Value-Add Strategies for Multi-Family Investing: Forcing Appreciation

Update: 2025-06-05

Description

In this episode of the Wisdom Lifestyle Money Show, host Scott Dillingham welcomes Jennifer Champion and Christine Traynor from LendCity's commercial mortgage team to explore value-add strategies for multi-family apartment buildings. They emphasize shifting focus from pure cashflow to forcing appreciation through rent increases to market levels and expense reductions, which are more controllable than in single-family investments. Drawing from their own active investing experiences, the guests explain how renovations and stabilization can dramatically boost property values, leading to tax-efficient wealth building without relying on market comparables.

Using a practical example, they illustrate purchasing a $1.5 million building, investing $200,000 in upgrades, and refinancing at $2.1 million for a $1.57 million loan at 75% loan-to-value, effectively recovering initial capital for infinite returns. The discussion covers essential financing tools like bridge loans for interest-only payments during renovations and takeout financing for long-term holds, including CMHC Standard and MLI Select options for higher leverage. They highlight the importance of calculating double closing costs and fees when planning profits.

The episode also addresses market selection, noting landlord-friendly regions like Alberta where value-add thrives due to flexible rent adjustments, while rent-controlled areas pose challenges. As of November 2025, Alberta's multifamily sector remains strong, with Calgary and Edmonton seeing low vacancies, population growth, and demand for upgraded units, making it ideal for these strategies. U.S. markets offer similar opportunities. This insightful conversation provides actionable tips for investors aiming to scale portfolios sustainably.

Key Takeaways

Forcing Appreciation Over Cashflow: Prioritize raising rents to market and cutting expenses in multi-family for controllable value growth, avoiding taxes on cashflow while building equity.
Value-Add Example: Buy at $1.5M, renovate for $200K, stabilize to $2.1M value, refinance at 75% LTV for $1.57M loan, recovering capital for infinite returns.
Two-Loan Financing Strategy: Use bridge loans (interest-only) during stabilization, then switch to takeout financing like CMHC for long-term holds and higher loan-to-values.
Market Considerations: Excel in landlord-friendly areas like Alberta; as of 2025, Calgary and Edmonton boast booming demand and value-add potential due to population influx and low vacancies.
Predictable Outcomes: Unlike single-family, multi-family appreciation is driven by internal improvements, enabling accurate refinance projections and portfolio expansion.
Expert Advice Integration: Work with seasoned professionals for market analysis, cost calculations, and financing to maximize transparency and long-term wealth.

Links to Show References