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As Toronto’s condo market starts to look less attractive, more investors are turning to multiplex properties as a way to diversify their portfolios and secure solid returns. However, buying a multiplex isn’t as simple as it seems—there are different types of multiplexes, each offering varying levels of effort, risk, and reward. In this blog, we break down four different Toronto multiplex investment options, so you can determine which one suits your goals best.
The Toronto Duplex Conversion
A Toronto duplex conversion is one of the easiest ways to get into multiplex investing. It involves converting a single-family home into two rental units, typically by creating a basement suite. This option is ideal for areas where people are looking for additional space, such as families in need of an in-law suite or tenants seeking more room.
For instance, you might purchase a $1 million home, invest $150K into renovations, and within two months, your property could be worth $1.3 million. While the value increase might not be huge, you’re also adding a rental unit that could generate significant income.
Pros:
- Lower risk
- Easier to manage
- Still generates profit
- Great for areas in demand for basement suites
Cons:
- Limited rental income, as you’re only adding one extra unit
The Toronto Triplex Conversion
A Toronto triplex conversion takes it up a notch by turning a property into three rental units. The major advantage of this option is higher rental income, thanks to the additional unit. However, the renovation costs are higher, and the value increase when you sell may not be as significant as with a duplex conversion, as triplexes tend to attract investors rather than homebuyers.
In terms of cash flow, though, having three rental units instead of two makes a big difference. This option is a solid middle ground for investors who want better returns than a duplex but don’t want to dive into a more complex project.
Pros:
- Increased rental income
- Great for cash flow
- Solid balance between effort and reward
Cons:
- Higher renovation costs
- Smaller potential resale value increase compared to duplexes
The Toronto Laneway or Garden Suite Addition
If you want to take your triplex conversion even further, consider adding a laneway or garden suite in Toronto. This involves transforming your backyard or garage into a separate rental unit. A 1,000 sq. ft. laneway suite could be worth $600K, and with a build cost of around $350K, you’re looking at a solid increase in property value and an additional $3,000 in rent each month.
This is a bigger project, but if you’re serious about maximizing cash flow and long-term returns, it’s a smart play. You’ll be adding significant value to your property, not to mention increasing the rental income potential.
Pros:
- Significant rental income boost
- Increase property value
- Maximizes cash flow with an additional unit
Cons:
- Higher upfront cost
- More complex project
The Toronto 4+1 Conversion
The 4+1 model involves converting the main property into four rental units and adding a laneway or garden suite for a total of five units. This is the highest-earning option, as you’ll make the most in rents, but it also comes with the highest costs and more risk.
One of the biggest advantages of reaching five units is that you can refinance commercially, which allows you to access better loan terms and pull out more capital. For investors looking to scale, this is a game-changer. However, selling can be trickier due to higher prices and fewer comparable properties in the market.
Pros:
- Highest rental income
- Commercial refinancing options
- Strong long-term growth potential
Cons:
- More complex project
- Higher costs and risks
- Harder to predict resale value
Next Steps - Let's Connect!
When it comes to multiplex investing, there’s no one-size-fits-all solution. It’s all about finding what works for you—whether that’s a lower-risk duplex conversion or a larger, more complex 4+1 project. For most investors, a triplex conversion is a solid starting point with the option to add a garden or laneway suite later on as your portfolio grows.
Before diving into the Toronto multiplex market, make sure you’ve got your capital and mortgage pre-approvals lined up. And if you need help navigating the process, we’re here for you! Our team specializes in guiding investors like you through every step, from crunching the numbers to helping you find the best investment opportunities.
Whether you’re after a turnkey property or something to convert, we’ll be by your side. Let’s make sure you’re making the best decisions for your future!
Here’s what it’s like to start as a client with us:
- Initial Consultation: We’ll talk with you to understand your needs and teach you how to invest wisely in Toronto real estate.
- Market Search & Purchase: We’ll search the market to find the perfect property for you.
- Renovation Support: If the property needs renovations, our trusted contractors are ready to help, and we’ll coach you as you manage the project.
- Leasing and Management: If you need help renting out and managing your property, our leasing and management team is here for you.
Ready to get started? Click on the link below, and let’s start working together!
What Toronto Real Estate Investment Is Right For You?
Check out our complete Toronto real estate investment guide for all the details and real-life examples. If you’re ready to dive in, just book a call with us!
