Force Appreciation in Multifamily: BRRRR Strategy Guide |

Most people get into apartment building investing for the cash flow. And sure, cash flow is nice. But here’s the thing – you pay taxes on that cash flow.

There’s a better strategy that lets you build serious wealth: forcing Appreciation. This approach lets you create equity you control, pull out your original investment, and own a building with basically none of your own money left in it.

Let’s break down how this works.

Why Multifamily Is Different

When you own a single family rental versus a multifamily property, your property value depends on what similar houses around you sell for. You can’t really control that.

But apartment buildings? Totally different game.

The value of a multifamily property is based on how much income it generates. That means you can directly control what your building is worth by raising income and lowering expenses.

This is powerful because you can actually predict what your property will be worth after you make improvements. No guessing. No hoping the neighborhood gets better. You’re in control.

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The Basic Strategy

Here’s how forcing appreciation works in practice:

You buy an apartment building for $1,500,000. Maybe the rents are below market because the previous owner didn’t care or didn’t know better.

You put $200,000 into renovations – updating units, improving common areas, making the place somewhere people actually want to live.

Then you raise the rents to market rates as leases come up for renewal or when new tenants move in.

Because the building now generates more income, it’s worth more. In this example, your property is now valued at $2,100,000.

If you’re eyeing a building where rents sit below market and you want to map out how $200K in renovations could create over $500K in equity, book a free strategy call with LendCity and we’ll run the numbers with you.

Pulling Your Money Back Out

Now comes the really cool part.

You refinance the property at 75% loan to value. Your new loan amount is $1,570,000.

Think about that for a second. You started with $1,500,000 (your purchase price) plus $200,000 (renovations) – that’s $1,700,000 total. Your new loan gives you $1,570,000.

You’ve pulled almost all your money back out. And you now own a building worth $2,100,000 with only $130,000 of your own capital still in the deal. That’s instant equity of over $500,000.

Your returns on invested capital can be extremely high, because you have almost no money left in the property.

The Two-Loan Approach

This strategy typically requires two different mortgages at two different times.

First is your purchase loan. You can use a credit union at 75% loan to value, but a better option is usually a bridge loan.

Bridge loans come with interest-only payments. This keeps your costs down while you’re doing renovations and getting rents stabilized. You’re not paying down principal when you need that cash for improvements.

Once the building is stabilized with rents at market rates, you get your second mortgage – the takeout financing. This is your long-term loan, usually a five-year term. This can be conventional financing or insured programs that go above 75% loan to value (which can go above 75% loan to value).

Use our free CMHC MLI max loan calculator to estimate how much you can pull out when you refinance with CMHC insurance.

Important note: remember you’ll have closing costs and fees twice. Factor that into your numbers from the start.

Where This Strategy Works Best

Not all markets are created equal for this approach.

You want landlord-friendly markets where you can actually raise rents without tons of restrictions. Alberta is a prime example – lots of investors are successfully doing this there right now.

Markets with heavy rent control make this harder. You might not be able to raise rents enough to force the appreciation you need.

This strategy also works really well in the US, where many markets are very landlord-friendly.

Whether you need a bridge loan for the renovation phase or a takeout mortgage once rents stabilize, book a free strategy call with us and we’ll walk you through both stages of the two-loan approach.

Why This Beats Just Collecting Cash Flow

Remember what we said at the start – cash flow gets taxed.

When you force appreciation and refinance, you’re pulling out cash that generally isn’t treated as taxable income (consult your accountant). You’re not selling the property (which would trigger capital gains). You’re taking out a loan against the equity you created.

Plus, you can now take that money and do it again with another property. And again. And again.

This is how you scale a real estate portfolio quickly without constantly needing to save up for down payments.

This content is for informational purposes only and does not constitute financial, investment, or legal advice. Past performance does not guarantee future results. Always consult qualified professionals before making investment decisions.

Is This Strategy Right For You?

Forcing appreciation in multifamily properties isn’t for everyone. You need to:

Have enough capital for the down payment and renovations
Be comfortable managing a larger property or hiring property management
Be willing to put in the work to stabilize rents and improve the property
Choose the right market where rent increases are possible
Understand the financing process and timeline

But if you can check those boxes, this strategy is genuinely game-changing. It lets you build wealth faster than almost any other real estate approach.

The key is being strategic about which properties you buy, making smart renovations that justify rent increases, securing fix and flip financing for your BRRRR projects, and understanding your Multi-Family Mortgage Financing so you can structure both the bridge loan and the takeout mortgage correctly.

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Frequently Asked Questions

What does forcing appreciation mean in multifamily investing?

Forcing appreciation means increasing your property's value by raising income and lowering expenses rather than waiting for the market to make your property worth more. In apartment buildings, you do this by bringing rents up to market rates and making improvements that justify those higher rents.

How is multifamily property valuation different from single-family homes?

Single-family homes are valued based on what similar homes around them sell for. Multifamily properties are valued based on the income they generate. This means you can directly control and increase an apartment building's value by increasing its income.

What is a bridge loan in multifamily investing?

A bridge loan is short-term financing with interest-only payments that you use when buying and renovating a property. The interest-only payments keep your costs down while you're stabilizing the building. Later, you replace it with long-term takeout financing once rents are at market rates.

Can I get all my money back out after forcing appreciation?

Yes, in many cases you can pull out all or most of your original investment. When you refinance at 75% loan to value (or higher with CMHC), the new loan amount often covers your purchase price and renovation costs, leaving you owning a property with little to none of your own money still in it.

Which markets are best for the value-add multifamily strategy?

Landlord-friendly markets work best, like Alberta in Canada or many US markets. You want areas where you can raise rents without heavy rent control restrictions. Avoid markets with strict rent control that limits your ability to bring rents to market rates.

Why is forcing appreciation better than just collecting cash flow?

Cash flow is taxable income. When you force appreciation and refinance, you pull out cash through a loan, which isn't taxed. Plus, you can use that money to buy more properties and repeat the process, scaling your portfolio faster than if you just saved cash flow.

How much should I budget for renovations on a value-add property?

This varies by property, but in the example given, $200,000 in renovations on a $1.5 million purchase (about 13%) increased the value to $2.1 million. Your specific numbers depend on the property condition, market rents, and what improvements are needed to justify higher rents.

Do I need two separate mortgages for this strategy?

Yes, typically you'll have two mortgages at different times. First is your purchase/bridge loan while you renovate and stabilize rents. Second is your takeout financing (refinance) once the property is performing well. Remember to factor in closing costs for both mortgages when calculating your returns.

Disclaimer: LendCity Mortgages is a licensed mortgage brokerage, and our team includes experienced real estate investors. While we are qualified to provide mortgage-related guidance, the broader financial, tax, and legal information in this article is provided for educational purposes only and does not constitute financial planning, tax, or legal advice. For matters outside mortgage financing, we recommend consulting a Chartered Professional Accountant (CPA), licensed financial planner, or qualified legal advisor.

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LendCity

Published

December 22, 2025

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6 min read

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Force Appreciation in Multifamily Properties | BRRRR Guide