The Numbers | Land Basis
Land Basis: The Number That Predicts Multiplex ROE
Land basis is what you pay for the lot. Your return on a multiplex is set the day you buy, not the day you finish building. That is why one number matters more than any other. It is the land cost per buildable door, and once you own the lot, it is fixed for good.
Land Price Per Door, Not Land Price
Most buyers look at the price of the lot and stop there. That number cannot tell you if the deal is good. A lot is only worth what it can build, and a multiplex lot builds units. So the price you care about is the price per unit, not the price of the whole lot.
To get it, take the land price and split it across the buildable doors. The land price divided by the achievable unit count gives you the land cost per door. That per-door figure is the basis. It is a ratio. It ties the money you pay to the thing you actually get, which is the right to build a set number of homes.
The reason the basis matters so much is timing. Design can change. Build cost can be managed. Financing can be shaped. But the price you paid per door is locked in the moment you close. You cannot fix a weak basis later with a clever layout or a better loan. It follows the project the whole way through.
Why the Same Price Is Good on One Lot and Bad on Another
Picture two lots listed at the same price. One is wide and large enough to reach six units. The other is narrow and caps at three. The price is identical, but the basis is not. On the six-unit lot, that same money is spread across twice as many doors, so the cost per door is far lower. On the three-unit lot, the cost per door is far higher.
Same sticker price. Very different deals. The wide lot can be a strong buy and the narrow lot can be a poor one, even though the listing shows the same figure. This is why the total price alone will fool you. It hides the part that actually drives the return.
It also cuts the other way. The most expensive lot on a street is not automatically the worst deal, and the cheapest is not automatically the best. If the pricier lot holds enough extra doors, its per-door basis can beat the cheaper one. You have to run the ratio for each lot to know. The sticker will not tell you.
How to Judge a Lot's Basis
Confirm the zone
Check that the lot allows a multiplex as of right, and confirm the exact zone against the City of Vancouver record for that parcel. Do not trust the listing or a nearby lot. If there is no eligible zone, there are no doors, and the basis question does not apply.
Estimate the unit count
The achievable unit count comes from frontage, lot area, and the zone rules together. On qualifying lots you can reach up to six strata units, or up to eight units when they are secured as rental. Get the real count for this lot, not the maximum you hope for.
Divide the land price by the doors
Take what you would pay for the lot and split it across the buildable doors. That gives you the land cost per door. This is the basis. It is a ratio, not a headline price, and it is the number that follows the project all the way through.
Compare on the ratio, not the sticker
Line the lot up against others on the per-door basis. A higher total price can still win if it carries more doors. A lower total price can still lose if it carries few. Rank on the ratio and the order of the deals changes.
Notice the order. You cannot divide the price by the doors until you know the doors, and you cannot know the doors until you have confirmed the zone, frontage, and area against the City record. The basis is the last step, not the first.
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Best For
- ✓ Buyers who rank lots on land cost per door, not on the total sticker price.
- ✓ Wide, eligible lots that reach a real unit count and spread the price across more doors.
- ✓ People who confirm the achievable units before they judge whether the price is fair.
Usually Fails When
- ✕ You compare lots on total price and ignore how many doors each one holds.
- ✕ You assume the cheapest lot is the best deal and the priciest is the worst.
- ✕ You guess the unit count instead of confirming zone, frontage, and area with the City.
What To Verify Before Spending Money
- → The exact zone, frontage, and lot area from the City of Vancouver record.
- → The achievable unit count for this specific lot, not the general maximum.
- → The land price per buildable door, worked out before you make an offer.
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Frequently Asked Questions
What does "land basis" mean for a multiplex lot?
Why divide by doors instead of just looking at the land price?
Is the cheapest lot always the best basis?
What do I need to know before I can judge the basis?
Does the land basis really predict the return?
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