How to Get Into Multifamily Real Estate in Ontario

March 07, 2025•6 min read

Multifamily real estate investing is often portrayed as the golden ticket to financial freedom. After all, owning a property with multiple units means building wealth through rental income, creating equity, and scaling your investments more quickly than with single-family homes.

But for Ontario residents, the reality is that entering multifamily real estate is not a walk in the park. Housing regulations, stiff competition, and hefty upfront costs present challenges that many first-time investors underestimate.

Still, for those willing to put in the effort, multifamily real estate can be a pathway to extraordinary success. This guide lays bare the hard truths of investing in multifamily properties in Ontario, while also giving you the actionable steps and insights to overcome them.

Understanding Multifamily Real Estate in Ontario

Multifamily real estate refers to residential properties with more than one rental unit. This could range from small duplexes to large apartment buildings with dozens of units.

But why has Ontario become such a hotspot for multifamily investing? The province's growing population and strong economic base make it a desirable place to live. Demand for rental properties in urban centers like Toronto and Ottawa remains high, and smaller cities like Hamilton, London, and Kingston are now attracting attention for their affordability and growth potential.

While the opportunities are exciting, it’s crucial to start with a clear understanding of how this market works—and the factors that make Ontario both lucrative and challenging.

What Does the Multifamily Market Look Like in Ontario?

Ontario’s multifamily market continues to be a strong performer for investors, despite the province’s stringent rent control laws. Key aspects of the current landscape include:

High Demand for Rentals: Rising housing costs across Ontario leave many residents unable to afford homeownership, driving persistent demand for rental units.
Pressure on Supply: Limited stock of multifamily properties in prime locations increases competition among investors.
Rent Control Regulations: Ontario’s rental laws cap annual rent increases for most units, which can limit income growth potential (we’ll cover navigating this later).
Appreciating Property Values: Multifamily properties in growing Ontario cities tend to appreciate significantly, offering long-term value gains.

Understanding these dynamics is crucial for positioning yourself in this competitive market.

Benefits and Challenges of Investing in Multifamily Properties

Before jumping in, make sure to weigh the pros and cons of multifamily investing.

Benefits

Ontario’s multifamily market continues to be a strong performer for investors, despite the province’s stringent rent control laws. Key aspects of the current landscape include:

Scalability: Acquiring multifamily properties allows for multiple income streams from a single investment.
Steady Cash Flow: Even if one tenant vacates, you’ll still earn revenue from other units, making multifamily properties less risky than single-family homes.
Cost Efficiencies: Maintenance, property management, and other expenses are often more cost-efficient when spread across multiple units.
Long-Term Wealth Building: With tenants paying down your mortgage and property values generally trending upward, you can build considerable equity over time.

Challenges

High Upfront Costs: Down payments and closing costs for multifamily properties are considerably higher than for single-family homes.
Complex Financing: Banks often have stricter lending criteria for multifamily properties.
Stringent Regulations: Ontario’s strict rent controls and tenant protections require thorough legal compliance.
Intensive Management: Managing multiple tenants and units can become a full-time job, especially for larger properties.

Being realistic about the benefits and challenges will help you enter this space with your eyes wide open.

6 Crucial Steps to Multifamily Real Estate Success

1. Conduct Detailed Market Research

Understanding your target market is the foundation of your investment success.

Research neighborhoods with strong rental demand and potential for appreciation.
Look for areas with good schools, transport links, and growing populations.
Study market trends to identify rental rates and vacancy levels.

2. Perform Due Diligence on Properties

Every multifamily property is unique, so scrutinize your options carefully.

Request financial statements (rental income, expenses, etc.) from sellers.
Have the property inspected to uncover structural issues.
Analyze the building’s cash flow potential based on current rental income and future expenses.

3. Explore Financing Options

Multifamily properties often require more creative financing than single-family homes. Consider these avenues:

CMHC-Insured Loans: CMHC provides mortgage insurance for multifamily properties, offering lower down payment requirements.
Local Credit Unions: These institutions often have tailored programs with flexible terms for real estate investors
Private Lenders: While higher interest rates are a tradeoff, private lenders can sometimes offer quicker approval for unique deals.

4. Understand Legal and Regulatory Requirements

Ontario’s landlord-tenant laws are among the strictest in Canada. Stay compliant by understanding key regulations, like the Residential Tenancies Act and rent increase limits. Working with an experienced real estate lawyer will help you avoid missteps.

5. Engage in Strong Property Management

Whether you self-manage or hire a property management company, effective management is crucial to maintaining cash flow and tenant satisfaction. Stay organized by:

Keeping up with regular maintenance to preserve property value.
Screening tenants carefully to secure reliable renters.
Building strong relationships with tenants to minimize vacancies and arrears.

6. Join Networking Groups and Learn from Case Studies

Engaging with local real estate communities can provide invaluable insights. Many successful Ontario investors achieve breakthroughs by learning from others' case studies or working with seasoned mentors.

Real Success Stories from Ontario Investors

An investor in Hamilton transitioned from single-family homes to owning a 5-unit townhouse property. Despite challenges with tenant turnover, this investor leveraged the city’s potential for rental growth and saw a 35% increase in property value within five years.
A Toronto-based real estate agent partnered with investors to acquire a 12-unit building. Their strategy of adding amenities like bike parking allowed them to attract higher-paying tenants while adhering to rent regulations.

These examples highlight how strategic planning can overcome common hurdles.

Tips for First-Time Multifamily Real Estate Investors

Start Small: Begin with duplexes or triplexes to gain experience before scaling to larger properties.
Build a Strong Team: Real estate agents, lawyers, mortgage brokers, and property managers can make or break your success.
Stay Educated: Regularly read real estate blogs, attend workshops, and learn from prominent industry professionals.
Reserve Capital for Emergencies: Unexpected repairs and vacancies can eat into your cash flow.

Is Multifamily Real Estate Right for You?

Multifamily real estate investing in Ontario isn’t for everyone. But for those who are willing to put in the time and effort to learn the ropes, it’s an investment strategy with considerable rewards.

Focus on building the right knowledge base, surrounding yourself with a reliable support network, and taking small, calculated steps.

If you’re ready to take the plunge, start by speaking with local real estate professionals, and keep your eyes peeled for multifamily properties in growth-rich areas.

Back to Blog