Multifamily Underwriting in Alberta

1. Date and define the underwriting case

Record the information date, property interest, proposed transaction, hold period and decision the model supports. Build separate columns for trailing actual, current in-place, stabilized base and buyer plan instead of overwriting historical performance with one blended pro forma.

Maintain a source and assumption ledger identifying the document, date, preparer, treatment and reviewer for each material input. Unverified figures should remain visibly provisional.

• Information date
• Trailing actual
• Current in-place
• Stabilized base
• Buyer plan
• Source and assumption ledger

2. Reconstruct gross potential rent

Build the unit schedule from the rent roll and tenancy agreements, with unit type, area where verified, occupancy, term, current rent, included services and separately charged parking, storage or utilities. Reconcile the total to the seller's statement.

Keep current occupied rent, vacant-unit asking rent and external market evidence separate. A listing asking rent is not an executed rent, and an area-wide average does not determine the supportable rent for one unit.

3. Model vacancy, collection loss and turnover

Use property history, current delinquency, unit condition, turnover, local evidence and the operating plan to build explicit vacancy and collection assumptions. Separate physical vacancy from economic loss caused by arrears, concessions, employee units, offline suites or bad debt.

CMHC Rental Market Survey data can provide geographic context for vacancy, average rent, turnover and rental-universe measures. Its definitions, geography and survey universe must be read before applying the data to a specific property.

4. Verify other income

Break out parking, storage, laundry, utility recoveries, pet charges, antenna or telecom income and other recurring sources. Reconcile billed amounts to agreements, occupancy and collections instead of applying an unsupported amount per suite.

Exclude deposits, insurance proceeds, asset sales, owner contributions and other balance-sheet or non-recurring amounts from property income. Have accounting and tax advisors confirm the treatment used for the actual ownership structure.

5. Normalize operating expenses without erasing risk

Review multiple years of general ledgers, statements, invoices and contracts. Model property taxes, insurance, utilities, payroll, management, repairs, grounds, snow, waste, security, cleaning, pest control, administration and other recurring costs on a transparent basis.

Identify owner-specific, related-party, deferred and one-time items, but do not remove a cost simply because it is inconvenient. If management, repairs or insurance appear below a sustainable level, show both reported and supportable scenarios.

6. Separate NOI from capital and financing

State the definition of net operating income used in the model. Debt service, income tax, depreciation and many capital items are normally analyzed outside property-level NOI, but reserve and expense conventions can differ among buyers, lenders and appraisers.

CRA's Rental Income guide discusses rental income, supporting records and current versus capital expenses for its stated audience. It is not a transaction-specific accounting conclusion; obtain advice for the buyer's entity, reporting basis and planned work.

7. Build the capital and renovation schedule

Translate building-condition findings into timing, scope, cost, contingency and disruption assumptions. Separate immediate deficiencies, recurring replacements, code or insurance work, suite turns, optional upgrades and expansion projects.

Model lost rent, temporary accommodation where applicable, professional fees, permits and financing carry as well as construction cost. A renovation premium is incomplete without the unit eligibility, legal path, turnover timing and full cost needed to achieve it.

8. Derive value from evidence, not a target price

Test income and direct-comparison evidence using consistent definitions. A capitalization rate should be interpreted with the income stream, condition, location, tenancy, growth expectations, transaction date and included rights—not copied from an unrelated sale or marketing brochure.

A brokerage analysis can support acquisition strategy but is not an appraisal. Where the decision or lender requires a formal opinion, engage a qualified appraiser working under the applicable professional standards.

9. Size debt and equity across scenarios

Run proceeds, debt service, coverage, amortization, renewal and exit sensitivity using lender-recognized inputs. Compare conventional and CMHC-insured alternatives without assuming that advertised maximums will apply to the property, borrower or timing.

For MLI Select, test the current affordability, accessibility or climate commitments, documentation, costs and continuing obligations with the lender and CMHC. Product materials are subject to change and do not constitute approval.

10. Issue a decision memo with limitations

Summarize the base case, downside case, upside dependencies, unresolved diligence, required conditions, capital exposure, financing constraints and decision thresholds. Link every material conclusion back to the work file.

This framework is educational and supports brokerage-level screening. It is not an appraisal, investment recommendation, financing approval, accounting opinion, tax advice, engineering report or legal conclusion.