How Much Does a Fourplex Cost — and What Does It Return?

Somewhere between three units and four, a homeowner’s project stops being a renovation and starts being a small development. The useful response is to change how you read the numbers — from “what will this cost?” to “does this pencil?”

This guide is about the second question. Our guide on fourplex build cost covers the first.

The basic pro forma

A pro forma is just a structured guess about whether a project works. Four blocks.

⚠️ The figures below are placeholders showing the method. They are not market data, not a projection, and not a recommendation. Substitute your own.

Block 1 — Total development cost

Block 2 — Stabilised revenue (“stabilised” meaning once it’s fully let and running normally)

Block 3 — Operating expenses

Block 4 — The answer

Effective gross income − operating expenses = Net Operating Income (NOI)

NOI is the number everything else keys off. Two tests:

• Debt service coverage — does NOI comfortably exceed your annual mortgage payments? Lenders look at this directly at multi-unit scale.
• Yield on cost — NOI divided by total development cost. Compare it against what you’d get from the capital elsewhere, and against the market capitalisation rate for similar properties.

Note what NOI excludes: your mortgage payment. Financing sits below the NOI line. Mixing them is the most common error non-developers make, and it flatters projects that don’t work.

Development cost inputs

We don’t publish build cost figures — the range between a conversion of an existing house and a new-build fourplex, across Vancouver and an Alberta satellite, is far too wide for a national number to mean anything.

What genuinely drives it:

New build vs conversion. A conversion reuses structure and foundation but inherits their constraints. A new build costs more and gives you an efficient layout.

Servicing capacity — the item to establish first. Four units need water, sanitary sewer and electrical capacity a single-family lot was never sized for. Where the connection has to be upgraded and that means work in the street, it is both expensive and slow. This is the single largest swing item at this scale, and the one most likely to arrive as a surprise.

Four kitchens and four bathrooms. Plumbing and ventilation, repeated. The expensive part of a fourplex isn’t the walls.

Fire and life safety at four units. Rated separations between all units, and depending on your code and configuration, potentially sprinklers.

Municipal fees. In Ontario, this is where the fourth unit matters: Bill 23 exempts the second and third units from development charges and parkland dedication — the fourth doesn’t get it automatically. Look up your municipality’s residential DC rate to size that.

Provincial cost base. BC charges 7% PST on many construction inputs. Alberta has neither a provincial sales tax nor Ontario-style development charges.

Contingency. At this scale, a budget with no contingency line is not a budget.

Revenue inputs

Rent. CMHC’s Rental Market Report publishes average rents and vacancy rates by centre and unit type, and it’s the authoritative Canadian source. Look up your own market, by unit size, rather than using a national average.

Then adjust honestly for what you’re actually building — unit mix, whether units are above or below grade, and the quality of the specific product.

Vacancy — and use a real number. Vacancy rates across major Canadian centres rose through 2025 and into 2026, easing what had been a very tight market. Using the assumptions of three years ago overstates your revenue. Take the current figure for your centre from CMHC and, if anything, be slightly conservative.

The most common revenue error at this scale is optimism, and lenders know it. An inflated rent assumption is the weakness underwriters look for first in a small multi-unit application. A defensible pro forma uses comparable local rents you can evidence, not the top of the range.

Financing

At four units, you’re still residential. Canadian lending treats one to four units as residential — underwritten substantially against your personal income and credit, with a portion of projected rental income counted toward qualifying you.

CMHC’s refinance product supports properties with up to four units at up to 90% of as-improved value, capped below $2 million, subject to owner or close-relative occupancy, funds going to construction, and CMHC approval before construction starts.

At five units and above, you move to multi-unit underwriting, where MLI Select becomes available — CMHC’s programme awarding points for affordability, energy efficiency and accessibility across three tiers (50, 70 and 100 points), converting those into higher loan-to-value and longer amortisation. Considerably more powerful, and considerably more involved, with long-term commitments attached. Note its terms tightened in July 2025, with premium increases and a surcharge on amortisation beyond 25 years — model from current figures.

One 2026 development: the federal Spring Economic Update tabled 28 April 2026 signalled that private mortgage insurers would be permitted to offer multi-unit insurance on five- to eight-unit properties. If your project sits in that range, ask a mortgage professional what’s actually available now rather than assuming the change has landed.

The threshold effects

This is why four is not an arbitrary number, and why the third-to-fourth unit decision deserves modelling both ways.

The GST rental rebate gate — at four. The enhanced federal rebate relieves GST (and in Ontario, the provincial HST portion) on qualifying new rental construction. Per PwC Canada, the property must contain “four or more stand-alone apartments, each with a private kitchen, bath and living area, or 10 or more residential units,” with at least 90% held for long-term rental. Construction must begin after 13 September 2023 and before 1 January 2031, and complete by 31 December 2035.

A triplex cannot reach this. A fourplex is the smallest building that can. On a qualifying project it removes the federal GST from the build — not a rounding item.

One trap: that 90% test. In a four-unit building, one owner-occupied unit is 25% of the total, which doesn’t leave 90% held for rental. If you intend to live in the building, get advice on this before finalising the plan.

The financing cliff — at five. Crossing from four to five moves you from residential to multi-unit underwriting. Different rates, different amortisations, different documentation, different lenders.

The Ontario development charge line — at four. The second and third units are exempt; the fourth generally isn’t.

So the fourth unit simultaneously gains you the GST rebate and may cost you a development charge. Which dominates depends on your municipality’s DC rate and your construction cost. Model it both ways rather than assuming bigger is better.

What makes a project fail

Five recurring causes, in roughly the order they bite:

1. Servicing discovered late. The capacity isn’t there, the upgrade requires work in the street, and the cost lands after the design is committed. Establish this first, always.

2. Optimistic rent. The pro forma works at assumed rents and doesn’t at achievable ones. This is the most common analytical failure and it’s self-inflicted.

3. No contingency. Small developments encounter surprises. A budget without a contingency line converts an ordinary surprise into a funding crisis.

4. Financing arranged too late. CMHC’s refinance product requires approval before construction starts. Building first and financing after is not available.

5. Structuring that misses a threshold by accident. Building three units when four would have qualified for the GST rebate; or planning owner-occupancy that breaks the 90% test. These are decisions made at the drawing stage and irreversible afterwards.

And one non-financial cause: underestimating that a fourplex is a project rather than a renovation. It has a critical path, a financing structure and a compliance load. Our development management page covers what running one involves, and multiplex development covers the product.

Get your project modelled properly

At four units the numbers stop forgiving optimism. What decides it is servicing capacity, defensible rent, and whether your structure clears the thresholds that matter.

HouseLyft’s free property assessment establishes what your lot can carry. If your project is at this scale and you want the financing structured, get qualified.