Since then, my cabins have tripled in value - worth easily $800K or more, and have produced $696,XXX in rents.  

I suspect the person who originally turned it into a fiveplex only applied for permits to make a fourplex and then did the 5th unit fly by night (perhaps at a later date) in order so the property would still be considered residential and allow for better financing possibilities.

Excluding the periods of “tulip bulb” irrational exuberance, a property must produce enough of a risk adjusted return to satisfy both the ROI demands of the “limited partners”, and the income/time requirements of the sponsor.  

Join a hugh producing team.

You mentioned that you are not a W-2, but that is not the only status of income producing individuals. 

He became a contractor, worked hard, and grew a successful business that produced a lot of money.

At first, it wasn’t glamorous, but today, those 12 doors produce about $90,000/year in net cash flow.

Though it may cash flow well based on their current debt service, when you compare the income it produces to the equity they have is it actually even a good investment for them from an ROI perspective or would they be better off liquidating and redeploying?

I was told initially that commercial deals(5 plus units) were based more off income property is producing than personal credit/finances but that's not entirely true.

If you are using STR, REPS, or self rental with material participation to convert to active or nonpassive income, you do not have to do this if you have passive business invesment that produce passive income that will exceed the loss generated by depreciation.