4plexes vs apartment complexes

Recommendation

I recommend purchasing multiple fourplexes (not apartment complexes) within a few miles of each other.

Advantages of Fourplexes Over Apartment Complexes

1. Newer Builds, Lower Maintenance
   Fourplexes are often built more recently, which typically reduces maintenance costs per dollar invested.
   
   

2. Operational Efficiency
   Owning several fourplexes in close proximity creates efficiency in management and operations.
   
   

3. Financing Flexibility
   
   

   • Fourplexes qualify for residential financing (1–4 units), often with 30-year amortization through Fannie Mae.
     
     

   • This lowers debt service and increases cash flow compared to most commercial loans, which are typically 15–25 years unless structured through Fannie Mae commercial programs.
     
     

   • Residential interest rates are generally lower than commercial rates.
     
     

4. No Balloon Payments
   Conventional fourplex loans typically have no balloon payments. By contrast, most commercial loans include balloons every 5–10 years, creating refinancing risk. (Exception: Fannie Mae commercial loans $1M+ may offer 30-year, non-recourse financing.)
   
   

5. Better Price Per Unit
   On a per-unit basis, fourplexes usually provide stronger value relative to their year built.
   
   

6. Flexible Exit Options
   
   

   • Fourplexes can be sold individually to small investors or packaged for a commercial buyer.
     
     

   • They can also be purchased by both owner-occupants and non-owner-occupants, increasing the buyer pool.
     
     

   • Smaller price tags attract more buyers who can qualify.
     
     

7. Recession Resilience
   Government-backed lenders (Fannie Mae, FHA, VA) remain more liquid during downturns than private commercial banks. This makes refinancing or accessing capital safer with fourplexes.
   
   

8. Appreciation via Rent Growth
   Rent increases directly impact the value of a fourplex, similar to apartment complexes. For example: I owned a fourplex in Killeen where raising rents increased its sale price by over $30,000 compared to a similar low-rent property nearby.
   
   

9. Insurance Accessibility
   Insurance is easier and cheaper to obtain and maintain on fourplexes. Apartment complexes often require stricter condition standards and fewer insurers are available.
   
   

10. No “Seasoning” Requirements
    Apartment complexes usually require 2 years of profitable tax returns before they can be financed by a new buyer. Fourplexes can be sold immediately after rents are upgraded, making them more liquid.
    
    

11. Comparable Sales Data
    MLS comps for fourplexes are plentiful. Apartment complexes often lack reliable comps, complicating valuation.
    
    

12. Liquidity in Emergencies
    A fourplex can typically be sold in ~60 days. Selling an apartment complex often takes 90+ days even in good markets.
    
    

13. Lower Stress, Less Oversight
    Based on my own experience (owning 3 apartment complexes and 10 fourplexes), apartments bring more stress, surprises, and regulation. Fourplexes have been far more manageable.
    
    

14. Fewer Regulatory Burdens
    Code enforcement is stricter for commercial apartments. For example, renovations in older complexes may require costly asbestos abatement (e.g., $4K–$7K per unit), while similar work on fourplexes may not.
    
    

Advantages of Apartment Complexes

• Property taxes generally equal one month or less of revenue (vs. 1–2 months for fourplexes).
  
  

• Insurance per unit is cheaper.
  
  

• Commercial loans of $1M+ can be non-recourse.
  
  

• Faster scaling is possible if you have substantial capital.
  
  

• Rent increases typically translate into larger valuation gains.
  
  

👉 In short: Fourplexes offer better financing terms, stronger liquidity, broader buyer pools, and fewer headaches—making them the safer, more flexible play for most investors. Apartment complexes can accelerate scale, but at higher risk and complexity.