How to Analyze a Fourplex

Start with the rent roll and the unit mix

List each unit's size, layout, condition, current rent and lease end date. Then set market rent per unit from comparable rentals of similar size and finish.

The gap between current and market rent is the potential upside, but Ontario's rent increase and vacancy rules govern how and when you can realise it. Underwrite the timeline, not just the gap.

Benchmark expenses per unit

Per-unit benchmarks are useful sanity checks. Verify property taxes from the assessment, insurance from a quote, and utilities from actual bills. Maintenance should reflect building age and systems, and management should be included at market rate.

Watch for expenses that scale with unit count rather than square footage: appliance replacement, turnover cleaning, and unit-level repairs.

Financing and DSCR

Lender programs, down payment expectations and appraisal treatment differ between small residential and larger multi-unit properties. Confirm the current parameters with a broker before you underwrite a structure.

In multi-unit, DSCR is often the binding constraint on price. Solve for the loan the NOI supports at the lender's required ratio and work backwards to your maximum offer.

Where value-add really comes from

Durable NOI improvements are worth a multiple of themselves at a given cap rate. The reliable sources are rent alignment on turnover, adding chargeable amenities such as parking, storage or laundry, reducing owner-paid utilities, and cutting turnover costs through better tenant retention.

Cosmetic renovations that do not change rent or retention are expenses, not value-add.

Frequently asked