Thinking about turning one house into multiple rental units? You’re in the right place. In this guide, we’ll walk you through what a multiplex is, how to build one in Toronto, what it costs, how long it takes, and what kind of returns you can expect.
Let’s dive in.
What’s a Multiplex?
A multiplex is a house split into 2, 3, or 4 separate units — each with its own kitchen and bathroom. You might know them as duplexes (2 units), triplexes (3 units), or fourplexes (4 units).
One thing to note: at least one unit must be above another to qualify. You can’t just add basement units side-by-side and call it a day.
Why Build a Multiplex in Toronto?
- More cash flow: More units = more rent
- Better value-add: You’re forcing appreciation by increasing income
- More financing options: 5+ units opens the door to better loans
- Helps solve housing issues: Smaller, more affordable units for the city
If you play it right, this strategy can be both profitable and sustainable.
How Do You Value A Toronto Multiplex?
It’s all about income in the multiplex space.
Take your annual rent, subtract your expenses, and you’ve got Net Operating Income (NOI). Then divide that by the cap rate (average in Toronto is ~5%) to get your property’s value.
It’s a simple formula that helps take the guesswork out of investing.
What Do the Numbers Look Like?
Now let’s look at a detached house on a main road in Toronto that can be purchased for around $800K — but this one needed renovations.
We budgeted $150K to legally convert it into a triplex. So, with the down payment and renovation costs, the total upfront investment came to about $340K.
Sounds like a lot? Here’s what that unlocked:
- Three rental units: a 2-bed upper, a 1-bed main, and a 1-bed basement
- Over $6,000/month in rental income
Operating costs were similar to the condo — about $1,200/month for taxes, insurance, and maintenance. But instead of bleeding cash, this place cash flows over $2,000/month. That’s a $3,000 swing in monthly cash flow — with the same purchase price as the condo.
Once renos are done, the triplex should appraise for around $1.1M — that’s an instant $150K equity lift. After refinancing, the investor can pull out roughly $240K, leaving only $100K of their own money in the deal — and still holding a property that cash flows every month.
And we’re not done yet. This property also has backyard development potential. Thanks to Toronto’s updated rules, there’s a real shot at adding a laneway or garden suite later on — unlocking even more rental income and long-term appreciation.
How Do You Finance It?
Here’s the usual path:
- 20% down to buy the property
- Use cash, HELOC, or construction loan to fund the build
- Once finished, either:
- Sell for profit
- Or rent and refinance with residential or CMHC-backed commercial loans (for 5+ units)
How Many Units Can You Create In A Toronto Multiplex?
It depends on your zoning:
- Most Toronto lots now allow up to 4 units by-right
- Some zones (like RM or R on major streets) allow more
- In the future, we might even see up to 30 units in some low-rise zones
Head here to check the zoning for a specific address.
What Do Development Charges Look Like?
Since 2023, there have been some significant updates:
- There are no development charges for the first 4 residential units in Toronto.
- Development charges for backyard houses may be deferred in Toronto.
- If there are four or more existing residential units in a building, development charges may be waived when you add one more unit or up to 1% of the existing units (whichever is more) in Ontario.
These changes have made Toronto real estate investing much more feasible and financially attractive.
For educational purposes only. Please verify all information with the City of Toronto before proceeding.
Can You Build A Laneway Suite Or Garden Suite On A Lot With A Toronto Multiplex?
Yes — even if you have a multiplex, you can still add a laneway or garden suite (if your lot qualifies). That’s one more way to increase rent and boost your ROI.
Just make sure to review the regulations for Toronto laneway suites and Toronto garden suites.
What Are The Parking Requirements If You Build A Toronto Multiplex?
Good news: Toronto waived parking minimums for multiplexes and most small apartments. That means you don’t need to squeeze in driveways or garages unless you want to.
What Should You Keep In Mind When Creating A Toronto Multiplex?
- Conversions (turning a house into multiple units) are faster and cheaper but limited in layout
- New builds let you design the most efficient income-producing property from the ground up
Ideally, you want one unit per floor, and max out the building size within zoning rules.
What Other Requirements Should I Keep In Mind For Toronto Multiplex Builds?
Some important building rules:
- Height limits: Usually 10m, but check your area
- Lot coverage & setbacks: How much of your lot you can build on
- Floor Space Index (FSI): The ratio of building size to lot size
- Development charges: Waived for the first 4 units!
Always double-check rules for your specific address with the City.
How Do You Read Toronto Zoning Labels?
Check out this video below made by the Toronto Regional Real Estate Board to learn how to read zoning labels in Toronto.
How To Budget Costs & Timelines For Toronto Multiplex Projects
Below is a breakdown of the estimated timeframes and costs associated with various stages involved in creating a Toronto multiplex property.
| Stage | Timeframe | Cost Estimate |
|---|---|---|
| Design & Drawings | 2 - 4 months+ | $10,000 - $30,000+ |
| Application For Zoning Review | 1 month+ | $600 - $2,000 |
| Committee of Adjustments (if needed) | 3 - 6 months+ | $5,000+ |
| City Building Permits and Fees | 1 - 2 months+ | $10,000 - 20,000+ |
| Multiplex Conversions | 3 - 12 months | $40,000+ per unit |
| Multiplex Builds | 12 - 24 months | $250 - $400 / square foot |
| Development Charges (if needed) and Other Soft Costs | N/A | Varies |
For educational purposes only. Please verify all information with the City of Toronto before proceeding.
How We Can Help
If you’re serious about building or converting a multiplex in Toronto, we’re your people.
We’re a real estate sales brokerage that helps you:
- Find the right property
- Understand the numbers
- Connect with architects, contractors, and lenders
- Support you from start to finish
Let’s make your investment work harder. Book a free strategy session with us today.
