People are quick to tell me why I should NOT buy a 5+ unit building. But why SHOULD I?
Wife and I are in the beginning stages of going after a long term income property. We already have a 4 unit building - and a single family home we live in. Our agent (who we trust very much) is asking us to consider a building with 5 or more units, saying that while riskier, and with more expensive and less secure loan options, they can pay off much greater down the line. 

I've had many people tell me why we should stick to 4 units. But wondering what the specific pluses of owning 5+ unit properties are?
My wife and I both like a little risk. So it is intriguing to us. Thanks

[{"id": "cblxx5p", "text": "Well, my thoughts are that more units generally mean more consistent cash flow. I'm not an expert by any means but I wouldn't hesitate to jump at a good deal on a 5+ building.", "replies": [], "depth": 1}, {"id": "cblyhge", "text": "Where is this 5 unit building located? ", "replies": [], "depth": 1}, {"id": "cbm1e71", "text": "This seems really case by case.  My dad used to own 1 apartment complex that on paper was as good a deal as one he owns now except the first one was 2 story so any time a toilet overflowed upstairs,  there was a huge repair downstairs to deal with.  The single story also has a pitched roof and concrete block construction on slabs.  Very low maintenance.  Is there some tax advantage in.cali for under 5 units? ", "replies": [], "depth": 1}, {"id": "cbm6k7k", "text": "In general the benefits of owning 5+ units (commercial multifamily) are:\n\n- Greater flexibility with financing. Individual banks set their own terms for portfolio loans.\n\n- Valued on an income basis more than a comps basis so less prone to pricing bubbles and busts\n\n- More units means that vacancies are less of a problem\n\nAs you indicated there are downsides too. Personally I don't feel that 5 units is enough extra to compensate you for the costs and risks over taking a conventional 4-unit place, unless you are getting a killer price. In my experience the benefits start kicking in around the 8-unit mark.\n", "replies": [{"id": "cbmlav8", "text": "This dude pretty much summed it up. ", "replies": [], "depth": 2}], "depth": 1}, {"id": "cbm774d", "text": "We own a couple of apartment buildings in the LA/SFV area.  IMHO 8 units or less are not worth it (with some exceptions).  To keep it simple, 8 units or less will generate a large mortgage payment (especially in LA) but a month or two with even 1 vacancy can really strain you and and eat into your emergency fund and maintenance account. A vacancy with a major capital expense (AC for example) will break your emergency account.  You should have 20% of the buildings Present Value in cash on hand in some sort of maintenance account or emergency cash fund if you are thinking of going into commercial.  We own nothing smaller than 12 units and they are curved as lazy hills (people like to move in the summer, rents go up in the winter) but vacancies do not cause the curve to violently increase generally.\n\nIf the 5 unit is a winner ( distressed property and bank needs out from underneath it) it could be a buy, if its a winner and needs some hab work done, probably a good candidate to buy, fix, flip.  Its a little more stress but there is good money to be made right now as so many people thought they were real estate investors from 2007-2009 and totally lost their ass's. Now a lot of 5-8 unit buildings on the market are distressed.  YMMV\n\nedit:  This is just my opinion, not sound financial advice and should be taken with large grains of salt.", "replies": [], "depth": 1}, {"id": "cbm84zt", "text": "Let's first be clear on the disadvantages, which is that costs in ownership/operation of a building per number of units are progressive without much in the way of economies of scale, and 4-6 units tends to be the cutoff line for a lot of different sorts of costs and regulations. Add in the other weirdness of market rents and asset ownership, and I would be hesitant to suggest a correlation between size and cash flow, maybe even a slight trend to the opposite. It's also always going to be a slower market for when you look to sell. \n\nSo, the advantage is the disadvantage. The larger a building gets, the more it's like running a full-fledged business of its own, the more you have to know about the business, and the more you have to work at it like a business rather than an investment or the sort of \"free-time\" management that many investors do with their real estate. If that's what you're looking for, great! It's just a lot of people aren't interested in quitting your proverbial day job. \n\nThe other big advantages come in terms of personal financial picture and so are harder to generalize.", "replies": [{"id": "cbml0zv", "text": "Actually the larger your buildings get, the more you have to rely on a team of \"professionals\" that you surround yourself with.  It will take time and you will definitely have a misstep or two (sometimes you just don't jell with someone), but once you find a good asset protection lawyer, accountant, property management company etc. its pretty much hands off unless you just want to be in the way and slow everything down.  \n\nMore units make more profit, there is more involved, especially in the beginning, and you need to stay the course if things get rough (cash on hand), but they make more pure profit, hands down.\n\nEdit: hands off as in I no longer run around and do grunt work like meet venders, show appartments, run my own books, put adds in the paper/craigslist, etc.  Most of my work is on the phone and as you get more and more units, things become more automated.  I do like to shake up my PMC every once in a while and do audits and what not, but that is about it.  It does take time to learn it all, but most people start small and work their way up, so you got time.\n", "replies": [{"id": "cbmlkgp", "text": "The way I see it, that cadre is required basically whatever real estate you're talking about, investment or no. And there's lots of strategic sorts of involvement. There's something that's being too hands on for sure and not listening to advice, but even just the strategic sort of thing requires a lot of garden-tending. ", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "cbmghij", "text": "Less risk with a vacancy causing as large of an impact and increase in efficiencies due to economy of size come to mind", "replies": [], "depth": 1}]