Ground-Up Development: 32-Unit Purpose-Built Rental in Edmonton

Vikram had spent 15 years building custom homes and small residential projects in Edmonton. He knew construction inside out—budgeting, scheduling, subcontractor management—but he'd always built for others. He wanted to build his own 32-unit apartment building, generate long-term rental income, and create generational wealth.

The challenge was capital. Traditional construction financing requires 25-35% equity for multifamily development. On a $13.6 million project, that meant $3.4-$4.76 million in equity. Vikram had strong construction expertise but only $680,000 in available capital—roughly 5% of the total project cost.

He'd identified a site in Edmonton's Bonnie Doon neighbourhood, close to the Valley Line LRT extension. The zoning was approved for a 4-story, 32-unit apartment building. The economics worked: projected rents of $1,350-$1,650/unit, stabilized NOI of $460,000/year, and strong demand for purpose-built rental in the area. But without high-leverage construction financing, the project was out of reach.

LendCity arranged a two-phase mortgage financing package using CMHC programs designed for purpose-built rental development. Phase one: CMHC's Affordable Communities Lending Program (ACLP) provided construction financing at 95% of project costs. Phase two: upon completion and lease-up, the construction loan converts to permanent MLI Select financing with up to 95% LTV and 50-year amortization.

The ACLP construction loan advanced $12,920,000 (95% of the $13.6M total project cost), drawn in stages as construction milestones were met. Vikram's $680,000 in equity covered the remaining 5%. The construction loan rate was prime + 1.25% (floating), with interest-only payments during the build phase.

Vikram designed the building to maximize MLI Select points: all 32 units priced at or below 75% of Edmonton's median market rent (50 affordability points), barrier-free design on the ground floor (20 accessibility points), and energy-efficient construction meeting CMHC's climate compatibility requirements (20 energy points). Total: 90 MLI Select points—qualifying for maximum incentives including 95% LTV and 50-year amortization on the permanent loan.

Construction took 18 months. Lease-up began during the final 3 months of construction, and the building reached 94% occupancy within 4 months of completion. The permanent MLI Select takeout replaced the construction loan at 95% LTV with a 4.1% rate and 50-year amortization.

CMHC's ACLP program is specifically designed to encourage new purpose-built rental construction. It provides construction financing at up to 95% of project costs—dramatically reducing the equity requirement compared to conventional construction loans. The program targets affordable rental housing, requiring borrowers to commit to below-market rents.

The MLI Select permanent takeout converts the construction loan into long-term, amortizing debt once the property is stabilized. With 90 points, Vikram qualified for maximum benefits: 95% LTV (matching the construction advance), reduced insurance premiums, and a 50-year amortization that maximizes cash flow.

The 50-year amortization is particularly powerful for new construction. Monthly debt service on the permanent loan is approximately $26,500—significantly lower than the $33,800 that a 25-year amortization would require. That $7,300/month difference flows directly to cash flow, making the project viable at below-market rent levels.

Vikram's 32-unit building is fully operational, generating $460,000 in annual NOI. After $318,000 in annual debt service (including mortgage insurance), net cash flow is $142,000/year. *(Results specific to this transaction; individual outcomes will vary.)*

The building's appraised value at stabilization was $14.8 million—$1.2 million above total project cost. Combined with the 95% LTV permanent financing, Vikram has created $1.2 million in equity above his original investment, plus strong annual cash flow. *(Results specific to this transaction; individual outcomes will vary.)*

Vikram is now planning his second development—a 48-unit building in Edmonton's Strathcona neighbourhood—using the same ACLP-to-MLI Select structure. His track record as a completed developer with a stabilized project gives him stronger positioning for the next CMHC application.