Pros and Cons of converting 4-plex to 5 unit commercial?

[David Burgess]

It seems to be that the jump from 4 units to 5 units is significant in that the 5 unit is values on income, and not on comps.  I've been mulling over a strategy of finding or building 4 unit buildings house hacking to get conventional financing, and the converting it into 5 unit (add one), or 8 unit (two story units converted down to one up and one down).

I understand every market is different, and sometime comps on a 4 can bring a bigger return than income on a 5, but I just love the idea of having a better control over value with the commercial, especially if I can get the leverage of a conventional loan at the time of purchase.

Apart from zoning issues, and parking, what jumps out about this that makes this either a smart play, or really really dumb. :-)

Thanks,

David