How We Evaluate CMHC MLI Select Deals: 6-Point Framework

핵심 답변

Six dimensions in a fixed order: geography, construction quality, financing structure, vacancy discipline, builder execution and risk allocation. A project must clear each before the next is considered. Most projects fail on the fourth or sixth, where optimistic rents and unallocated risk hide inside a pro forma that looks fine at the first three.

핵심 사실

Six dimensions in fixed order: geography, construction quality, financing structure, vacancy discipline, builder execution, risk allocation.
Each risk is assigned in writing before purchase: appraisal shortfall, delivery delay, rate at commitment, lease-up, holdback.
Pipeline aggregates are published quarterly so the framework can be tested against outcomes.

1. Geography

Provincial rules first, then the metro, then the neighbourhood. We work where tenancy law, tax treatment and dispute resolution align with ownership of new rental, in the markets that pass this test. Within the metro we favour mature neighbourhoods with transit, employment and existing rental demand over greenfield.

2. Construction quality

New construction designed to the MLI Select criteria, delivered under the provincial new home warranty, by a builder with completed comparable projects. Across small to mid-market multifamily assets, several building formats have a place; what matters is that the specification earns the points without retrofit and that the unit mix is legible in the rent roll.

3. Financing structure

Takeout over draw for most investors. Fixed price through closing, deposit staged, financing condition tied to the certificate of insurance, appraisal guarantee from the builder, premium financed, and a written understanding of the rate mechanism at commitment. The standard underwrite on this site is the model we apply.

4. Vacancy and rent discipline

Rents at or below CMHC zone rents for each unit type, vacancy sourced from the Rental Market Survey and stated with its year, lease-up modelled as a cash reserve, and a full expense schedule including management and reserves. The deal must hold coverage above the insurer's minimum with rents down 10% and the rate up 50 basis points.

5. Builder execution

Completed blocks on the same site, a track record of delivering the promised specification, transparent pro formas whose model we can inspect, and a rebate or incentive structure documented in a signed agreement rather than described in a brochure.

6. Risk allocation

Every risk is assigned in writing: appraisal shortfall to the builder, delivery delay to the timeline, rate at commitment to the buyer with a buydown plan, lease-up to a reserve, holdback to demonstrated liquidity. A project that leaves any of these unassigned is not ready to buy.

What we do with the output

Projects that clear all six are tracked in our pipeline and, where a client's balance sheet fits, presented with the standard underwrite and its stress cases. The aggregated pipeline statistics are published quarterly on the research page so that the framework can be checked against outcomes rather than taken on trust.

자주 묻는 질문

Is this a recommendation to buy?

No. It is the method we apply before any recommendation. Individual recommendations are made to clients against their own balance sheet, objectives and advice from their counsel and accountant.

How often is the framework revised?

Each quarter, alongside the research update. Changes are noted with the revision date at the top of this page.

출처

MLI Select: multi-unit mortgage loan insurance,
Canada Mortgage and Housing Corporation (CMHC)
Standard underwrite model (this site),
Daniel Kim & Associates

How we evaluate a CMHC MLI Select deal: the six-dimension framework