There are lots of 2 bed apartments that will sleep 5 ie maybe one on sofa in the Algarve.
Nice beach with bars etc nothing special really my kids are aged 10/12 and 17
There's Albufeira, which is quite big and with lots going on, Vilamoura, is another popular resort with its Marina.
Albufeira sounds ok what transfer times like could you recommend anywhere there b&b ok we like to eat out and try different places
Sorry but I've not stayed in this area. Have a look around the Internet both on booking sites, private rentals & Tour operators to see what's best for your budget
Let us know if we can be of further help
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