Strategic Pathways to Build Wealth in Commercial Real Estate

Multifamily real estate remains one of the most resilient asset classes in Canada’s commercial real estate (CRE) landscape. But in 2025, the game has changed. Investors can no longer rely on past formulas or “price per door” shortcuts. Instead, multifamily acquisition success depends on strategic underwriting, debt structuring, and a clear asset management plan from Day 1.

Whether you’re a first-time buyer looking to acquire a 12-unit building in Calgary or an experienced operator ready to scale into a 30+ unit asset in Gatineau, this guide is tailored to help you succeed in today’s market conditions.

📊 Why Multifamily in 2025? A Landscape in Motion

1. Demand Drivers Are Still Structurally Strong

The foundation of multifamily demand in Canada continues to solidify, not because of a temporary spike, but due to long-term demographic and economic trends that are unlikely to reverse anytime soon.

• Historic Immigration Levels
  Canada is welcoming over 500,000 newcomers annually, with many settling in mid-sized urban markets like Halifax, Regina, and Kelowna where affordability and job growth intersect. These new residents are rarely in a position to buy right away, which makes purpose-built rental housing their first landing point often for several years. For multifamily investors, this translates into predictable tenant flow and reduced leasing risk.
• Homeownership on Pause
  Even for those already living in Canada, high borrowing costs and mortgage qualification hurdles have forced many would-be buyers to stay in the rental market longer. With interest rates still elevated and affordability at a two-decade low in many cities, the rental lifecycle is expanding, particularly in the commercial segment, where tenants include student housing operators, seniors’ residence groups, and short-term workforce accommodations.
• Chronic Undersupply Across Urban Centres
  Canada’s housing supply gap isn’t just about detached homes — it’s deeply rooted in a systemic shortage of high-density, professionally managed rental units. CMHC estimates that Canada needs 3.5 million new units by 2030 to restore affordability, yet the current pace of multifamily construction is lagging far behind. For CRE buyers, this imbalance means existing assets even older ones are well positioned to capture rent growth simply because there aren’t enough alternatives. 

These demand forces don’t just create stability, they create leverage. In commercial multifamily, that means lower vacancy, more predictable cash flow, and ultimately, stronger valuations over time.

Multifamily Market Dynamics in Halifax, Kelowna & Regina

🔎Note: The cities of Halifax, Kelowna, and Regina are presented here for illustrative purposes only. They are not necessarily areas of strategic focus for Smart Capital but serve to highlight how multifamily market dynamics and supply-demand imbalances are playing out across different regions in Canada.

Halifax
Recently, Halifax has seen its multifamily vacancy rate rise to approximately 2.1% in 2024, up from a record low of 1.0% in 2023. This increase is largely due to a surge in new rental apartment completions combined with a slight deceleration in population growth, easing some of the immediate pressure on rental demand. However, rent levels remain robust, with turnover rents jumping over 28% year-over-year—indicating that while existing tenants may benefit from rent control measures, new tenants face significantly higher market rents. Despite these short-term fluctuations, Halifax’s constrained land availability and growing population create a favorable environment for multifamily commercial real estate, as demand still outpaces supply in the broader market. The CMHC estimates that Canada needs 3.5 million new rental units by 2030, underscoring the chronic undersupply that will continue to support Halifax’s rental market over the long term.
Sources: connectcre.ca, infotel.ca, halifaxpartnership.com, CMHC

Kelowna
Kelowna’s multifamily vacancy rose to about 3.8% in late 2024, largely because of the addition of approximately 2,000 new rental units expanding the city’s stock. While this represents one of the highest vacancy rates in Canada, the market has maintained strong rental rates averaging $1,930 for one-bedroom and $2,230 for two-bedroom units as of early 2025. Landlords are responding by offering lease incentives, but underlying demand remains strong due to ongoing population growth and limited alternative housing options. The structural supply gap emphasized by CMHC applies here as well, signaling that this vacancy uptick may be temporary as the market absorbs new inventory, with rental rates expected to remain stable or increase once the market balances. This dynamic makes Kelowna’s multifamily sector a compelling opportunity for commercial real estate investors seeking long-term cash flow stability.
Sources: kelownanow.com, kelownacapnews.com, CMHC

Regina
Although detailed recent data for Regina’s multifamily market is less readily available, the city has historically shown steady rent growth and moderate vacancy rates, supported by a stable economy and population growth. The broader Canadian supply gap also impacts Regina, with new rental developments unable to fully satisfy the rising demand from an increasing workforce and household formations. This long-term imbalance suggests that Regina’s multifamily assets will continue to see resilient occupancy levels and upward rent pressure, making acquisitions in this market a solid play for investors focused on commercial multifamily properties. Due diligence and consultation with local market experts are advised to capitalize on these opportunities.
Sources: avisonyoung.ca, canadianrealestatemagazine.ca, CMHC

The Big Picture
While short-term metrics in these cities may show rising vacancies or moderated rent growth, the overarching reality remains: Canada is facing a major multifamily supply shortage. The CMHC’s projection of 3.5 million new rental units needed by 2030 reflects an urgent demand that far outpaces current construction levels. For commercial multifamily real estate investors, this means that existing properties especially well-located, professionally managed ones hold significant long-term value, with strong fundamentals driving lower vacancy, steadier cash flow, and increasing valuations despite market fluctuations.

2. Construction Costs Make Existing Stock More Valuable

The price per square foot for new builds has risen by 20–40% in most provinces. This shifts focus toward value-add acquisition of existing assets, especially those with underperforming rents or outdated units.

Investors are now prioritizing:

• Stabilized assets with low capex
• Light renovation deals (kitchen/bath upgrades, not structural overhauls)
• Assets eligible for CMHC MLI Select improvement incentives 

3. Government Incentives Create Financing Leverage

In 2025, CMHC’s MLI Select program continues to be a game-changer, particularly for acquisitions with 5+ units.

Benefits include:

• Loan-to-value up to 95%
• Amortization up to 50 years
• Below-market interest rates for qualifying projects

✅ Smart Capital Insight: Investors with a clear plan to improve affordability, energy efficiency, and accessibility can dramatically reduce their debt service and improve cash flow.

🏢 Case Study: Value-Add Multifamily Acquisition with Bridge-to-CMHC Strategy

📌 The Deal (Year 0)

• Purchase Price: $2.4 million (16 units at $150,000 per unit)
• Initial Financing:
  Smart Capital structured a Bridge Loan at 80% LTV on the purchase price + renovations, securing $2.16 million:
  • $1.92M for acquisition (80% of $2.4M)
  • $240K for renovations (80% of $300K budget)
• Investor Cash Injection:
  • $480,000 down payment (20% of $2.4M)
  • $60,000 for renovations (remaining 20% of $300K)
  • Total Initial Investment: $540,000 

🔧 The Strategy: Value-Add Execution

• Renovation Budget: $300,000 ($18,750 per unit)
  • Energy-efficient windows, insulation, and modern appliances
• Rent Growth:
  • Average monthly rent increased from $1,000 to $1,220 over 18 months (+22%)
  • Annual rental income rose by $42,240, driving NOI growth
• Occupancy: Maintained 100% occupancy due to strong market demand

💰 The Refinance (Year 2)

After stabilization, Smart Capital facilitated a CMHC-insured refinance:

• Stabilized NOI: Increased from $120,000 to $162,240
• New Valuation: $162,240 ÷ 4.5% cap rate = $3.6 million
• CMHC Loan:
  • 85% LTV of $3.6M = $3.06 million
• Bridge Loan Repayment:
  • Original bridge loan = $2.16 million
  • Cash Pulled Out = $3.06M – $2.16M = $900,000

📈 The Results

• Initial Investor Capital: $540,000
• Cash-Out at Refinance: $900,000
  • $360,000 net in pocket after full capital returned
• Remaining Equity:
  • $3.6M (valuation) – $3.06M (new loan) = $540,000
• Total Wealth Created:
  • $360K cash + $540K equity = $900,000 in 2 years
  • Without selling the property
• Ongoing Cash Flow:
  • Lower CMHC debt service, stabilized rents, and upside for further increases

✅ Key Takeaways

• Bridge-to-CMHC is a powerful strategy for value-add multifamily deals.
• Investor was able to recycle 100% of their capital and retain long-term ownership with strong cash flow and equity growth.
• Even in markets with slower rent growth, the supply gap and rising construction costs continue to support valuation resilience.

Smart Capital’s “3-Lens Acquisition Method”

To simplify and professionalize acquisitions, we developed the 3-Lens Method a decision-making framework used by our investor clients:

1. Financial Engineering Lens

• Can this asset qualify for CMHC or will it need a short-term bridge?
• Will the DSCR (Debt-Service Coverage Ratio) support your target loan amount?
• What’s the ROI on each dollar of CapEx?

📌 Pro Tip: Many investors underestimate soft costs like appraisal, legal, and CMHC premiums. A precise financial model avoids surprises. Book Your Free Call Now!

2. Operational Margin Lens

Your property isn’t just a spreadsheet; it’s a dynamic business.

When evaluating operational margins, it’s crucial to consider:

• Property Management Costs: Deciding between in-house management and third-party services can significantly affect your bottom line. In-house management offers greater control but may require more resources, while third-party services can provide expertise and efficiency at a cost.
• Vacancy and Turnover Timelines: High turnover rates can lead to increased vacancy periods, affecting rental income. Implementing tenant retention strategies and efficient turnover processes can mitigate these risks.
• Local By-Laws Affecting Renovation Pace and Tenant Relocation: Understanding and complying with local regulations is essential to avoid delays and additional costs during renovations or tenant relocations.
  

🔍 Strategic Considerations for Investors

Given these legislative changes, investors should:

• Review and Adjust Operational Budgets: Account for potential increases in compensation costs and extended vacancy periods due to lease assignment refusals.
• Stay Informed on Regulatory Changes: Regularly monitor local laws and regulations to ensure compliance and adapt strategies accordingly.
• Engage with Legal and Property Management Experts: Collaborate with professionals to navigate the complexities of property management under the new legal framework.

Understanding and adapting to these changes is crucial for maintaining profitability and ensuring compliance in Quebec’s evolving real estate landscape.

3. Exit Liquidity Lens

Buying is the easy part. Selling or refinancing is the true test of a good investment.

Key metrics:

• Projected NOI at Year 5
• Market cap rate in submarket (check Altus Group and CBRE quarterly reports)
• Buyer profile for your asset in the future: Is it another investor? A REIT? A syndicate?

🧭 What Smart Buyers Are Prioritizing in 2025

💼 How Smart Capital Adds Value (Beyond Just Financing)

We act as a strategic co-pilot throughout the acquisition process:

🚀 Acquisition Support

• Market & submarket due diligence
• Broker relationships across Canada.
• Deal vetting and comparables

🏦 Financing Architecture

• CMHC application process (incl. MLI Select scoring)
• Bridge-to-permanent loan structuring
• Private equity if required (JV deals)

📈 Post-Acquisition Growth

• Refinance planning
• NOI optimization strategies
• Exit or refinance preparation within 24–36 months

🗺️ Next Steps: Planning Your First or Second Acquisition

Smart Capital helps investors:

• Model their next acquisition
• Pre-qualify for financing
• Evaluate multiple loan options
• Tap into our nationwide broker & lender network

💡 Ready to start? We’ve created a free discovery call program to walk you through your next steps.

👉 Book Your Strategy Call Now

🔁 Related Articles

• Bridge Loans vs. CMHC Loans: Which One Fits Your Strategy?
• Unlocking Success in CRE in Canada
• How to Buy a First Multifamily Acquisition

❓ FAQ – Multifamily Acquisition in 2025

Q: I only have $300K–$400K in capital. Can I still buy?
Yes. With CMHC Standard  and MLI Select-backed financing, you may only need 5–15% down for qualifying assets. Partnering with Smart Capital helps unlock those options.

Q: Can I finance renovations as part of my loan?
Yes. Many CMHC products allow inclusion of renovation budgets, especially if they improve affordability or energy efficiency.

Q: Are small markets like Sudbury or Red Deer worth exploring?
Absolutely. If population growth and tenant demand are trending upward, these markets can offer better cap rates and fewer bidding wars than Toronto or Vancouver.