Why multi-family?
Have you ever looked at a family that owns apartment buildings and wondered how that happens? Mostly it isn’t lottery money or a lucky flip. It’s one building, a mortgage the tenants pay down, and twenty-five years of arithmetic. Pick your own numbers and watch what that arithmetic does.
If I start with , borrow at %, hold for years, and property prices grow % a year — we set this one to zero on purpose — then:
Everything else we assumed — open it and judge for yourself.
We assumed buildings are bought at a 6% cap rate — meaning a building producing $60,000 a year of income costs $1,000,000.
We assumed you borrow 75% of what a building is worth, and refinance back up to 75% every 7 years — each refinance costs 2% of the new loan.
Mortgages pay off over 30 years.
Rent money left over each year sits uninvested at 0% until the next refinance.
The full Modeler lets you change all of these.
Want to understand the machine that just did that? Start here.
The First Building is a free eight-lesson course on buying and owning small apartment buildings in Ontario. Each lesson is a five-to-eight-minute read.
One lesson a week, by email. Or read it all now — every lesson is on this site.
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Here is the whole model, before any of the detail.
An apartment building is a small business. Its revenue is rent. Its costs are the ordinary ones — property taxes, insurance, heat, repairs, someone to manage it. What remains after costs is the building's income, and that income is what you are actually buying. This is the most useful fact in the course: apartment buildings are priced on the income they produce. Everything else follows from it.
Most buyers don't pay cash. They put down a portion, a lender finances the rest, and the building's income makes the mortgage payment. That payment does two jobs at once. Part of it is interest, the cost of borrowing. The other part pays down the loan itself. That second part matters more than it looks: every month, the people renting the units are, through their rent, reducing the debt on a building you own. You added no new money. The loan is smaller anyway.
Leave that alone for ten or fifteen years and something slow happens: the debt keeps shrinking while the building keeps operating. The gap between what the building is worth and what you owe on it is your equity, and loan paydown builds it on a schedule you can read the day you sign, because it is arithmetic. Whether the building is also worth more by then is a separate question. Market prices move in both directions, and no one can tell you in advance which way. The paydown doesn't depend on that.
Now the step that turns a purchase into a cycle. Equity in a building can be borrowed against. Owners who want to grow refinance — take a new, larger loan against the building they have paid down — and use what that frees up as the down payment on a second building. The first building's tenants keep retiring the first loan. The second building's tenants start on the second. None of this requires a hot market, perfect timing, or a rare deal. It requires a sound building, competent operation, and years.
That is the machine the widget above just ran. Income covers the costs and the debt, the debt falls, the equity that creates gets put back to work, and each building added puts more rent to work retiring more debt. The eight lessons that follow each cover one part of it: what a sound building looks like, what it truly costs to run, how lenders decide what you can borrow, and what can go wrong.
This model is not ours, and it is not new. Our family has used it for three generations. It began with one apartment building, bought and held the way described above, the equity eventually put back into the next one. Sean McKinney spent four decades owning and brokering multi-family buildings across Ontario's smaller cities on the same pattern, and his father did it before him. Liam is the third generation.
We mention this for one reason: so you know the course describes something we have done, over long stretches of time, through good markets and bad ones. The specifics of our buildings are not the point. The pattern is. It was ordinary work, done consistently, and it is available to anyone patient enough to do it.
Before you start, the caveats that belong up front rather than in fine print. This takes years; the machine runs on time, and there is no version of it that runs fast. Debt is what makes the arithmetic work, and debt also makes mistakes expensive — leverage cuts in both directions. And a building is a real operation: tenants, trades, a furnace that fails on a Friday night in January. Professional management handles the daily work, but ownership is never entirely passive. If those three things — time, debt, and operations — don't put you off, the rest of the course is the detail.
The why ends here. The how starts in lesson one.