We picked up a house in Roncesvalles this summer for $920,000, and before we touched a single wall, we sat down and ran the numbers two different ways. Convert it into a triplex, or push it further into a fourplex.
Here’s the part that surprised even us. We assumed the bigger renovation would come with the bigger payday. It didn’t. The fourplex actually landed with less value-add lift than the triplex, even though it cost $100,000 more to build. We still chose the fourplex, and we want to walk you through exactly why, because the reasoning matters more than the renovation budget.
Why This House Was Underpriced
This is a big semi-detached house. Once you walk through it, you can see why. It already has three kitchens in it, even though the property is only designated as a single family home on paper.
Two things pulled the price down to $920,000. The house needs real work, which scared off most buyers looking for something move-in ready. And it sits on a semi-detached lot facing a busier main road instead of a quiet side street, which tends to knock the price down too. Neither of those things matters much once the property is rented out as a legal multiplex. Tenants care about a clean, functional unit. They do not discount their rent because of the street the building faces.
That combination, a house that needs work on a slightly busier street, is exactly the kind of discount we look for. It is also worth saying clearly that this is a conversion, not an addition. We are not adding a single square foot to the house. We are simply chopping up the same existing footprint in a smarter way.
Triplex or Fourplex: Same Footprint, Two Paths
Because the house already had three kitchens, we had two realistic paths forward. Option one was a straightforward triplex conversion, keeping each floor as one self contained unit. That renovation runs $250,000.
Option two was to split the main floor one more time and go to a full fourplex. Same footprint, same three floors, but the main floor becomes two separate one bedroom units instead of one. That renovation runs $350,000, because a legal split means a second kitchen, a second bathroom, and updated plumbing, electrical, and fire separation to divide the space properly.
Below is how the two options compare, side by side, using the same purchase price and the same conservative completion value assumptions.
| Metric | Triplex | Fourplex | Difference |
|---|---|---|---|
| Renovation Cost | $250,000 | $350,000 | +$100,000 |
| Total Cost (Purchase + Renovation) | $1,170,000 | $1,270,000 | +$100,000 |
| Total Monthly Rent | $8,650 | $9,600 | +$950 |
| Month 1 Cash Flow | $3,858 | $4,808 | +$950 |
| Completion Value | $1,400,000 | $1,450,000 | +$50,000 |
| Value-Add Lift | $230,000 | $180,000 | -$50,000 |
Why the Bigger Renovation Did Not Win on Lift
Look at that last row again. The fourplex cost $100,000 more to build, and it still ended up with $50,000 less value-add lift than the triplex. That is not a typo. It is simply how the math worked out on this specific house.
Completion value, based on market comparables rather than a pure cap rate calculation, only moved from $1,400,000 to $1,450,000 between the two options. That extra $50,000 in value did not come close to covering the extra $100,000 in renovation cost. So on a pure lift basis, the triplex wins clearly.
But the extra $100,000 did not disappear. It showed up somewhere else entirely. It bought an extra $950 a month in rent, month after month, for as long as the property is held. So the real lesson here is simple. More units and more renovation spending does not automatically buy more equity. Sometimes it just buys more monthly income instead. Those are two different outcomes, and which one is better depends entirely on what you are trying to build.
Why We Still Chose the Fourplex
Given some uncertainty in the market right now, we would rather be conservative and prioritize cash flow over chasing the bigger lift. Lift is a projection. It depends on the market cooperating when you go to sell or refinance. Cash flow is real money landing in your account every month, no matter what the market does next. In this kind of environment, we would rather bank the sure thing.
There is a second reason, and it is one many newer investors do not think about. Stronger cash flow helps you qualify for your next property. Lenders look closely at rental income when they calculate how much more you can borrow. A property cash flowing an extra $950 a month puts you in a noticeably stronger position to qualify for the next deal. So the fourplex is not just the safer choice on this property. It helps us scale into the next one too.
And we are not giving up on the lift forever, either. If we refinance the fourplex once it is stabilized and rented, we can still pull out roughly 75% of our capital and keep cash flowing close to $2,800 a month. We are simply choosing to give up a little on this first refinance in exchange for scaling faster. There is also a laneway on the back of this property, which means there is technically laneway suite potential down the road too, if we ever removed the garage and rear extension. We are leaving that upside on the table for now, because the fourplex already gives us strong rents from the main house as is.
The Bottom Line
This deal is a good reminder that bigger is not always better in Toronto multiplex investing. The renovation that costs more does not always come back to you as extra equity. Sometimes it comes back as cash flow instead, and knowing which outcome you actually want is what should drive the decision, not the size of the renovation budget on its own.
That is the whole approach behind how we underwrite these deals. We are not just betting on the market going up. We are forcing the value through the renovation, and then choosing the strategy, more lift or more cash flow, that actually fits what our clients are trying to build next.
Our brokerage specializes in Toronto multiplexes. We’ll help you find deals, crunch the numbers, and guide you through renovations and management. If you want full support in Toronto multiplex investing, our team can help you:- Find high-potential properties
- Crunch the numbers so you know exactly where you stand
- Coach you through renovations to maximize returns
- Lock in great tenants
- Provide full property management so your investment runs smoothly
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!
This is for educational purposes only; it does not guarantee future performance or serve as financial or tax advice.
