Introduction: The Jump Into Large-Scale Multi-Family
Buying a 50-unit apartment building in Calgary might sound like something only REITs or deep-pocketed investors can do. But the truth is, more individual investors and small partnerships are stepping into this space, especially as the Alberta market heats up.
Still, this isn’t a casual condo flip. Large-scale deals require a different mindset and a lot more due diligence.
In this blog, we’ll walk you through exactly how to analyze a 50-unit apartment building, using a real-world-style scenario, and show you how to break down the numbers like a pro.
Step 1: Understand the Basics of the Deal
Let’s say you find a 50-unit apartment in southeast Calgary listed for $8.5 million.
Here’s the info you receive from the seller:
- Monthly rent (on average per unit): $1,150
- Annual gross rental income: 50 units × $1,150 × 12 = $690,000
- Vacancy & bad debt estimate (4%): – $27,600
- Other income (laundry, parking): $18,000/year
- Effective Gross Income (EGI): $680,400
That’s your top-line number, the income you can expect after accounting for normal vacancies.
Step 2: Estimate Operating Expenses
Operating expenses typically range from 35% to 50% of your Effective Gross Income, depending on the building’s condition and management style.
For this property, let’s assume the following annual costs:
- Property Taxes: $78,000
- Utilities (water, gas, electricity): $95,000
- Insurance: $25,000
- Repairs & Maintenance: $40,000
- Management Fees (7% of EGI): $47,628
- Miscellaneous/Admin: $10,000
Total Operating Expenses: $295,628
Step 3: Calculate Net Operating Income (NOI)
Now subtract the operating expenses from your Effective Gross Income:
NOI = $680,400 – $295,628 = $384,772
This is the income your property produces before mortgage payments, and it’s one of the most important numbers in multi-family investing.
Step 4: Cap Rate and Market Comparison
The Cap Rate helps you compare income to purchase price:
Cap Rate = NOI ÷ Purchase Price
= $384,772 ÷ $8,500,000 = 4.53%
This might seem low, but in Calgary’s urban multifamily market, cap rates between 4.5%–5.25% are typical for well-located, newer buildings.
Higher cap rates usually come with higher risk or deferred maintenance.
Step 5: Financing and Cash-on-Cash Return
Let’s assume:
- Down payment: 25% → $2,125,000
- Loan amount: 75% → $6,375,000
- Interest rate: 5.5%
- Amortization: 30 years
- Annual Debt Service (approx.): $431,000
Now calculate your Cash Flow:
Cash Flow = NOI – Debt Service
= $384,772 – $431,000 = –$46,228
Uh oh. You’re in negative cash flow.
This tells us that either the deal is overpriced or it needs a different financing structure (such as CMHC-insured financing under the MLI Select program, which would dramatically reduce payments).
Step 6: Debt Coverage Ratio (DCR)
Lenders look for a Debt Coverage Ratio (DCR) of at least 1.10 to 1.25 on large multi-family deals.
DCR = NOI ÷ Debt Service = $384,772 ÷ $431,000 = 0.89
This DCR is too low, and the bank will likely say no unless you use CMHC-insured debt with longer amortization.
Step 7: What Could Make This Deal Work?
- Raise rents by $100/unit = +$60,000/year
- Reduce expenses (self-manage or improve efficiency)
- Refinance using CMHC’s MLI Select for up to 50 years of amortization
- Re-negotiate the price closer to $7.5M for stronger returns
Conclusion: Big Deals Need Smart Numbers
Analyzing a 50-unit apartment in Calgary isn’t rocket science, but it does take clear thinking, realistic projections, and the right strategy. Deals of this size require patience, creativity, and often professional property management to protect your income and peace of mind.
At Green Casa, we help Calgary’s landlords scale from fourplexes to 50+ unit buildings by managing their assets with care, precision, and local know-how.
