I had heard mentioned before that it was something to do with their income producing capacity but also heard that that's not a factor until you're looking at 5 units.

Time is a factor.

After factoring in my Cost to Purchase of $4838....My cap rate is at 6.15% (I consider okay for NJ and condition of property), and my CoC is 4.74%!

Factors I am not including?

@Dmitriy Fomichenko undefined I was reading up on the different IRA options this morning and it makes me nervous considering all the options, penalties, etc.

They take what they feel are comps and sort of average the price after adjusting for differences, then add a factor for excess or less Sq footage.So if 6 close comps sold for an average of $100K and averaged 1500 sq ft, all else equal, they would start at 100K then if the subject property was say 1650 ft they would add like $20-25 per foot for the additional 150 ft.

I found that a thinner margin for a rock solid house makes better long term financial sense and has a much lower hassle factor.

There are lots of other things that might be factored in.Is there any common areas that you will have an electric bill?

this is more an out of curiousity issue at this point, as i intend to move forward, just interest in if it would be cost prohibitive to add for an additional $150 or so in rent/ added value if sold.Also, i understand that the local muni codes etc are a big factor here, and i plan on calling them up if we get the house under contract, but in terms of labor and construction if there arent any structural conflicts.thanks in advance.

One other item, your exit strategy is also a factor here.