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I am reading and learning what I can and as a simple home owner I wish to increase my income through real estate.

An idea that I have been thinking of is to build a multi-plex and sell off units as condos. I do not have a lot of money laying around to get started but the though of pre-selling condo units in something such as a 4-plex seems reasonable.

Depending what the market demands would determine the detail in construction - ideally something simple to target new home owners as construction of a 'simple' unit would be cost effective.

I can raise the funds to get a project off the ground up to the point of construction. I assume a construction loan with pre-sold down payments and contracts in place with buyers and construction companies would make the banks happy. Is that a fair statement?

What I have done below is create a checklist of sorts to get me started. I am hoping that the experts here could tell me that I am out to lunch with my idea, on the right track and/or could guide me down the golden path.

Sorry for the length but I am not aware of anyway to upload this list as an attachment.

Here we go:

Question for RE Development:


Market research
- What is required in the current market
- What product is moving/ can be moved with ease
- High, mid or low end
- Assume mid to low for faster sales or as potential rental units

Have a design idea -
- 4/6 plex is comfort level at this stage

Draft up plans
- Cost for engineering and architecture
- Cost for and ‘open draft’ on building plans for changes once property is identified

Rough estimate from builders
- A = Industry standard for % cost overrun
- B = Max that a builder can legally go over quoted estimate
- C = Developer buffer on cost overrun
- C must be < or = (the < of A or B)
- Bonus for coming in under bid and/or time?

Builder liability:
- Construction quality
- Coming in on cost
- Coming in on time
- Deferment of my liability to builders liability

Find property
- Agent directed
- Considerations:
- Does it fit into the neighbourhood
- Zoning
- Multi family
- Building height
- Access to utility services - water, sewer,etc
- Access to amenities for marketability - bus, shopping, work, etc
- Liens
- Taxes - deferment for development purposes
- Developing/ transitioning part of town
- Soil testing
- Existing structures?
- Demolition

Pre-sell units
- Construction loan:
- based on pre-sale down payments/ contracts to purchase or
- does developer require a % down for loan approval
- is it all based on business plan and contracts in place
- Downpayment % if required by developer
- Downpayment % for purchaser
- Contracted time to construct
- Clause being dependent on other units being sold
- Length to hold deposit if unable to sell fulfill clause
- Once all pre-sold then construction time hacks
- Selling a unit at cost for personal use or is that conflict of interest
- Agent fees
- Estimate % for profit per unit
- Cost per unit:
- Building cost
- Land cost
- Services cost
- Legal
- Agent
- Engineer
- Applications/ permits/ etc
- Utilities - sewer, water, hydro
- Other common costs

- Manage the managers and inspect the work
- See the foundation before poured
- See walls before closed
- Picture and document
- Inspect with inspector
- Energy efficient and low maintenance
- Geothermal
- Radiant heat
- ICF all walls
- Metal roof
- Liability end for defective construction?
- Me or builder?
- Building/ construction insurance
- Personal accident
- Fire/ water/ act of God during construction phase
- Delays that effect contract fulfillment
- Outside of builder contract liability

- Done pre-sale/ post sale or post build
- Condo fund reserve?
- Estimating condo fees
- pre or post sale
- not my concern as Strata takes care of that from day of handover

Cash cheque!
- Taxation strategies
- capitol gains?
- Business structure
- Set up as LLC or Inc?
- How?
- Cost?

What am I missing?

What is the order of ops?

So there you have it folks - I now throw it to the community here to rip this idea to shreds, tweak it or something in between. As I said I am new to all this and eager to learn. Let the constructive criticism flow... :)


"I much prefer the sharpest criticism of a single intelligent man to the thoughtless approval of the masses." ~ Johann Kepler

420 Posts
Do you have any experience with land development/ custom builds either personally or professionally?

You will have to surround yourself with a competent team. Have you considered partnering with a builder to benefit from their expertise?

You will need a mortgage professional who specializes in builder mortgages. The lender will usually expect you to fund the 1st third of the project and then will release funds to you in stages as certain construction milestones are met. These mortgages are expensive and have a lot of fees attached (appraisal fees throughout the project, legal fees, etc).

You will have to familiarize yourself with the building requirements/by-laws of the municipality you will be building in.

This is an ambitious undertaking. Good Luck! Keep us apprised of your progress.

2,054 Posts
It is easier as a first step to convert and existing structure to condominium then it is to build it from the ground up.

In the city of Toronto any building with 5 or less units can be converted to condominium with no requirement for City of Toronto approval.

So my suggestion is to buy an existing 5 plex and go through the rest of the approval process while it is still rented out.

If you are really interested in this I have actually been in and seen two four-plexes downtown for sale that are already stripped down to bare walls ready for exactly this kind of conversion. They are side by side. They were for sale for $718,000 each (too much in my opinion) but still $145,000 per door. Condo's in the area sell for about $300,000

It is a very advanced project and would require very deep pockets... banks will not usually lend on this type of project. Out of 12 apartments only 3 have tenants.

Still for someone learning a project of this type I would start with a 4-5 plex conversion.
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