different buyer, a different financing path, and a different way of setting price. Knowing which side of the line your building sits on shapes how it should be sold.
The financing divide
This is the heart of it. 2–4 unit buildings are typically financed like residential income property, which opens the door to owner-users and first-time investors — a wide, sometimes emotional buyer pool. At 5 units, buildings cross into commercial financing, which changes the buyer pool to investors underwriting on income. We name this so you can plan around it; for the specifics of any loan, consult a licensed loan officer of your choosing — this site carries no lending content.
How each is valued
2–4 unit buildings lean partly on price-per-unit and comparable sales (and trade on higher GRMs, recently ~13.5x). 5+ unit buildings are valued almost purely on income — GRM and cap rate — because the buyers are investors, not owner-occupants. The same gross rent can produce a different price depending on which side of the line you're on.
Where each gets marketed
2–4 unit buildings belong on the MLS and consumer portals where the largest, most emotional audience shops. 5+ unit buildings need the commercial platforms — LoopNet and Crexi — plus direct investor outreach, because that's where income-buyers and 1031 exchangers actually look. A building marketed to the wrong pool sits.
What this means for your sale
If you own a fourplex, you're selling to the broadest possible audience and presentation-to-consumers matters. If you own 5+ units, you're selling to professionals who reward clean numbers and a documented plan — and who will quietly pass on anything mispriced. Either way, the strategy should match the asset class, not treat them the same.
The short version
- 5 units is the line where residential financing gives way to commercial — and the buyer pool shifts.
- 2–4 units trade partly on comps and price/unit; 5+ trade on income.
- Each side needs a different marketing channel mix to reach the right buyers.
- Financing specifics belong with a licensed loan officer — not this site.
Keep reading
The marketing plan — written down, before your building ever hits the market
Know Your NumberHow your building is actually valued
Defer, Don't Give AwayThe 1031 exchange, in plain English
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