MLI Select New Construction: 60-Unit Purpose-Built Rental in Victoria, BC

Raj had spent fifteen years as a residential home builder in the Victoria market. He'd built hundreds of single-family homes and had deep relationships with trades, suppliers, and municipal planning. But home building was commoditizing. Margins were compressing, and new home demand was softening as interest rates rose.

He saw an opening: Victoria had a critical shortage of purpose-built rental housing. New purpose-built rental supply had been virtually flat for two decades while population grew. Rents were climbing. But transitioning from home construction to multifamily development meant navigating new lending landscapes, different construction timelines, and unfamiliar financing structures.

The project itself was ambitious: a 60-unit mid-rise in a transit-proximate Victoria neighborhood. Land cost $2.8 million. Construction would run $14.2 million (a realistic all-in figure for purpose-built rental in 2025). Total project capitalization: $17 million. He had land equity and some development capital, but needed construction financing to carry the project through lease-up, and then permanent financing to settle at stabilization.

Raj's lender recommended a two-phase structure: ACLP (Available Credit Lines for Projects) construction financing during build and lease-up, then a permanent CMHC MLI Select takeout once stabilized.

For construction, he secured an ACLP facility at 90% Loan-to-Cost (LTC). This meant the construction lender would fund $12.8 million of the $14.2 million construction budget (the difference coming from his equity and a land lease arrangement). The ACLP rate was priced at prime+2% (8.5% in 2025) with interest-only payments during construction.

The real insight came in structuring the permanent takeout. Raj designed the building to maximize MLI Select points:

• Affordability (50 points): All 60 units rented at 75% of Victoria area median market rent ($1,875/month for one-bedroom vs. $2,500 market rate)
• Energy efficiency (35 points): Built to BC Step Code 4 (near-Passive House performance), with heat recovery ventilation, superior insulation, and all-electric systems
• Accessibility (15 points): 10% of units designed to universal accessibility standards, with accessible parking and common areas

With 100 total MLI points, Raj qualified for:

• 95% LTV on the permanent mortgage (vs. standard 85%)
• Reduced mortgage insurance premiums (approximately 2.4% vs. 3.1%)
• 50-year amortization (maximum allowed for MLI Select new construction)
• A competitive permanent rate of 3.75% (below-market for new construction)

ACLP (Available Credit Lines for Projects) is a specialized CMHC construction insurance product designed for purpose-built rental new construction. Unlike traditional construction loans, ACLP doesn't require a pre-committed permanent lender at close. Instead, the lender insures the construction risk, and the borrower refinances into permanent financing once stabilized.

Raj's ACLP facility funded $12.8 million of construction costs at 90% LTC. He covered the remaining $1.4 million construction gap through operating reserves and sweat equity. Monthly ACLP interest-only payments ran approximately $90,000 during the 28-month construction period, or $2.5 million in total financing costs.

By month 28 (project completion), Raj had leased 85% of units at his affordability-target rents ($1,875 one-bedroom, $2,375 two-bedroom). Pro-forma monthly gross rent was $112,000. With operating expenses of $48,600, monthly NOI hit approximately $63,400.

At this point, he refinanced the ACLP balance into a permanent MLI Select mortgage. The 100 affordability/energy/accessibility points qualified him for 95% LTV and a 50-year amortization. The permanent rate was 3.75%, and the mortgage amount was $15.855 million. This paid off the ACLP balance, covered the remaining construction costs, and left a small reserve.

The Victoria 60-unit building opened in 2025 to strong demand. Raj leased the property to 90% occupancy within two months of completion, hitting monthly gross rents of $112,000. Operating expenses ran $48,600 monthly, creating stable $63,400 NOI. Monthly debt service on the permanent mortgage was $55,200, leaving $8,200 in monthly cash flow.

By the end of year one, the property had appreciated to $21 million. Raj had created $4 million in equity through development and an additional $500,000 through mortgage paydown. His original equity contribution was approximately $4.2 million (land + development capital + reserves). The annual cash flow of $98,400 represented a 34% cash-on-cash return.

Perhaps most significantly, Raj had successfully transitioned from home construction to multifamily development. With ACLP and MLI Select handling the complexity, he could focus on what he knew best: building efficiently and on schedule. The 50-year amortization meant the property could be held indefinitely, generating sustainable cash flow as rents grew and the mortgage amortized.