Small multifamily investing - 2-4 unit or 4+ unit

[Jody Ho]

Hey investors, I would like to get your thoughts between investing in 2-4 unit multifamily and 4+ unit. It seems to me that the main benefits of 2-4 unit are 30 year fixed rate residential loan and possible house hacking to get even better loan. However, there are way more competition to buy, and harder to find cash flow properties (price per unit is usually higher). If you factor in the property management, the fee is higher for 2-4 units.

On the other hand, when the number of units increase, the price per unit is generally lower, management fee goes lower. It is easier to get positive cash flow. However, it gets into commercial loan, no fixed rate long term loan (cannot take full advantage of the low rate situation).

If I evaluate 2-4 unit properties like 4+ unit properties, the price I come up usually way too low to be competitive. What am I missing when I look at them? Will you guys invest in both or mostly either one? What are you guys looking for when investing in 2-4 unit vs 4+ unit?

I think more units seem to be better investment. What do you think?

Thank you in advance.