Youssef KobbiExample How to buy 6-Plex in Canada: A Step-by-Step Guide for Commercial Real Estate Investors
Taking the leap from residential to multifamily real estate is a major milestone for any investor. Whether you’re scaling up from a condo or diving straight into commercial assets, buying your first multifamily property can open the door to stable cash flow, stronger financing opportunities, and long-term wealth creation.
But unlike single-family homes, multifamily properties in Canada typically starting at 5 units or more fall under commercial real estate rules. That means different lenders, valuation methods, and investment metrics apply.
In this guide, Smart Capital walks you through every step of the acquisition process, from strategy to financing to closing. We will talk about How to Buy a First Multifamily Acquisition And to bring it all to life, we’ll take a real-world example: buying a 6-plex as your first multifamily deal.
Whether you’re looking in Ontario, Quebec, Alberta, or beyond, this playbook is designed to help you invest smart right from your first acquisition.
Buying a 6-plex (six-unit multi-family property) is a strategic entry point into commercial real estate in Canada. It offers scale, consistent rental income, and financing options not available to smaller residential investors. But navigating this process requires more than just capital, it demands strategic planning, financial structuring, and market expertise.
At Smart Capital Real Estate, we specialize in structuring and financing multi-family acquisitions from 5 to 100+ units. In this guide, we’ll walk you through the step-by-step process of acquiring a 6-plex in Canada, highlighting key financing options, common pitfalls, and how to maximize your returns.
Why Buy a 6-Plex?
Before diving into the process, let’s understand why a 6-plex is a smart investment:
| Benefit | Description |
| Commercial Classification | Properties with 5+ units are considered commercial real estate, opening access to better financing structures. |
| Economies of Scale | Shared maintenance, insurance, and management costs improve operational efficiency. |
| Cash Flow Potential | Higher rental income vs. single or duplex properties. |
| Value-Add Opportunities | Renovations or repositioning can significantly boost NOI and property value. |
Step-by-Step: How to Buy a 6-Plex in Canada
1. Define Your Investment Criteria
Start by answering these questions:
- Where do you want to invest ?
- Are you looking for value-add, turnkey, or underperforming assets?
- What is your target cap rate, budget, and expected cash flow?
👉 Tip from Smart Capital: For beginner investors, secondary markets like Gatineau, Saskatoon, or Windsor can offer better entry prices and strong fundamentals.
2. Get Pre-Qualified for Financing
Unlike residential mortgages, commercial financing is assessed based on the property’s Net Operating Income (NOI) and Debt Service Coverage Ratio (DSCR). You’ll need to prepare:
- A personal net worth statement
- A business or corporate profile (if purchasing via a company)
- A financial plan or pro forma
Get pre-qualified with smart capital now.
Main financing options:
| Loan Type | Key Features | When to Use |
| Conventional Loans | Up to 75% LTV, DSCR of 1.20–1.30, amortization up to 25 years | Ideal for stabilized, income-producing 6-plexes |
| CMHC-Insured Loans | Up to 85%–95% LTV, lower interest rates, longer amortization (up to 40 years) | Best for long-term buy-and-hold investors |
| Bridge Loans | Short-term, interest-only | For value-add or repositioning projects |
🔗 Learn more about CMHC vs. Conventional Loans
3. Build Your Acquisition Team
A successful commercial deal relies on the right team:
- Mortgage Broker or Capital Advisor: Structures financing options: At Smart Capital, we’re not just Capital Advisors who structure your financing options. We position ourselves as part of your team. That means we go beyond arranging capital, we help you build your team. Whether you need a mortgage broker, a lawyer, an appraiser, or other key partners, we’ll guide you to the right professionals to get your deal done efficiently and successfully.
- Commercial Broker: Specializes in multi-family properties. They provide access to off-market opportunities, accurate financial analysis, and expert negotiation tailored to income-generating properties. At Smart Capital, we work closely with top commercial brokers across Canada and if you don’t have one yet, we can connect you with the right partner for your project.
- Real Estate Lawyer: Reviews purchase agreements, handles due diligence. A Real Estate Lawyer plays a critical role in reviewing purchase agreements and managing the due diligence process. They ensure all legal aspects of the transaction are secure, from title verification to closing documents. At Smart Capital, we can introduce you to trusted real estate lawyers who specialize in multi-family and commercial deals to help you move forward with confidence.
- Commercial Appraiser: Needed for financing and valuation. He is essential for determining the fair market value of a multi-family or commercial property. Their report is a key requirement for lenders during the financing process and helps investors validate their investment assumptions. At Smart Capital, we work with accredited appraisers across Canada and can connect you with the right expert based on your asset type and location.
💡 Smart Capital Advantage: We act as your capital advisor, connecting you with lenders, brokers, and underwriters to structure the deal from A to Z. Start Now: Book a Free Call
4. Analyze the Deal Properly
Use key metrics like:
- Cap Rate: Net Operating Income ÷ Purchase Price
- Cash-on-Cash Return
- Break-even Ratio
- Rent Roll & Expense History: Scrutinize tenant leases, vacancy rates, utilities
5. Make an Offer with Conditions
Your offer should include:
- Financing condition (typically 30–60 days)
- Inspection clause
- Environmental review (Phase 1 ESA for older properties)
- Review of tenant leases and financials
This is where Smart Capital’s underwriting support becomes critical, we help assess risk and identify red flags before you commit. Unlike traditional mortgage brokers, you can reach out to us at this early stage to help you analyze your deal, challenge your assumptions, and ensure the numbers make sense before moving forward.
6. Secure Financing & Close the Deal
Once your offer is accepted, it’s time to finalize financing:
- Lender Underwriting: Based on property income, location, and your profile
- Appraisal & ESA: Ordered by the lender or broker
- Final Approval & Legal Closing: Prepare funds, review legal docs, close with a notary or real estate lawyer
🎯 Smart Capital Insight: We help investors access off-market lending solutions and institutional capital for smoother closings, especially on tight timelines.
7. Asset Management & Optimization
After closing, your focus should shift to performance:
- Implement professional property management
- Reduce operating expenses
- Increase rents (legally, as per provincial rules)
- Explore refinancing after value creation
📈 Smart Capital supports post-acquisition strategies like refinancing, repositioning, and portfolio expansion.
Real-World Example: Financing a 6-Plex in Gatineau
- Purchase Price: $1,200,000
- NOI: $72,000
- CMHC Loan: 85% LTV, $1,020,000 at 3.3% for 40 years
- Monthly Mortgage Payment: For 3.3% ~$4,539 and For 3.77%~ $4.881
- Net Cash Flow: ~$1,461/month For 3.3% and ~$1,119 for 3.77%
By working with Smart Capital, the investor secured a CMHC loan with 0.80% lower interest than market rates, saving $60,000+ in lifetime interest.
Common Mistakes to Avoid
| Mistake | Why It Matters |
| Underestimating closing costs | Legal, inspection, financing, and CMHC premiums can add up to 5–8% of the purchase price |
| Poor due diligence | Missing issues in leases, structural elements, or zoning |
| Overleveraging | Leave room for unexpected vacancies or repairs |
| DIY approach to financing | Working with specialized advisors like Smart Capital unlocks better loan structures |
Final Thoughts: Why a 6-Plex Is a Smart First Commercial Deal
A 6-plex offers a unique opportunity: low enough to be manageable, yet large enough to unlock the benefits of commercial real estate. Whether you’re planning to grow a portfolio or stabilize long-term income, the 6-plex is often the perfect “first big step.”
At Smart Capital, we don’t just find financing, we build strategies. From due diligence to deal structuring to post-acquisition support, our team ensures your first multi-family deal sets the stage for long-term success.
Frequently Asked Questions (FAQ)
Q: Can I buy a 6-plex with a residential mortgage?
No. In Canada, properties with 5+ units are considered commercial real estate, and must be financed accordingly.
Q: What credit score do I need for a commercial loan?
There’s no strict minimum, but lenders prefer borrowers with 680+ credit scores and solid net worth.
Q: How much down payment is required?
Typically 15%–25% depending on the lender and whether CMHC insurance is involved.
Q: Do I need a corporation to buy a 6-plex?
Not necessarily, but many investors use corporations for tax and liability benefits.
Ready to Acquire Your First 6-Plex?
📞 Book a call with Smart Capital to get pre-qualified, analyze your project, and explore the best financing path for your commercial real estate ambitions.
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