Glossary

Cash flow, year 1

The money left in the first year once expenses and the mortgage are paid.

How it is calculated

• Rent collected, less vacancy, less operating expenses, less mortgage payments (principal and interest).
• Computed on the realistic projection: each lease renews on its date with the TAL (Quebec rental tribunal) increase.
• Example: $60,000 of rent − $22,000 of expenses − $35,000 of payments = +$3,000 a year, or +$250 a month.

How to read it

• Meets target: at least $50 per unit per month.
• Watch: positive, but under that level.
• Deal-breaker: negative. You would have to put money into the building every month.

Source

• SCHL, Enquête sur les logements locatifs, octobre 2025 : 2,7 % pour la RMR de Sherbrooke (fiabilité a), arrondi prudent à 3 % (as of 2026-09-28)
• TAL, taux de base 2026 (baux débutant du 2 avril 2026 au 1er avril 2027), moyenne de l’IPC sur trois ans (as of 2026-09-28)

Cash to close

All the money you need on hand on closing day.

How it is calculated

• Down payment + closing costs (transfer tax, notary, inspection, appraisal) + the liquidity reserve the lender requires + tax adjustments at the notary.
• The down payment is the price less the loan; a CMHC premium, when there is one, is added to the loan, not to the cash.

How to read it

• It is information, not a return: it does not count in the verdict.
• If you set a budget: watch from 90% of the budget, deal-breaker above it.

Source

• Norme interne à calibrer (as of 2026-09-28) illustrative
• Plan directeur 2026-09-28, section 31.4 (si RCD de 1,10) (as of 2026-09-28)
• Ville de Sherbrooke, Droits de mutation immobilière : 3 % au-delà de 500 000 $ depuis le 1er janvier 2026 (sherbrooke.ca, consulté le 2026-09-28) (as of 2026-09-28)

DCR (debt coverage ratio)

How many times the building’s net income covers the year’s mortgage payments.

How it is calculated

• Net operating income as the lender sees it ÷ annual mortgage payments (principal and interest).
• Example: $48,000 of net income ÷ $40,000 of payments = 1.20.
• “Stress”: the same ratio if the interest rate rises by 2 points.

How to read it

• Under 1.00: deal-breaker, the income does not pay the mortgage.
• From 1.00 to 1.20: watch. 1.20 and over: meets target.
• Each program has its own minimum: if the ratio is too low at the maximum loan, the loan is reduced.
• For 1 to 4 units the lender mostly qualifies on your personal income: the ratio is for information.

Source

• Politique interne (as of 2026-09-28)

Full methodology

10-year IRR (internal rate of return)

The average yearly return on your cash over 10 years, counting each year’s cash flow and the sale.

How it is calculated

• Start with the cash paid at closing, add each year’s cash flow, then the net proceeds of the sale at the end of year 10 (value, less sale costs, less the loan balance).
• The IRR is the yearly rate that makes those inflows equal to the initial cash.
• Sale value: next year’s net income ÷ the exit cap rate (the market’s, plus a prudence spread).

How to read it

• Under the discount rate (7%): deal-breaker.
• At the target IRR or more (10% by default, editable in the Summary): meets target. In between: watch.
• The IRR depends a lot on the assumed sale price: see the Risk tab.

Source

• Plan directeur 2026-09-28, section 31.4 (as of 2026-09-28)
• Politique interne (as of 2026-09-28)

Full methodology

Maximum price (optimized)

The highest purchase price, paid today, that still leaves you the target return over 10 years.

How it is calculated

• It assumes the optimization plan: each unit moves to its relocation rent when its tenant leaves (TAL increases until then), with the best eligible financing.
• We look for the highest price at which the 10-year IRR reaches the target (10% by default) and the DCR stays at 1.00 or more if rates rise by 2 points.
• The year-10 sale is estimated at the market cap rate.

How to read it

• Asking price at or under the maximum price: meets target. Up to 5% above: watch (room to negotiate). Beyond: deal-breaker.
• Not to be confused with the optimized value. The maximum price is what you can pay today; the optimized value is what the building would be worth once every unit is re-let.
• The gap between the two pays for the wait, the risk and the renovations.

Source

• Plan directeur 2026-09-28, section 31.4 (as of 2026-09-28) illustrative
• Politique interne (as of 2026-09-28)
• Choix de l’investisseur : relocation au loyer affiché sans rénovation (clause G : le nouveau locataire peut demander au TAL de fixer le loyer). Remise à niveau d’un logement ancien : environ 5 000 à 30 000 $ selon l’état (as of 2026-09-28) illustrative

Optimized (stabilized) value

What the building would be worth once every unit is re-let at its relocation rent.

How it is calculated

• Net income with every rent at the relocation rent ÷ the market cap rate, less the planned renovations.
• Example: $60,000 of net income ÷ 5.5% = about $1,090,000.
• Relocation rent: the rent of a new lease when the tenant changes (typed per unit, else the city’s asking rent).

How to read it

• It is a future value, not a price to pay today: tenants have to leave first, and some units need work.
• The new tenant can also ask the TAL to set the rent (clause G of the Quebec lease).
• The more the optimized value exceeds the asking price, the more upside there is. The maximum price says how much of that upside you can pay for.

Source

• Plan directeur 2026-09-28, section 31.4 (as of 2026-09-28) illustrative
• Choix de l’investisseur : relocation au loyer affiché sans rénovation (clause G : le nouveau locataire peut demander au TAL de fixer le loyer). Remise à niveau d’un logement ancien : environ 5 000 à 30 000 $ selon l’état (as of 2026-09-28) illustrative

Cap rate

The building’s return if it were paid in cash: its yearly net income divided by its price.

How it is calculated

• Year-1 net operating income ÷ price.
• Example: $44,000 ÷ $800,000 = 5.5%.

How to read it

• Against the market cap rate: more than 0.5 point above, meets target (low price for the income); within 0.5 point, watch; more than 0.5 point below, deal-breaker (high price for the income).
• A very high cap rate can also hide a problem: inflated rents, work coming.

Source

• Plan directeur 2026-09-28, section 31.4 (as of 2026-09-28) illustrative

GRM (gross rent multiplier)

How many years of gross rent it would take to equal the price.

How it is calculated

• Price ÷ annual gross income.
• Example: $800,000 ÷ $64,000 = 12.5.

How to read it

• The lower it is, the cheaper the building is for its rents.
• It ignores expenses: useful to compare similar buildings quickly, not to decide. No threshold.

Price per unit

The price divided by the number of units.

How it is calculated

• Example: $800,000 ÷ 6 units = $133,333 per unit.

How to read it

• Compare with buildings of the same size in the same area. It ignores rents and condition: no threshold.

Expense ratio

The share of income that goes to operating expenses, not counting the mortgage.

How it is calculated

• Operating expenses ÷ effective gross income (the rent actually collected, after vacancy).

How to read it

• Meets target: 35% to 50%.
• Under 30%: deal-breaker. Expenses are probably incomplete (management, maintenance or reserve left out by the seller).
• Over 55%: deal-breaker, unusually high expenses. Between those zones: watch.

NOI: Seller, Lender, Investor

Net operating income (NOI) is what the building earns in a year before the mortgage; it is computed three ways.

How it is calculated

• Seller: the listing’s figures, as given.
• Lender: undocumented rents capped at market, vacancy counted, and each expense at least equal to the lender norm (management, maintenance, janitor, reserve), even if the owner does everything himself.
• Investor: current rents, free units at market rent, actual expenses when known, else the norm.

How to read it

• The lender NOI is almost always the lowest: it sets the maximum loan, through the DCR.
• A wide gap between Seller and Lender points to expenses left out of the listing.

Source

• SCHL, Enquête sur les logements locatifs, octobre 2025 : 2,7 % pour la RMR de Sherbrooke (fiabilité a), arrondi prudent à 3 % (as of 2026-09-28)
• Plan directeur 2026-09-28, section 31.4 (as of 2026-09-28)

Full methodology

Cash-on-cash return

What your invested cash earns in cash flow in the first year.

How it is calculated

• Year-1 cash flow ÷ cash to close.
• Example: $6,000 ÷ $150,000 = 4%.

How to read it

• Meets target: 4% and over. Negative: deal-breaker. In between: watch.
• It counts neither the principal repaid nor the gain in value: see the IRR.

Equity multiple

How many times you get your initial cash back over the projection.

How it is calculated

• Total received (each year’s cash flow + net sale proceeds) ÷ cash paid at closing.
• Example: $300,000 received for $150,000 invested = 2.0×.

How to read it

• Meets target: 2.0× and over. Under 1.5×: deal-breaker. Under 1×: you lose capital.

Break-even occupancy

The share of the rent you must collect to pay every expense and the mortgage.

How it is calculated

• (Operating expenses + mortgage payments) ÷ gross potential income.

How to read it

• The lower, the more room you have. Meets target: 80% or less. Over 90%: deal-breaker, a single empty unit puts you in the red.

Lowest cash balance

The lowest level the cash on hand reaches, month by month, over the projection.

How it is calculated

• Starting cash + each month’s cash flow, cumulated; the lowest month is kept.

How to read it

• Negative: deal-breaker, you will have to add money. Meets target: at least 3 months of mortgage payments in reserve at the lowest point.

Months with negative cash flow

The number of months in which more money goes out than comes in.

How it is calculated

• Counted on the cash view: taxes in instalment months, seasonal expenses, capital work.

How to read it

• A few negative months are normal (tax instalments). Meets target: 3 months or fewer. More than 12 months: deal-breaker.

Equity in year 10

What you would own in the building at the end of the tenth year.

How it is calculated

• Estimated value of the building + cash and reserve, less the loan balances.
• Estimated value: net income ÷ exit cap rate.

How to read it

• Information, no threshold. Equity grows through principal repayment and through a rising net income.

Source

• Politique interne (as of 2026-09-28)

Income value

What the building is worth based on the income it produces today.

How it is calculated

• Lender net operating income ÷ market cap rate.
• Example: $44,000 ÷ 5.5% = $800,000.

How to read it

• If the asking price is well above it, the buyer is paying for upside that is still to be earned.
• Lenders reason this way for buildings of 5 units and more.

Source

• Plan directeur 2026-09-28, section 31.4 (as of 2026-09-28) illustrative

Closing costs

The one-time costs paid at purchase, on top of the down payment.

How it is calculated

• Transfer tax (“welcome tax”, computed by brackets that depend on the city) + notary, inspection, appraisal and sundry.

How to read it

• These costs are not financed by the loan: they add to the cash to close.

Source

• Norme interne à calibrer (as of 2026-09-28) illustrative
• Ville de Sherbrooke, Droits de mutation immobilière : 3 % au-delà de 500 000 $ depuis le 1er janvier 2026 (sherbrooke.ca, consulté le 2026-09-28) (as of 2026-09-28)

Full methodology

Zero-cash-flow price

The highest price at which the building still pays for itself in the first year.

How it is calculated

• We look for the price at which year-1 cash flow falls exactly to zero, with the selected financing program.

How to read it

• Above that price you must add money every month.
• Empty (—) when the loan is limited by the DCR: the payment then stays under the net income at any price, and a higher price only adds to the down payment.

Verdict

The analysis in one word: the most severe status among the key figures.

How it is calculated

• Five figures get a status: year-1 cash flow, DCR, 10-year IRR, maximum price against asking price, cap rate.
• The verdict takes the worst of the five. Cash to close does not count.
• With no eligible financing program at this price: deal-breaker.

How to read it

• Meets target: every threshold is met.
• Watch: at least one figure is between its two thresholds.
• Deal-breaker: at least one figure is under its minimum.
• Information: no threshold for that figure. The status is always given by an icon and a word, never by colour alone.

“Preliminary analysis”

A mark reminding you that the result still rests on at least one unverified assumption.

How it is calculated

• The engine records each assumption it reads. If an assumption flagged “illustrative” drives a key result (market cap rate, renovation cost, estimated interest rate), the analysis is preliminary.
• A typed value more than 20% away from the norm, or outside its range, with no justification note, also makes it preliminary.

How to read it

• It is not an error. It is a reminder: before an offer, replace those values with verified figures (lender quote, comparables, contractor quote).
• The list of reasons is in the Assumptions tab.

Full methodology

Key figures (realistic projection)

The numbers that sum up the building, each with its status and threshold.

How it is calculated

• All come from the realistic projection: leases are followed month by month, renewed on their date with the TAL increase, and units that free up move to market rent.
• Each tile has its own explanation: open the “i” next to its name.

How to read it

• Under each figure: the status (meets target, watch, deal-breaker or information) and the threshold used.

Asking, maximum and zero-cash-flow price

A ruler placing the asking price between two markers: the zero-cash-flow price and the maximum price.

How it is calculated

• Zero-cash-flow price: the highest price at which year-1 cash flow stays at zero or more.
• Maximum price: the highest price that still gives the target IRR over 10 years on the optimization plan.
• The three fields under the ruler (target IRR, market cap rate, renovation per re-let unit) move those markers.

How to read it

• Asking price left of the maximum price: there is room. Right of it: negotiate.
• The stabilized value shown below is a future value, once every unit is re-let: it is not a price to pay today.

Source

• Plan directeur 2026-09-28, section 31.4 (as of 2026-09-28) illustrative
• Choix de l’investisseur : relocation au loyer affiché sans rénovation (clause G : le nouveau locataire peut demander au TAL de fixer le loyer). Remise à niveau d’un logement ancien : environ 5 000 à 30 000 $ selon l’état (as of 2026-09-28) illustrative

Three value methods

Three independent ways to estimate what the building is worth, each with a range, compared with the asking price.

How it is calculated

• Income: net operating income ÷ market cap rate.
• Comparables: price per unit of similar listings, applied to the number of units.
• Cost: land value + cost to rebuild the building, less its wear.
• Reconciled value: weighted average. 5 units and more: income 60%, comparables 30%, cost 10%. 2 to 4 units: comparables 60%, income 30%, cost 10%.

How to read it

• Methods that agree give confidence; a wide gap means checking the rents, the comparables or the condition.
• “Most constraining” is the method giving the lowest value.
• This is not a certified appraisal.

Source

• Plan directeur 2026-09-28, section 31.4 (as of 2026-09-28) illustrative

From rent to cash flow, year 1

A waterfall chart: start from the rent and each bar removes one item, down to what is left in your pocket.

How it is calculated

• Gross potential income − vacancy − operating expenses = net operating income; − mortgage payments = cash flow.

How to read it

• The longest downward bar is what weighs most. If the last bar is below zero, the building costs money in year 1.

Cash to close

How the money to bring on closing day splits up.

How it is calculated

• Down payment, transfer tax, other costs, liquidity reserve and tax adjustments: each slice of the ring is one of them.

How to read it

• The down payment almost always dominates. Items flagged “illustrative” are estimates to replace with your own figures.

Source

• Plan directeur 2026-09-28, section 31.4 (si RCD de 1,10) (as of 2026-09-28)
• Norme interne à calibrer (as of 2026-09-28) illustrative

10-year cash flow

The cash flow of each year of the projection, after expenses and the mortgage.

How it is calculated

• Rents and expenses move separately year after year; the mortgage renews at the same rate at the end of the term (assumption).

How to read it

• A bar below zero is a year in which you add money. A steady rise comes from rents going up while the payment stays fixed.

Source

• Plan directeur 2026-09-28, section 31.4 (as of 2026-09-28)
• TAL, taux de base 2026 (baux débutant du 2 avril 2026 au 1er avril 2027), moyenne de l’IPC sur trois ans (as of 2026-09-28)

Checks

The inconsistencies the engine spotted in the figures entered.

How it is calculated

• Each check compares a figure with a benchmark: expenses too low for the income, a rent well above market, taxes that do not match the assessment, a unit count different from the roll.

How to read it

• A check is not a certain error: it is a question for the seller or a document to ask for (leases, tax bills, invoices).

Detailed income statement, year 1

The first year’s income and expenses, line by line, on the realistic projection.

How it is calculated

• Gross potential income (every rent, as if fully let) − vacancy and bad debt = effective income.
• Effective income − operating expenses = net operating income (NOI). NOI − interest = income before tax.
• An expense flagged “norm” is estimated, for lack of an actual amount.

How to read it

• The “% of effective income” column shows the weight of each line. Expand a line for the detail by unit or by expense.

Source

• SCHL, Enquête sur les logements locatifs, octobre 2025 : 2,7 % pour la RMR de Sherbrooke (fiabilité a), arrondi prudent à 3 % (as of 2026-09-28)
• Plan directeur 2026-09-28, section 31.4 (1 % à calibrer, 0 dans les études de cas) (as of 2026-09-28)
• TAL, taux de base 2026 (baux débutant du 2 avril 2026 au 1er avril 2027), moyenne de l’IPC sur trois ans (as of 2026-09-28)

Expense breakdown

Two charts: expenses by line year after year, and the share of each line in the first year.

How to read it

• Taxes and insurance are often the largest lines. A share that grows year after year deserves a check.

Source

• Plan directeur 2026-09-28, section 31.4 (as of 2026-09-28)

Rents and market, by unit

For each unit, the current rent, the market rent and the rent projected at the end of the monthly projection.

How it is calculated

• The projected rent follows the lease: TAL increase at each renewal, market rent when the unit frees up.

How to read it

• A current rent far below market is upside, but it only comes when the tenant leaves. A rent above market is a risk of decrease.

Source

• TAL, taux de base 2026 (baux débutant du 2 avril 2026 au 1er avril 2027), moyenne de l’IPC sur trois ans (as of 2026-09-28)

Full methodology

Expense normalization: actual, norm, floor

For each expense, the actual amount entered, the norm, and the one the lender uses.

How it is calculated

• Actual: the amount you entered (listing, invoices).
• Norm: what that line usually costs for a building of this size in this city.
• Used: the actual when known. If it is under the norm on a line the lender imposes (management, maintenance, janitor, reserve), the lender uses the norm: that is the “lender floor”.

How to read it

• “actual”: your figure is used. “norm”: nothing was entered. “lender floor”: your figure was too low for the lender.
• Many lines at “norm”: ask the seller for the invoices.

Source

• Plan directeur 2026-09-28, section 31.4 (as of 2026-09-28)
• Norme interne à calibrer (chauffage inclus) (as of 2026-09-28) illustrative

Full methodology

Financing structures

Every loan program this building is eligible for, with the maximum loan and what it yields.

How it is calculated

• For each program the loan is the smaller of two caps: the program’s maximum loan-to-value and the loan the net income can carry at the minimum DCR. The “Limit” column says which one applied.
• CMHC: Canada Mortgage and Housing Corporation insures the loan for a premium added to the loan. 5 units and more: up to 85% and 40 years.
• MLI Select: a CMHC points program (affordability, energy, accessibility). More points give a larger, longer loan and a lower premium: 50, 70 or 100 points.
• 1 to 4 units: residential loans, qualified on your personal income.

How to read it

• Compare year-1 cash flow, cash needed and IRR: a longer loan helps cash flow but costs a premium and more interest.
• An asterisk flags an illustrative rate, to confirm with a quote. The “selected” program drives every tab.

Source

• nesto, 24 septembre 2026 (as of 2026-09-28)
• Plan directeur 2026-09-28, section 31.4 (as of 2026-09-28) illustrative
• Plan directeur 2026-09-28, section 31.4 (cas 2 et 3) (as of 2026-09-28) illustrative
• Plan directeur 2026-09-28, section 31.4 (cas 3) (as of 2026-09-28) illustrative

Full methodology

Adjustments at the notary

The day-by-day split of taxes and rents between the seller and you on the deed date.

How it is calculated

• If the seller paid the year’s taxes, you refund the share for the days you will own the building.
• If the seller collected the month’s rents, you get the share for the days after the deed.

How to read it

• A positive total adds to the cash to close; a negative total is a credit. Confirm with the notary’s statement of adjustments.

Term choice

The total cost of the loan by term length (the period over which the rate is fixed), up to the planned exit.

How it is calculated

• Total cost = first-term interest + renewal interest + CMHC premium and fees + a penalty if the loan is repaid before the term ends.
• Rate of each term: Government of Canada bond yield of the same term + the same spread as in the analysis.
• “Loan exit”: when the loan is repaid (the plan’s refinance or the sale in year 10).

How to read it

• Rank 1 is the cheapest term for that exit. A long term protects against a rate increase but costs a penalty if you refinance before it ends.
• Illustrative rates: replace them with real quotes.

Source

• Écart du taux assuré 5 ans sur l’obligation du Canada 5 ans, calibré le 2026-09-28 (nesto 4,39 % ; obligation 3,68 %) (as of 2026-09-28) illustrative
• Écart du taux conventionnel 5 ans sur l’obligation du Canada 5 ans, calibré le 2026-09-28 (nesto 5,03 % ; obligation 3,68 %) (as of 2026-09-28) illustrative
• Écart estimé des prêts multilogements assurés SCHL de 10 ans sur l’obligation du Canada 10 ans, à confirmer par soumission (as of 2026-09-28) illustrative
• Écart estimé des prêts commerciaux conventionnels de 5 ans sur l’obligation du Canada 5 ans, à confirmer par soumission (as of 2026-09-28) illustrative

Financing alerts

The risks tied to the loan itself, mostly when it comes up for renewal.

How it is calculated

• DCR at renewal: year-1 net income with no growth (prudent) ÷ payments at the forward rate estimated from the yield curve. A 5-year term is assumed.

How to read it

• Threshold: the program’s minimum DCR, else 1.00. An alert means the lender could ask for a partial repayment or better terms at renewal.

Investor or owner-occupant

The same purchase, depending on whether you live in one of the units.

How it is calculated

• An owner-occupant can use insured loans with a smaller down payment (1 to 4 units, under $1.5 M) but loses the rent of the unit occupied.

How to read it

• Compare cash to close and year-1 cash flow across the two columns. Taking back a rented unit follows strict rules (notice, delays, indemnity): validate with a lawyer.

Full methodology

Borrowing capacity

The loan a lender would grant you based on your personal income and debts (1 to 4 units).

How it is calculated

• The lender computes your payments at a stress-test rate, higher than the real rate.
• GDS (gross debt service): housing costs ÷ gross income. TDS (total debt service): housing costs + other debts ÷ gross income.

How to read it

• Both ratios must stay under the maximums shown. The first to bind sets your maximum loan.

Financing structure optimizer

A trial of loan combinations (first mortgage, second mortgage, vendor take-back) to cut the down payment or lift the return.

How it is calculated

• Each combination respects each lender’s limits; they are ranked on the goal you pick.
• Vendor take-back: part of the price lent by the seller.

How to read it

• Less cash down means more debt, so a lower cash flow and more risk. The first lender must accept any junior loan.

Debt schedule

For each year (or month), what you pay the lender and what is left to repay.

How it is calculated

• Payment = interest + principal. Interest is computed on the balance, with the semi-annual compounding of Canadian mortgages; principal reduces the balance.

How to read it

• Early on nearly all the payment is interest; the principal share grows over time. The term renews at the same rate (assumption).

Full methodology

Simplified balance sheet

What you own (assets) and what you owe (liabilities), at closing then at each year end.

How it is calculated

• Assets: estimated value of the building (net income ÷ exit cap rate) + cash + reserve.
• Liabilities: loan balances. Equity = assets − liabilities.

How to read it

• Equity should grow year after year. If it stalls, net income is not rising or cash is draining.

Source

• Politique interne (as of 2026-09-28)

Replacement schedule

The major replacements to plan for (roof, windows, heating), taken from the building sheet.

How it is calculated

• Each component has an age, a service life and a cost; the replacement falls at the end of its life, at a cost indexed each year.

How to read it

• Tick the box to include them: they are then paid from the year’s cash flow and lower the return. A replacement with no cost entered is left out.

10-year projected statement

Income, expenses, the mortgage and cash flow for each year, then the sale.

How it is calculated

• Rents: TAL increase at each lease renewal, market rent when a unit frees up.
• Expenses: indexed each year. Mortgage: renewed at the same rate.
• Sale at the end: value − sale costs − loan balance = net proceeds.

How to read it

• Follow the cash-flow line: it should turn or stay positive. The IRR and the equity multiple, under the table, sum up the ten years.

Source

• Plan directeur 2026-09-28, section 31.4 (as of 2026-09-28)
• TAL, taux de base 2026 (baux débutant du 2 avril 2026 au 1er avril 2027), moyenne de l’IPC sur trois ans (as of 2026-09-28)
• Politique interne (as of 2026-09-28)

Full methodology

Equity build-up

How the building’s value, the debt and what you own change year after year.

How it is calculated

• Equity = estimated value + cash − loan balances.

How to read it

• The widening gap between value and debt is your gain: it comes from principal repaid and from rising net income.

Source

• Politique interne (as of 2026-09-28)

Monthly cash flow

The money coming in and going out each month, and the cumulative cash.

How it is calculated

• It is a cash view: taxes fall in instalment months, snow removal in winter, the notary adjustments in the first month.

How to read it

• Negative months are normal; what matters is the lowest point of cumulative cash.
• If it goes below zero, plan a larger reserve at purchase.

Source

• Plan directeur 2026-09-28, section 31.4 (si RCD de 1,10) (as of 2026-09-28)

Reconciliation with the simple analysis

Why year-1 net income is not quite the same in the program table and in the projected statements.

How it is calculated

• The simple analysis takes year-1 rents and expenses as they are. The projected statements follow the leases month by month. The table splits the gap by cause: vacancy, timing of TAL increases, turnover at market rent, management.

How to read it

• A small gap is normal. A large one nearly always comes from leases renewing late in the year.

Tax

An estimate of the tax on rental income and on the sale, and of the after-tax return.

How it is calculated

• Taxable income = net income − interest − CCA. CCA (capital cost allowance) is a deduction for the building’s wear; it cannot create a loss.
• On sale: the CCA claimed is taken back (recapture) and part of the capital gain is taxed.

How to read it

• CCA defers tax, it does not erase it. Indicative estimate, to validate with a CPA: not tax advice.

Holding structure

The same deal held three ways: personally, through a corporation or through a partnership.

How it is calculated

• Same projection and tax rules; only the tax rates and the timing of the tax change.

How to read it

• The tool shows the after-tax gap; it does not choose the structure. Validate with a CPA and a lawyer.

Optimization plan

A scenario in which each unit moves to its relocation rent when its tenant leaves, then the building is refinanced.

How it is calculated

• Expected value: each unit frees up at the usual turnover pace for its size.
• Accelerated: departures are negotiated (departure incentive) to reach the relocation rents within a few years.
• In the meantime sitting tenants get the TAL increase.

How to read it

• The table compares the IRR with and without the refinance, and the equity left in the deal.
• The new tenant can ask the TAL to set the rent (clause G of the lease): the relocation rent is not guaranteed.

Source

• TAL, taux de base 2026 (baux débutant du 2 avril 2026 au 1er avril 2027), moyenne de l’IPC sur trois ans (as of 2026-09-28)
• Choix de l’investisseur : relocation au loyer affiché sans rénovation (clause G : le nouveau locataire peut demander au TAL de fixer le loyer). Remise à niveau d’un logement ancien : environ 5 000 à 30 000 $ selon l’état (as of 2026-09-28) illustrative

From current to relocation rents

Total monthly rent over the years, in both scenarios of the plan.

How to read it

• The “accelerated” line rises faster but costs departure incentives. The gap between the lines is what accelerating earns.

Timeline by unit

For each unit: its current rent, its relocation rent, the gap, and when it would be re-let.

How it is calculated

• Expected re-let: from the usual turnover of that unit type. Accelerated re-let: spread over the years chosen.

How to read it

• Units with the largest gap create the most value. The “Clause G” column recalls that the new rent can be contested.

Refinance

A new loan, taken once rents are up, to get back part of your cash.

How it is calculated

• Stabilized value = stabilized net income ÷ market cap rate.
• New loan = the smaller of the maximum loan-to-value and what the net income can carry (DCR).
• Refinance cash-out = new loan − balance repaid − penalty − costs.

How to read it

• “All equity returned”: the refinance gives you back all your cash. Mind that a bigger loan means bigger payments.

Source

• Plan directeur 2026-09-28, section 31.4 (as of 2026-09-28) illustrative

Cash flows by year (plan)

Rents, net income, renovations and cash flow for each year of the plan, with and without the refinance.

How to read it

• Years with renovations and incentives are negative: that is the plan’s investment. The refinance shows as a large inflow in its year.

Optimization levers

The ways to raise this building’s net income, each costed or set aside with its reason.

How it is calculated

• Value created = net income increase ÷ market cap rate, less the cost.
• Levers are ranked by value created per dollar invested. Ticking one adds it to the plan: its cost in the planned month, the income increase after, with its success probability.

How to read it

• Costs, take-up rates and probabilities are illustrative: replace them with quotes. A “not capitalized” lever earns income, but a buyer would not pay more for it.

Source

• Plan directeur 2026-09-28, section 31.4 (as of 2026-09-28) illustrative

Energy: measures, subsidies and MLI Select points

What energy-saving work costs and earns, subsidies included.

How it is calculated

• Net cost = cost − subsidies.
• Savings go to whoever pays the energy (you if heating is included in the lease, else the tenants).
• TAL major-works rent increase: 5% of the net cost per year.
• Payback: the number of years for your savings and rent increases to repay the net cost.

How to read it

• A short payback is a good lever. A large enough energy reduction also earns MLI Select points, hence a better loan. Illustrative costs: replace them with quotes.

Source

• Règlement sur les critères de fixation de loyer, décret 1455-2025 (Gazette officielle, 17 décembre 2025), art. 3 : 5 % du coût des travaux majeurs par année, en vigueur depuis le 1er janvier 2026 (as of 2026-09-28)

Full methodology

Regulatory deadlines: adding units

What the rules in force on this date allow for each way to add units.

How to read it

• A “blocked” or “upcoming” status changes the order of the levers. It is a presumption: confirm with the City and a lawyer.

Sensitivity (tornado chart)

What happens to the result when a single assumption changes, the others held fixed.

How it is calculated

• Each bar runs from the value with the low assumption to the value with the high one.

How to read it

• The longest bars, at the top, are the assumptions that matter most: check those first.

Sensitivity maps

Grids showing the result when two assumptions change at the same time.

How it is calculated

• Each cell is a full calculation with the two values of its row and column.

How to read it

• The outlined cell is the base case. The colour is centred on the threshold: the target IRR, a DCR of 1.00 or zero cash flow.
• A hatched cell means financing is impossible in that case.

IRR fan by year of sale

The yearly return you get depending on the year you sell.

How it is calculated

• Band: the three worst (low) and three best (high) variants combined. Dashed line: the realistic projection.

How to read it

• Selling too early often gives a low IRR, because of purchase and sale costs. The band is not a probability.

Break-evens

How far an assumption can worsen before cash flow falls to zero or the DCR falls to 1.00.

How it is calculated

• For each assumption (rents, rate, price) we look for the exact value that brings the result to the threshold.

How to read it

• The further the break-even is from today’s situation, the more room you have. “Already negative”: an increase would be needed, not a decrease.

Stress tests

What happens in a few specific bad cases: higher rates, an appraisal under the price.

How it is calculated

• DCR if rates rise 2 points: same income, payments recomputed at the higher rate.
• Appraisal 5% or 10% low: the lender lends on the lower value, so you bring the difference.

How to read it

• A stressed DCR of 1.10 or more meets target; under 1.00, deal-breaker: the income would no longer pay the mortgage.

Source

• Politique interne (as of 2026-09-28)

Monte Carlo simulation

Thousands of possible versions of the building’s future, to see the spread of outcomes rather than a single number.

How it is calculated

• In each run the post-closing assumptions (rents, expenses, vacancy, renewal rate, sale price, unplanned repairs) are drawn at random within their range.
• The most likely value of each assumption is the analysis value. The loan and the cash invested do not change.
• Median IRR: half the runs do better, half do worse. 10th percentile: only 1 run in 10 does worse.

How to read it

• Look at the probabilities: reaching the target IRR, a negative cumulative cash flow, losing capital.
• The simulation does not replace judgment: it shows the rare bad cases three scenarios hide.

10-year IRR distribution

A histogram: each bar counts the runs whose IRR falls in that band.

How to read it

• A narrow histogram means a predictable result; a wide one, an uncertain result. The left tail shows the bad cases.

Main IRR drivers

The assumptions that move the IRR most from one run to the next.

How it is calculated

• Rank correlation between each assumption and the IRR: from −1 to +1.

How to read it

• Near +1: when the assumption rises, the IRR rises. Near −1: it falls. Near 0: little effect. The top drivers are the ones to watch.

Equity and split between partners

Where the down payment comes from, what it costs, and how profits are shared between partners.

How it is calculated

• The optimization plan’s cash flows (operations, refinance, sale) are distributed under the agreement, in the order of a waterfall: see “Waterfall over the horizon”.

How to read it

• All capital is assumed paid at closing. Capital calls and buy-sell clauses are not modelled.

Sources of the down payment

The list of money making up the down payment: savings, line of credit, partner loan, vendor take-back.

How it is calculated

• Each source has an amount, a cost (rate) and says who pays it: the deal or the partner.
• Blended cost: average of the rates, weighted by the amounts.

How to read it

• “Shortfall” should be zero. A large borrowed share lifts the return if all goes well, and the risk if rents drop.

Distribution agreement

The rules for sharing profits between the investors and the sponsor (the one running the deal).

How it is calculated

• Preferred return: a yearly return paid first to the investors.
• Catch-up: a share then paid to the sponsor, to reach the agreed split.
• Tiers: above certain investor IRRs the sponsor gets a larger share (promote).

How to read it

• A high preferred return protects the investors. A high promote rewards the sponsor only if the deal succeeds.

Results by partner

For each partner: what they put in, what they receive, their profit, IRR and multiple.

How it is calculated

• Multiple = total received ÷ contribution. Average yearly return = average operating distributions ÷ contribution.

How to read it

• Compare the profit share with the capital share: the difference is what the agreement shifts to the sponsor. The chart shows when each one is paid.

Waterfall over the horizon

The order in which each dollar distributed is allocated, step by step.

How it is calculated

• 1. Preferred return. 2. Return of capital. 3. Sponsor catch-up. 4. Tiered split by investor IRR.
• Each step must be filled before moving to the next.

How to read it

• If the first steps absorb everything, the sponsor gets no promote: the deal did not beat the preferred return.

IRR sensitivity to the exit price

Each partner’s IRR if the building sells 10% lower or 10% higher than planned.

How to read it

• The sponsor’s IRR swings more than the investors’: paid last, the sponsor carries the most risk.

Cash flows by partner and year

What each partner pays in and receives, year by year.

How to read it

• The first line is the contribution (negative). The large inflows come from the refinance and the sale.

Holding structures (qualitative comparison)

A table comparing the ways to hold the building with others: liability, tax, lender requirements, costs.

How to read it

• No structure is best for everyone. Validate with a lawyer and a CPA before signing an agreement.

Roll comparables

Where the building sits among similar buildings on the property assessment roll.

How it is calculated

• Buildings of a similar size in the same area. For each measure: the 1st quartile (the lowest quarter), the median (the middle) and the 3rd quartile.

How to read it

• A value per unit under the median can point to an under-assessed building or one in poorer condition.
• These are assessed values, not sale prices.

Source

• Quebec property assessment roll (MAMH, open data)

Market and potential

The rent benchmarks and the zoning potential used for this building.

How it is calculated

• Rent reference: average rents of the CMHC Rental Market Survey, for the building’s zone when known, else for the centre.
• Presumed potential: extra units the zoning grid seems to allow.

How to read it

• CMHC rents are those paid by sitting tenants: a floor for market rent, not a cap. Confirm the zoning potential with the planning department.

Full methodology

Market calibration

The ratios observed in the saved listings, by building size: cap rate, multiplier, price per unit.

How it is calculated

• Median and quartiles over the last 12 months, latest version of each listing.
• Seller cap rate: advertised income less expenses ÷ asking price. Normalized cap rate: the engine’s net income (normalized expenses) ÷ asking price.

How to read it

• The normalized cap rate becomes the default market cap rate when there are enough listings; otherwise the engine’s illustrative rate is used.
• These are asking prices, not sale prices. “n” is the number of listings: a small n is unreliable.

Source

• Plan directeur 2026-09-28, section 31.4 (as of 2026-09-28) illustrative

Building history

What public registers and your captures say about the building’s past: assessed values, transactions, listings.

How to read it

• A quick resale, a sharp rise in assessed value or repeated relisting are signals to understand before an offer.

Potential to add units

The ways to add units to this building, assessed from the lot, the building and the zoning.

How it is calculated

• For each method (splitting a large unit, basement, attic, extension, converting a non-residential space): feasibility, indexed illustrative cost, net income added, value created and IRR effect.
• Value created = net income added ÷ market cap rate, less the cost.

How to read it

• Methods are ranked by value created. The tags say whether the method is feasible and allowed today.
• It is a presumption: confirm with the planning department. Replace the costs with a contractor quote.

Source

• Plan directeur 2026-09-28, section 31.4 (as of 2026-09-28) illustrative

5th-unit threshold: 4 → 5

What changes when a 4-unit building becomes a 5-unit one: it moves to another financing regime.

How it is calculated

• At 4 units: residential loan, based on market value (comparables) and on your personal income.
• At 5 units: commercial or CMHC multi-unit loan, based on the building’s net income (economic value, DCR), with access to MLI Select.

How to read it

• The card compares the possible loan, the down payment and the value before and after. The 5th unit can raise the loan, or reduce it if net income is weak.
• Taxes, insurance and building rules change too: see “What changes at the 5th unit”.

Full methodology

Additional dwellings (rules in force)

A summary of the municipal rules on adding a dwelling to an existing building.

How to read it

• The official by-law text prevails: follow the link, and confirm with the planning department before counting on that unit.

Assumptions used

The list of every value the engine used without you entering it, with its source and date.

How it is calculated

• Level: 1 actual data, 2 typed value, 3 sector norm, 4 city norm, 5 province or lender norm.
• Status “illustrative”: a reconstructed or provisional value, to confirm at the official source.

How to read it

• Highlighted rows are illustrative assumptions that drive a key result: the first ones to replace with a verified figure.
• “Drives” names the result the assumption influences.

Full methodology

User overrides

The assumptions you replaced with your own figure, and the gap with the norm.

How it is calculated

• Deviation = your value ÷ the norm − 1. Beyond 20%, or outside the assumption’s range, a written justification is required.

How to read it

• “Missing (required)” keeps the analysis preliminary until the note is written. The note is saved with the deal.