Framework
Standard underwrite
The model applied to every CMHC MLI Select project. Edit any input; every figure recalculates. Defaults are an illustrative reference case; set the unit mix for the building you are evaluating.
Acquisition
Financing
Assumptions
Revenue
| Unit type | Units | Monthly rent | |
|---|---|---|---|
Other income
| Item | Units | Uptake (%) | Monthly rate | |
|---|---|---|---|---|
Operating expenses (year one)
Year-one results
- Net operating income
- $117,052
- Annual debt service
- $101,321
- Cash flow after debt service
- $15,732
- Debt coverage ratio (Insurer minimum 1.10x)
- 1.16x
- Cap rate
- 5.32%
- Cash-on-cash (on deposit)
- 14.3%
- Price per unit
- $275,000
- Gross potential income
- $167,760
- Less vacancy
- -$5,033
- Effective gross income
- $162,727
- Total operating expenses
- -$45,675
- Mortgage (price less deposit)
- $2,090,000
- CMHC premium (financed)
- $111,502
- Total insured loan
- $2,201,502
- Monthly payment
- $8,443
Qualification
- Cash advanced before funding (deposit + application fee)
- $111,600
- Net equity after rebate
- $110,000
- Liquidity to demonstrate
- $220,000
- Net worth to demonstrate
- $550,000
Ten-year projection
| Year | Gross income | Vacancy | Total operating expenses | Net operating income | Debt service | Cash flow after debt service | Debt coverage ratio | Cash-on-cash | Principal paid | Loan balance | Value | Equity |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1 | $167,760 | -$5,033 | -$45,675 | $117,052 | -$101,321 | $15,732 | 1.16x | 14.3% | $14,243 | $2,187,259 | $2,255,000 | $67,741 |
| 2 | $171,954 | -$5,159 | -$46,817 | $119,979 | -$101,321 | $18,658 | 1.18x | 17.0% | $14,818 | $2,172,441 | $2,311,375 | $138,934 |
| 3 | $176,253 | -$5,288 | -$47,987 | $122,978 | -$101,321 | $21,657 | 1.21x | 19.7% | $15,417 | $2,157,024 | $2,369,159 | $212,135 |
| 4 | $180,659 | -$5,420 | -$49,187 | $126,052 | -$101,321 | $24,732 | 1.24x | 22.5% | $16,040 | $2,140,984 | $2,428,388 | $287,404 |
| 5 | $185,176 | -$5,555 | -$50,417 | $129,204 | -$101,321 | $27,883 | 1.28x | 25.3% | $16,688 | $2,124,297 | $2,489,098 | $364,801 |
| 6 | $189,805 | -$5,694 | -$51,677 | $132,434 | -$101,321 | $31,113 | 1.31x | 28.3% | $17,362 | $2,106,935 | $2,551,326 | $444,391 |
| 7 | $194,550 | -$5,837 | -$52,969 | $135,745 | -$101,321 | $34,424 | 1.34x | 31.3% | $18,063 | $2,088,872 | $2,615,109 | $526,237 |
| 8 | $199,414 | -$5,982 | -$54,293 | $139,138 | -$101,321 | $37,818 | 1.37x | 34.4% | $18,793 | $2,070,079 | $2,680,486 | $610,408 |
| 9 | $204,399 | -$6,132 | -$55,651 | $142,617 | -$101,321 | $41,296 | 1.41x | 37.5% | $19,552 | $2,050,527 | $2,747,499 | $696,972 |
| 10 | $209,509 | -$6,285 | -$57,042 | $146,182 | -$101,321 | $44,861 | 1.44x | 40.8% | $20,342 | $2,030,185 | $2,816,186 | $786,001 |
Return metrics (ten-year hold)
- Cumulative cash flow
- $298,174
- Reversion value (year-10 NOI / exit cap)
- $2,923,643
- Remaining loan balance
- $2,030,185
- Net sale proceeds
- $893,459
- Equity multiple
- 10.83x
- IRR without sale
- 19.1%
- IRR with sale
- 34.4%
Stress cases
Mortgage rate
| Mortgage rate (%) | Annual debt service | Cash flow after debt service | Debt coverage ratio | Cash-on-cash |
|---|---|---|---|---|
| 3.60% | $94,547 | $22,505 | 1.24x | 20.5% |
| 3.80% | $97,910 | $19,142 | 1.20x | 17.4% |
| 4.00% (base) | $101,321 | $15,732 | 1.16x | 14.3% |
| 4.25% | $105,648 | $11,404 | 1.11x | 10.4% |
| 4.50% | $110,043 | $7,010 | 1.06x | 6.4% |
Rent shortfall
| Adjustment | Gross income | Net operating income | Cash flow after debt service | Debt coverage ratio |
|---|---|---|---|---|
| base | $167,760 | $117,052 | $15,732 | 1.16x |
| -5% | $159,540 | $109,079 | $7,758 | 1.08x |
| -10% | $151,320 | $101,105 | -$215 | 1.00x |
| -15% | $143,100 | $93,132 | -$8,189 | 0.92x |
Exit cap rate
| Exit cap rate (%) | Value | Profit on sale | Net after debt | Equity multiple |
|---|---|---|---|---|
| 4.0% | $3,654,554 | $1,454,554 | $1,624,369 | 17.48x |
| 4.5% | $3,248,492 | $1,048,492 | $1,218,308 | 13.79x |
| 5.0% | $2,923,643 | $723,643 | $893,459 | 10.83x |
| 5.5% | $2,657,857 | $457,857 | $627,673 | 8.42x |
| 6.0% | $2,436,369 | $236,369 | $406,185 | 6.40x |
Amortization
| Amortization (years) | Annual debt service | Debt coverage ratio | Passes minimum | Equity required to hold 1.10x |
|---|---|---|---|---|
| 50 | $101,321 | 1.16x | Yes | $110,000 |
| 45 | $105,003 | 1.11x | Yes | $110,000 |
| 40 | $109,871 | 1.07x | No | $175,808 |
| 35 | $116,451 | 1.01x | No | $290,192 |
| 30 | $125,623 | 0.93x | No | $429,625 |
| 25 | $138,964 | 0.84x | No | $599,593 |
Payments use Canadian semi-annual compounding. Expenses escalate from year two. Reversion uses year-ten NOI and ignores selling costs.
Illustrative model. Rents, expenses, rates, premiums and qualification thresholds are assumptions and vary by project, lender and insurer decision. Not an offer or a recommendation; complete independent due diligence with your counsel and accountant.