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.

Read the methodology Framework

Acquisition

Purchase priceDeposit (%)Closing fee allowance (rebate)Lending structureCMHC application fee (per unit)

Financing

Mortgage rate (%)Amortization (years)CMHC premium (% of mortgage)

Assumptions

Vacancy (%)Rent escalation (%/yr)Expense escalation (%/yr)Appreciation (%/yr)Exit cap rate (%)

Revenue

Unit type	Units	Monthly rent

Other income

Item	Units	Uptake (%)	Monthly rate

Operating expenses (year one)

Property taxes

Insurance

Utilities

Repairs and maintenance

Management and salaries

Caretaker and miscellaneous

Replacement reserve

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.