Multifamily Underwriting Software Built by Real Investors

What underwriting a multifamily building actually requires

Underwriting a multi-unit building is not a bigger version of underwriting a house. The value of a house is set by comparable sales; the value of an apartment building is set by its income. That single difference changes what you need to get right.

It means net operating income is the foundation of everything. Cap rate, valuation, debt coverage, loan sizing and your eventual exit price are all derived from it. An error in NOI does not stay contained — it propagates through every downstream number at the same proportion. At a 5.5% cap rate, overstating NOI by five thousand dollars overstates value by roughly ninety thousand.

It also means the vendor's operating statement is a starting point, not a source of truth. Serious underwriting normalises it: management added back where the owner self-managed, vacancy set to a market rate rather than the current occupancy, property taxes reassessed at the purchase price, insurance re-quoted at today's rates, and a capital reserve carried as a percentage rather than whatever happened to be spent last year.

Why the spreadsheet eventually breaks

Almost every investor starts in Excel, and for a first deal that is entirely reasonable. The problems appear with volume and with time.

Models drift. The template used for deal one gets copied for deal two, tweaked for deal three, and by deal ten there are several versions in circulation with quietly different assumptions. Comparing them is no longer comparing like with like.

Formulas break silently. A dragged cell, a row inserted in the wrong place, a reference pointing at the wrong sheet — none of these announce themselves, and all of them produce a number that looks entirely plausible. The failure mode of a spreadsheet is not an error message; it is a confident wrong answer.

And the output is not shareable in any controlled way. Sending a lender or a partner a spreadsheet means sending them every assumption in an editable form, with no record of which version they saw.

Canadian multifamily underwriting is genuinely different

Most underwriting software is built for the US market, and the gaps show quickly on Canadian deals.

Financing is the largest difference. On residential buildings of five units or more, CMHC-insured financing supports advances and amortisation periods that conventional lending cannot approach, with debt coverage minimums to match — around 1.30 on standard insured financing and roughly 1.10 under MLI Select. Those are not small adjustments to a conventional model; they change which buildings are viable. Insured deals also carry a premium that is normally financed into the loan, while the provincial sales tax on that premium is generally payable in cash at closing.

Lender expense conventions matter too. Insured underwriting applies its own assumptions for management and wages regardless of what you intend to spend, so a model built on your actual costs will not match the one the lender runs.

Rent control shapes the revenue side in provinces that have it. Growth on existing tenancies is capped by the annual guideline, so multi-year projections built on market rent growth across the whole building overstate income — often substantially over a five or ten year hold. And on the tax side, capital cost allowance and its recapture on disposition behave differently from US depreciation, which matters to after-tax returns.