Multifamily Investing in the North Bay and San Francisco

By Matthew Martinez, Founder, CEO & Managing Broker, Diamond Real Estate Group. California DRE #01869679.

Multifamily investing in the North Bay and San Francisco splits into two different businesses: 2 to 4 unit properties, which are financed with residential mortgages and can be bought by an owner who lives in one unit, and buildings of five or more units, which are priced on their income and financed with commercial or multifamily loans. In both, the rules on rent and eviction decide much of what a building is worth. State law caps rent increases on many units, and San Francisco, Oakland, Berkeley and San Jose add local ordinances on top.

This page is the starting point for our multifamily guides. It explains how the two size classes differ, what changes from county to county, which rent rules to check, and the order in which a purchase is usually investigated. Diamond Real Estate Group works with multifamily investors across Sonoma, Napa, Marin and San Francisco and in the East Bay and South Bay, including Oakland, Berkeley and San Jose.

2 to 4 units versus 5 or more: why the line matters

The four-unit line is set by the lending system. Fannie Mae publishes its single-family loan limits for one, two, three and four units; a fifth unit moves the loan into the multifamily or commercial world, where the building’s income carries most of the underwriting weight.

Question	2 to 4 units	5 or more units
Typical financing	Residential mortgage: conventional, FHA or VA if the buyer will live in a unit; conventional or portfolio loans for non-occupant investors	Multifamily or commercial loan from a bank, credit union, agency multifamily lender or debt fund
2026 conforming loan limit (baseline counties)	$1,066,250 (2 units), $1,288,800 (3), $1,601,750 (4)	Not applicable
2026 conforming limit ceiling (highest-cost counties)	$1,599,375 (2 units), $1,933,200 (3), $2,402,625 (4)	Not applicable
How the price is usually tested	Comparable sales of similar small buildings, checked against rents	Net operating income and market cap rates, checked against sales
Owner-occupant options	Yes, including low-down-payment programs	Rarely relevant
Who the buyers are	Owner-occupants and small investors	Investors, partnerships and funds

Loan limits are from Fannie Mae’s 2026 table; each county’s actual limit sits somewhere between the baseline and the ceiling, so ask a lender for the figure that applies to the property’s county. For the owner-occupant side, our guide to financing a duplex, triplex or fourplex covers FHA, VA and 5% down conventional loans and how lenders count rent. Above four units, read apartment building loans next.

County and city guides

Multifamily markets here are local. Zoning, rent rules, transfer tax and the age of the housing stock change at the city line, so we keep separate guides for each market.

Sonoma County. From duplexes in Santa Rosa and Petaluma to apartment complexes, our Sonoma County multifamily guide covers Santa Rosa’s R-2 and R-3 zoning, Petaluma’s tenant protections and the county’s Ordinance 6496 for unincorporated areas.
San Francisco. The city’s own rent ordinance, eviction rules and building programs sit on top of state law. Units first certified for occupancy after June 13, 1979 are exempt from the Rent Ordinance’s increase limits but still have just cause protection, so a building’s age and permit history matter as much as its rents. Start with our San Francisco multifamily guide.
Marin County. Each city and town sets its own zoning and housing rules, so a building in San Rafael and one in Novato can be very different investments. See the Marin County multifamily guide.
Napa. For the City of Napa and the rest of the county, see the Napa multifamily guide.
Oakland and Berkeley. Both cities have rent stabilization and eviction rules of their own; our East Bay rent stabilization comparison sets them side by side.
San Jose. The city has its own rent ordinance for apartments; read San Jose’s rent ordinance for investors before you underwrite one.

Rent rules that shape value

A building’s value depends on how far, and how fast, rents can move. Three layers of law decide that.

State law: the Tenant Protection Act (AB 1482)

Civil Code section 1947.12 limits rent increases on covered units to 5% plus the regional change in the cost of living, with a hard cap of 10%, over any 12-month period. For increases taking effect from August 1, 2026 through July 31, 2027, the California Attorney General’s chart puts the cap at 8.8% in the San Francisco metro counties (Alameda, Contra Costa, Marin, San Francisco and San Mateo) and 8.6% in the rest of the state’s regions served here, including Sonoma and Napa. Some units are exempt, among them housing issued a certificate of occupancy within the previous 15 years, a duplex in which the owner lived in one unit when the tenancy began and still does (as long as neither unit is an ADU or junior ADU), and single-family homes and condos not owned by a REIT, a corporation or an LLC with a corporate member, if the tenant received the required written notice. The section is set to be repealed on January 1, 2030. Companion just-cause eviction rules sit in Civil Code section 1946.2. Our AB 1482 guide for landlords walks through every exemption and the notice rules.

Costa-Hawkins and local rent control

The Costa-Hawkins Rental Housing Act (Civil Code section 1954.52) limits what a city’s rent control can cover. It lets owners set the initial and later rents on units with a certificate of occupancy issued after February 1, 1995, and on most units that can be sold separately, such as condos and single-family homes, free of local rent limits. Cities may still regulate the grounds for eviction in those units. A building’s construction date can therefore change its value more than its finishes.

City ordinances

San Francisco, Oakland, Berkeley and San Jose each run a rent program with its own registry, fees, allowable increases and eviction rules, and those rules generally govern older buildings instead of the state cap. In Sonoma County, Petaluma and the unincorporated county add their own just cause and relocation rules but no rent cap. Elsewhere, local rules can be added or changed at any council meeting. Check the current rules for the specific city, and the county’s rules for unincorporated parcels, before you write an offer.

How a multifamily purchase is investigated

The order matters, because each step depends on the documents from the step before it.

Get the rent roll, leases and operating statements. Ask for at least two years of income and expenses and every lease, amendment and side agreement.
Rebuild the net operating income yourself. Replace the seller’s projections with actual collections, a realistic vacancy allowance and the property tax that will apply after your purchase. Our guide to net operating income shows the line items.
Check each unit’s legal status. Confirm the unit count against permits, and find out which units are under local rent control, which are covered by AB 1482 and which are exempt.
Verify the tenants’ side of the story. Tenant estoppel certificates confirm rent, deposits and any promises the seller made, before you close.
Inspect the building, not just one unit. Roof, foundation, sewer lateral, electrical service, balconies and stairs, and any seismic retrofit history. Larger buildings may also need environmental and zoning reports for the lender.
Line up the loan and the insurance. Lenders set loan size from income and debt coverage, and insurance quotes can change the numbers in fire-exposed areas.

The full step-by-step process for five units and up is in our guide to how to buy an apartment building.

Property tax, transfer tax and exchanges

A long-held building’s property tax bill can rise sharply for the next owner after a sale, so budget the post-sale tax in your NOI rather than the seller’s current bill. Transfer tax depends on the county and, in some cities, an extra city tax; who pays it is negotiable, though in Diamond’s North Bay markets the seller customarily pays.

Many multifamily sales are one side of a tax-deferred exchange. If you are selling a building to buy another, the exchange’s identification and closing deadlines start running when your sale closes, so plan the purchase side before you list. Our 1031 exchange guide explains the federal rules and California’s own reporting.

How Diamond works with multifamily investors

We start with your criteria: unit count, target cities, rent-control tolerance, financing and how hands-on you want to be. Then we search the MLS and our own client database, and we run targeted off-market campaigns to owners who may sell. Listings marketed through other brokerages follow MLS rules, including NAR’s Clear Cooperation policy, and we do not promise access to another brokerage’s private or office-exclusive listings.

After closing, Diamond manages some rental properties directly and refers others to partner property managers. Diamond may refer you to partners we work with; you’re free to choose any provider. We also help owners sell multifamily buildings, from pricing on income to assembling the rent roll and estoppels buyers will ask for.

This is general information, not legal or tax advice; talk to a California landlord-tenant attorney or tax adviser about your situation.

Questions people ask

Is a fourplex residential or commercial?

For lending, a property with two to four units is residential: it can be financed with a conventional, FHA or VA mortgage, and an owner can live in one unit. Five or more units is generally financed as multifamily or commercial property. Zoning and building codes use their own definitions, so check those separately.

Do I need a bigger down payment for a duplex than for a house?

Not always. Owner-occupants can use FHA, VA or conventional programs with low down payments on 2 to 4 units, while non-occupant investors usually put down more. The details and lender rules are in our 2 to 4 unit financing guide.

Is there rent control on apartments in Sonoma County?

Most covered units in Sonoma County are subject to the state cap under AB 1482 (8.6% for increases from August 1, 2026 through July 31, 2027), not to a city rent board. Santa Rosa voters rejected local rent control in 2017, while Petaluma and the unincorporated county (Ordinance 6496) add just cause and relocation rules without a rent cap. Confirm the rules for the specific parcel.

Are newer buildings exempt from rent control?

Units with a certificate of occupancy issued after February 1, 1995 are exempt from local limits on rent levels under Costa-Hawkins, and housing issued a certificate of occupancy within the previous 15 years is exempt from the state cap. Local eviction rules can still apply.

Can I raise rents to market after I buy?

Only within the law that applies to each unit. A tenant’s rent does not reset because the building sold, so underwrite the rents you can actually collect.

Can Diamond find off-market apartment buildings?

We search our own client database and run targeted campaigns to owners who may sell. We cannot promise access to listings held privately by other brokerages.

If you are weighing a multifamily purchase or sale in the North Bay, San Francisco or the East Bay, tell us what you are looking for and we will set out the buildings, rules and numbers that fit. For our wider investment services, see the investor hub.

Sources & notes

Last reviewed October 2026 by Matthew Martinez.