Breaking Down a 50-Unit Apartment Deal in Calgary: A Real Investor’s Guide
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: 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: 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: 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? 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.