Two-to-four unit residential property sits in an odd spot: too small to be commercial multifamily, but different enough from a single-family home that it needs its own appraisal form. Form 1025 is that form. Because these properties are usually purchased for rental income, the report is built around income as well as sale comparables — a structural difference from the one-unit report worth understanding before ordering one.
What the form covers
Form 1025 documents the same basic categories as a one-unit appraisal — property description, site, neighborhood, condition, and comparable sales — but adds a unit-by-unit breakdown of the property (bedroom and bathroom count, square footage, rent) and an income approach to value, since two-to-four unit properties are valued in part on what they can rent for.
Built-in rent analysis
Because Form 1025 already contains its own rent schedule for each unit, a separate Form 1007 is not used alongside it — 1007 is a one-unit-only form. Many appraisers pair the 1025 with Form 216, which develops the operating income statement supporting the income approach.
Actual versus market rent on multi-unit
For a tenanted two-to-four unit property, the appraiser records actual in-place rents unit by unit. For vacant units, or where actual rent looks out of line with the market, the appraiser also develops a market rent opinion for comparison — the same actual-versus-market distinction covered on our market rent vs. actual rent page.
How lenders use it
DSCR lenders qualifying a two-to-four unit property draw the rent figure for the ratio calculation from the 1025, aggregating the individual unit rents into a total gross monthly rent figure. The mechanics of that ratio are covered under DSCR.
Where it stops at five units
Form 1025 tops out at four units. A five-plus unit building is commercial multifamily and is appraised on entirely different forms and methodology, outside the scope of this residential form set.
Form 1025 (Small Residential Income Property Appraisal Report) FAQ
Two, three, and four unit residential properties. One-unit properties use Form 1004; five-plus unit buildings are commercial multifamily and use different appraisal methodology entirely.
Yes. It records actual or market rent unit by unit, then aggregates the total, which is different from the single combined figure Form 1007 produces for a one-unit property.
No. The rent analysis is built into the 1025 itself. Appraisers commonly pair it with Form 216 for the supporting operating income statement rather than with Form 1007.
The ratio calculation is the same gross rent against total payment. The difference is that the rent side aggregates several unit rents from the 1025 rather than a single 1007 figure.
That changes the purchase into an owner-occupied transaction rather than a pure investment purchase, which is a different loan category with different requirements than a DSCR rental loan.