Multi-Family Properties | An Investor’s Guide (2025)
Multifamily Investor Guide
1.0 Beyond Single-Family: The Power of Scaling
For a real estate investor, graduating from single-family homes to multi-family properties is a pivotal step. A multi-family property is any residential building with more than one distinct housing unit. This is how you transition from being a landlord to a serious portfolio operator. Instead of buying one door at a time, you acquire multiple streams of income with a single transaction, dramatically accelerating your path to financial goals.
2.0 The Core Benefits of Multi-Family Investing
Why do savvy investors focus on multi-family properties? It comes down to powerful financial advantages that single-family homes can’t offer.
1. Economies of Scale: This is the “one roof” principle. You have one foundation, one roof, and one insurance policy covering multiple income streams. This significantly lowers your per-unit maintenance, management, and capital expenditure costs.
2. Amplified Cash Flow: More doors mean more rent. A single transaction can yield two, four, or even more rental incomes, dramatically boosting your monthly cash flow and your ability to service the property’s debt.
3. Built-In Risk Mitigation: Vacancy can be devastating for a single-family rental (100% income loss). In a fourplex, one vacancy means you’re still collecting 75% of your gross rent, providing a powerful buffer that protects your investment.
3.0 Types of Multi-Family Properties in Canada
Canada offers a wide range of multi-family properties, each with unique characteristics and financing requirements.
Duplexes: The perfect entry point into multi-family investing. These two-unit properties can be side-by-side or up/down and are often eligible for favorable owner-occupant financing. Learn more about investing in duplexes.
Triplexes & Fourplexes: Often considered the sweet spot for investors. These properties (3-4 units) offer strong cash flow and can still be financed with residential mortgages, making them highly accessible. Explore fourplex investment strategies.
Small Apartment Buildings (5+ Units): Once you cross the four-unit threshold, you enter the world of commercial real estate. These properties require commercial financing, which is based more on the property’s income potential (NOI) than your personal income.
4.0 How to Analyze a Multi-Family Deal
The numbers for multi-family properties are different. Three key metrics you must know are:
Net Operating Income (NOI): This is your gross rental income minus all operating expenses (taxes, insurance, maintenance, utilities, etc.), but before mortgage payments. It measures the property’s standalone profitability.
Capitalization Rate (Cap Rate): This is the NOI divided by the purchase price. It measures your unleveraged rate of return and is the primary tool for comparing the value of different commercial properties.
Cash-on-Cash Return: This is your annual pre-tax cash flow divided by the total cash you invested (down payment, closing costs). This is the number that tells you how hard your actual money is working for you.
5.0 Financing Your Multi-Family Property
As mentioned, financing changes at the five-unit mark. Properties with 1-4 units typically qualify for residential mortgages, while buildings with 5 or more units require commercial loans. Specialized programs exist to help investors acquire these larger properties.
Learn about CMHC financing for multi-unit properties.
This is just one of many investment strategies. For a complete overview, return to the Ultimate Guide to Real Estate Investing.
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Common Investor FAQs
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What is a good cap rate for an investment property in Edmonton?
While cap rates vary by neighbourhood and property type, a good target for a stabilized residential property in Edmonton as of Fall 2025 is typically between 4.5% and 6%. High-demand areas near the University or with legal suites may be on the lower end, while properties requiring some renovation might offer higher initial cap rates.
What makes a basement suite “legal” in Edmonton?
A legal suite in Edmonton must meet specific safety and building code requirements. Key criteria include a separate entrance, specific window sizes for egress, a minimum ceiling height (typically around 6’11”), and independent heating and ventilation systems. Always verify the property has the required development and building permits from the City of Edmonton.
Which areas in Edmonton are best for cash-flowing properties?
For consistent cash flow, focus on areas with strong rental demand and more moderate purchase prices. Neighbourhoods near major institutions like the University of Alberta (Strathcona, Garneau), NAIT (Westwood, Prince Rupert), or those with easy access to transit and industrial hubs often perform well. Newer suburbs with high concentrations of young families also offer excellent opportunities.
How much of a down payment do I need for a rental property in Canada?
For a non-owner-occupied investment property, the minimum down payment is 20% of the purchase price. If you plan to live in one of the units (i.e., “house hacking” a duplex or home with a legal suite), you may be able to purchase it with a lower down payment as it’s considered owner-occupied.
Is Edmonton a better market for appreciation or cash flow?
Historically, Edmonton is known as a strong cash flow market. Compared to cities like Vancouver or Toronto, Edmonton’s property prices are significantly more affordable relative to average rental rates, allowing investors to see positive monthly income more easily. While the city does experience steady long-term appreciation, the primary draw for most investors is the potential for immediate and consistent cash flow.
