The Number That Decides the Deal
Multiplex ROE Explained (and How to See It on Every Lot)
Return on equity is the one number a multiplex builder should judge a lot by. This page explains what it means, why it beats cap rate and ROI for a build, and why it is mostly decided the day you buy. Then it shows how VanPlex puts a projected ROE on every listed Vancouver lot so you can rank them.
What ROE Means
ROE stands for return on equity. In plain words, it is the profit a project makes divided by the cash equity you put in. Equity is your own money in the deal, not the money you borrow. So ROE answers a simple question. For the cash I risked on this lot, how much profit did the project return?
That framing is why builders lean on it. You do not care only about how big the project is. You care about how hard your own money worked. A lot that returns more profit per dollar of your equity is a better use of that money than a lot that returns less, even if the second lot is larger. ROE puts both on the same footing so you can compare them.
We keep this page to the idea, not the math. The actual ROE figures live in the tool, computed for each real lot, because a worked example on a page can never match the real numbers on a real parcel.
ROE vs Cap Rate vs ROI
These three measures answer different questions. Using the wrong one on a build sends you toward the wrong lot. Here is how they differ.
Cap rate
A lens for a finished rental
Cap rate looks at the yearly income of a building that is already rented and running. It fits a stabilised rental you buy to hold. It says little about a build, because during a build there is no income yet and the whole point is the value you create, not the yield you collect.
ROI
A lens for total cost
Simple ROI measures profit against every dollar spent, including borrowed money. That hides how much of your own cash the project actually needed. Two projects with the same ROI can tie up very different amounts of your equity, so ROI alone can push you toward the wrong lot.
ROE
The lens for a build
Return on equity measures profit against the cash you personally put in. For a multiplex you build and sell, that is the number that matters. It tells you how hard your own money worked on this lot, which is exactly the question a builder is trying to answer.
Why ROE Is Set at Purchase
Here is the part most people miss. On a multiplex, the return is decided mostly at the moment you buy, by the land basis per door. That is the land price spread across the number of buildable units. Three forces explain why.
The land basis is fixed on day one
The price you pay for the lot, spread across the buildable doors, is locked the moment you close. You cannot renegotiate it later. Because land is the largest cost on most multiplex projects, this one number sets the ceiling on the return before you have poured any concrete.
Build cost moves in a narrow band
Two similar multiplex projects in the same area cost roughly the same to build per square foot. There is not much room to win or lose on construction. So the return gap between a strong lot and a weak lot mostly comes down to what you paid for the land, not how you build.
Sale value is set by the market, not by you
You do not control what finished units sell for. The market does. With build cost fairly steady and sale value out of your hands, the lever you actually control is the buy price. Overpay for the land and no amount of good building brings the return back.
Put together, the buy price is the lever you control, and it is fixed on day one. So screening lots by their projected ROE before you offer is not a nice extra. It is the whole game.
See the return on equity on every lot
The PlexScore and the projected return on equity for each listed lot are a PlexPro feature. Subscribers can filter and sort every Vancouver listing by ROE, so the highest-potential lots rise to the top. You get instant access the moment you subscribe.
Unlock ROE on every lot
Live listings
See live Vancouver lots with multiplex potential
Browse active single-family listings on lots that can be rebuilt as a multiplex. Map and list view, filter by price, lot size, and frontage.
Best For
- ✓ Builders who judge a lot by return on equity, not by how the house looks.
- ✓ People who want to rank every listed lot and start with the strongest ones.
- ✓ Buyers who set the return at purchase by pricing the land per buildable door.
Usually Fails When
- ✕ You judge a build by cap rate, a measure meant for a finished rental.
- ✕ You lean on simple ROI and let borrowed money hide how much cash you risked.
- ✕ You overpay for the land and hope good building brings the return back.
What To Verify Before Spending Money
- → The zone and buildable unit count against the City of Vancouver record.
- → The land price per buildable door for the exact parcel.
- → The projected return on equity for the lot before you make an offer.
Keep Reading
Frequently Asked Questions
What is a good ROE for a Vancouver multiplex?
Is the ROE on each lot free or paid?
Why not just use cap rate like other real estate deals?
Can I change the ROE on a lot after I buy it?
Do I need to combine several lots to make the ROE work?
City & Provincial Sources
Screen a Vancouver lot before you make an offer
Enter any Vancouver address to check the zone, the likely unit count, and whether the multiplex math works, before you spend money on drawings.