Most Montreal investors climb a ladder: condo, plex, then "something bigger". The most common question I get from clients on the third rung is whether to buy two 6-plexes or one 12-unit building. The math says they are not the same asset class — and the differences compound.
Financing: The 5-Unit Line and Beyond
Both a 6-plex and a 12-unit sit above the 5-unit threshold, which means commercial-style underwriting: the lender finances the building's income, not your salary. Both qualify for CMHC MLI Select. The differences appear in practice:
- 6-plex: more lenders compete at this size; transaction costs (appraisal, environmental, legal) are proportionally heavier per unit.
- 12-unit: fixed transaction costs spread across more doors; CMHC underwriting effort is nearly identical to the 6-plex, for double the income base.
Rule of thumb: the diligence and financing effort for a 12-unit is perhaps 20% more than a 6-plex — for 100% more units.
Management: The Hidden Inflection Point
A 6-plex is self-manageable if you live nearby and have patience. A 12-unit usually is not — snow contracts, more turnover, more TAL exposure, more systems to fail. Professional management at 4–5% of revenue becomes realistic at 12 units, and budgeting it honestly changes the comparison: the 12-unit's per-door expenses often drop (one roof, one boiler room, one insurance policy) while its management line rises.
The crossover: per-door operating costs in Montreal typically favour the 12-unit by 10–15% — if it was built as a 12-unit, not assembled from conversions.
Valuation and Exit
A 6-plex in a desirable neighbourhood still attracts semi-residential buyers — families planning to occupy, small investors stretching up. That demand puts a floor under prices but caps the cap rate logic.
A 12-unit trades almost purely on income. Your buyer pool is smaller but more rational: private investors, family offices, CMHC-financed operators. Value creation is mechanical — every dollar of defensible NOI you add is worth $18–22 at a 4.5–5.5% cap. Renovate a kitchen on turnover, raise the rent legally, and you have created equity you can measure. When the time comes to sell, that same logic drives the income-approach valuation.
Risk Profile
- Concentration: one 12-unit means one roof, one foundation, one neighbourhood bet. Two 6-plexes diversify location and staging of capital expenses.
- Vacancy resilience: one vacant unit is 8.3% of a 12-unit's income, 16.7% of a 6-plex's. Larger buildings smooth the bumps.
- Liquidity: the 6-plex sells faster in most markets; the 12-unit sells slower but to more disciplined buyers.
The Verdict
If your goal is maximum learning with recoverable mistakes: 6-plex. If your goal is scale, CMHC leverage, and measurable value-add: the 12-unit wins on almost every per-door metric. Most of the off-market opportunities I source for clients in the 8–24 unit range never reach Centris — owners of this stock sell quietly. That sourcing pipeline is the core of my multifamily acquisition practice.
Jeremy Soares is an OACIQ-licensed residential and commercial real estate broker (H2731) in Montreal.