It depends on the type of apartment development and how it’s classified. Here’s a clear breakdown:
- Multifamily residential (apartments) for income
- Commercial classification: In real estate, apartment buildings with 5 or more units are usually considered commercial real estate because they generate rental income and are treated as investment properties.
- Why: Banks, investors, and developers treat them like commercial assets for financing, valuation, and tax purposes.
- Small residential buildings (1–4 units)
- Residential classification: Duplexes, triplexes, or quadplexes are generally considered residential rather than commercial, even if rented out.
Summary:
- Apartments with 5+ units → commercial development
- Apartments with 1–4 units → residential development
Related
What is a commercial appraisal?
What is the difference between residential and commercial development?