Why does the four-unit line matter so much?
Because it determines what kind of loan you can get and how the property is valued.
At four units or fewer, lenders generally treat the property as residential. That opens the door to conventional financing, and if you occupy one unit, to owner-occupied terms with lower down payment requirements than an investment purchase. Appraisers value the building by comparing it to similar sold properties.
At five units and above, it's commercial. Underwriting shifts to the property's income, down payments are typically larger, terms are shorter, and appraisal moves to an income approach. That's not worse, and for some strategies it's better, but it's a different transaction with a different buyer pool.
For a first or second investment property in New Hampshire, staying at four units or under keeps the financing simple.
How does vacancy risk change with unit count?
This is the strongest argument for more units.
In a duplex, one empty unit removes 50% of your gross rent. In a triplex, 33%. In a fourplex, 25%. Fixed costs stay the same in every case, so the smaller the building, the harder a single vacancy hits.
New Hampshire's tight rental market softens this in practice. Statewide rental vacancy ran about 3.9% in early 2025, below the roughly 5% New Hampshire Housing treats as balanced, and Manchester–Nashua multifamily sat near 4.8% in 2026. Units generally fill.
But underwriting to a tight market is how people get hurt. A 5% vacancy allowance on a duplex means you've budgeted for about eighteen days of one unit sitting empty across a year. A single bad turn blows through that.
What about operating costs per unit?
They generally improve with scale, though less than people expect in older New Hampshire stock.
One roof over four units costs less per unit than one roof over two. Same for a single heating plant, one lawn, one snow contract, one insurance policy. That's the efficiency argument.
What doesn't scale is anything inside the units. Turns, appliances, plumbing fixtures, and flooring are per-unit costs, and in Manchester's century-old triple-decker stock they're substantial. A four-unit building with four kitchens has four kitchens to maintain.
Use 35% to 45% of effective gross income for operating expenses as a starting point, weighted higher for older buildings and self-management, and keep capital reserves separate from that number.
Looking at a specific two, three, or four-unit building? Send me the address and I'll run the real numbers on it. Two business days, no obligation.
Does house hacking change the calculation?
Substantially, and it's the most common way people start in this market.
Occupying one unit of a two-to-four unit building can qualify you for owner-occupied financing terms, with a lower down payment than an investment purchase requires. Your tenants offset your own housing cost while you build equity.
The trade-offs are real. You live in your investment, you're the closest thing to on-site management whether you want to be or not, and you give up the flexibility of a separate residence. Owner-occupancy requirements also typically come with a minimum period of actually living there.
For a first purchase in New Hampshire's price environment, it remains one of the few routes into a market where cap rates are compressed and entry prices are high.
Which should I actually buy?
The honest answer is that unit count matters less than the specific building.
A well-maintained duplex with below-market rents and a recent roof is a better investment than a fourplex with a failing heating system and rents already at market. Unit count sets the shape of the risk. Condition, rents, and the tax bill set the return.
What to compare across candidates:
- Rent roll against market rents. Where's the gap, and how quickly can it close?
- Capital condition. Roof, heating, electrical, plumbing, windows. Age and remaining life on each.
- The tax bill on that parcel for the current year, rather than a town average.
- Unit mix. Three two-bedrooms rent differently than three studios.
- Separate utilities. Whether heat and hot water are separately metered changes your expense ratio considerably.
