This is a great question. I'll answer from a financing perspective. The cap rate is NOT as important when trying to secure good financing for a 4 and under because they are residential loans. It is all important for a 5+ because that is a commercial loan and rate is determined by DSCR. From a valuation perspective, I think it is equally important in any case but I'd defer to a real estate expert. I'd be interested in your opinion, Keith. I hope this link to an article I wrote helps:
I would say that for commercial its extremely important, less so for residential. There is more wiggle room in residential. My guess is because commercial renters are primarily interested in square footage. Hope this helps.