Multiplex Financing in British Columbia
Construction loans, CMHC programs, equity strategies, and joint ventures — how to fund your multiplex project from start to occupancy.
Rental financing needs a separate screen
CMHC terms can look compelling in isolation, but small-lot built-to-rent only works on selective sites. Use the build-to-rent hub to compare rental hold against strata on the same lot before assuming MLI Select solves the deal.
Open the build-to-rent hubFinancing options compared
| Option | Typical LTC | Rate Range | Best For | Min Units |
|---|---|---|---|---|
| Construction Loan | 65-75% | Prime + 1-3% | For-sale projects | No minimum |
| CMHC MLI Select | Up to 95% | Fixed, lower | Rental-tenure projects | 5 units |
| Private Lending | 60-70% | 8-12% | Fast approval, bridge | No minimum |
| Joint Venture | Varies | Profit share | Land-rich, cash-light | No minimum |
| HELOC + Construction | Combined 80%+ | Variable | Owners with existing equity | No minimum |
Construction loans: how the draw process works
Unlike a conventional mortgage that funds in full at closing, construction loans release money in stages as building milestones are completed. This protects both the lender and the borrower.
- Approval & first draw — Loan approved based on plans, permits, and appraisal. First draw covers site preparation and foundation.
- Progress draws — Typically 4-6 draws tied to milestones: foundation complete, framing complete, lock-up, rough-in complete, finishing.
- Inspection — Lender sends an inspector before each draw to verify work completion matches the draw request.
- Interest reserve — Most loans include an interest reserve so payments during construction come from the loan itself.
- Completion & takeout — Upon occupancy, the construction loan converts to a permanent mortgage or is repaid from unit sales.
CMHC MLI Select: maximizing leverage for rental projects
For developers planning to retain units as rentals, CMHC MLI Select can offer significantly better terms than conventional construction financing. The key word is can: it improves the capital stack, but it does not automatically make a small-lot rental project viable.
Eligibility criteria
- Minimum 5 self-contained rental units
- Rental tenure for minimum 10 years
- Meet affordability, accessibility, or energy thresholds
- Minimum 1.1x debt coverage ratio
Benefits
- Up to 95% loan-to-cost (vs 65-75% conventional)
- Lower interest rates (insured product)
- Up to 50-year amortization
- Premium reductions for meeting social criteria
Equity unlock strategies
Many multiplex developers already have significant equity locked in their current property. Common strategies to unlock this capital include:
- Land as equity — If you own your lot, its appraised value counts as your equity contribution, reducing cash needed.
- HELOC refinance — Access equity in your existing home to fund soft costs and deposits while the construction loan covers building costs.
- Pre-sale deposits — For strata projects, pre-selling 1-2 units provides working capital and reduces lender risk.
- Phased development — Build and sell Phase 1 units to fund Phase 2, reducing total equity required at any point.
Typical financing structure
Example: $5.6M Fourplex Project
- Land value (owner equity): $2.8M (50%)
- Construction loan: $2.1M (75% of $2.8M construction + soft costs)
- Cash equity: $700K (remaining 25%)
- Interest carry (built into loan): ~$150K
- Total cash out of pocket: ~$700K if land is owned free and clear
This is an illustrative example. Actual structures vary by project, lender, and borrower profile.
FAQs
What is a construction loan and how does it work for multiplexes?
A construction loan provides funds in staged draws as building progresses. Lenders typically finance 65-75% of project costs. Interest is charged only on drawn amounts, and the loan converts to a mortgage or is repaid from unit sales upon completion.
How much equity do I need to build a multiplex?
Typically 25-35% of total project costs. If you own the land outright, the land value often counts as your equity contribution, significantly reducing cash requirements.
What is a joint venture in multiplex development?
A JV pairs a landowner with a capital partner or developer. The landowner contributes the property, the partner contributes capital and expertise. Profits are split according to the JV agreement.
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