I Don't Fall in Love With Buildings. I Fall in Love With Markets.
I once had someone send me photos of a building before they'd even told me what city it was in. Beautiful renovation, great curb appeal, exactly the kind of listing that gets people excited before they've asked a single real question.
My first question back to them wasn't about the building. It was "what's vacancy doing in that market right now, and why."
That's not me being difficult. It's that the best-run building in the wrong market will still underperform, and the worst-run building in the right market usually has more room to improve than people think. The building sets your ceiling on execution. The market sets the actual ceiling.
Averages hide more than they reveal
Canada's rental market isn't one market right now. It's a lot of very different local stories that happen to share a border. CMHC's most recent data shows vacancy rising across nearly every major metro, but at very different speeds. Calgary has held stable near 5%, supported by strong demand keeping pace with supply. Vancouver and Toronto, on the other hand, saw sharp increases from historically tight conditions, with Vancouver's vacancy rate reaching its highest point since 1988.
If you only look at a national or even a city-wide number, you can miss what's actually happening in the specific neighborhood you're buying into. A city with rising overall vacancy can still have pockets of genuine, durable demand. A city that looks tight on paper can have a specific submarket that's about to get flooded with new supply. The averages are a starting point, not an answer.
New supply changes everything about how a deal will perform
One of the things I always dig into now is what's actually being built nearby. Markets with heavy purpose-built rental completions underway, and Calgary, Edmonton, and Montreal have all seen a lot of that recently, face more near-term competition for tenants. That means slower lease-up on anything vacant or newly repositioned, and it means the rent growth you might have expected from a few years ago isn't guaranteed to show up on the same timeline.
Population and employment trends matter here too. Slower population growth and softer youth employment have been named directly by CMHC as key reasons behind the demand slowdown across 2025. That's not something a great property manager can fix. It's a market-level force, and it affects every building in that market whether it's well run or not.
Rising vacancy isn't automatically a bad sign
This one surprises people. Rising vacancy driven by new supply and slower population growth behaves completely differently than rising vacancy driven by tenants actively leaving a specific building or neighborhood. The first is a market cycle working itself out. The second is a property problem, and usually a warning sign about something specific to that asset or that block.
Before I underwrite anything, I want to know which one I'm actually looking at. A market softening because of new construction can still be a great long-term hold. A building losing tenants while everything around it stays full is telling you something you need to listen to.
Why I underwrite every deal like I'm never selling it
This connects to something else I think about with every acquisition. A lot of deals only make financial sense if you sell in a few years at a better cap rate than you bought at. I don't treat those as real deals. I treat them as bets on the exit market, dressed up to look like investments.
Canadian multifamily cap rates for core assets have sat in a narrow, elevated range through 2025 and into 2026, and most analysts expect only gradual movement from here, not the kind of rapid re-compression that would bail out a deal that was underwritten on optimistic exit assumptions. So I ask a simple question before I ever get excited about a property: does this deal produce an acceptable return purely from ongoing cash flow and amortization, without needing appreciation or cap rate compression to work? If the answer is no, I've found a speculation, not an investment.
Long-term ownership means modeling cash flow through an actual renewal cycle, not just year one. It means asking who's managing the property in year five, and whether the building's age and condition can support another decade without a major capital event. The financial plan and the operational plan need to agree with each other.
The market comes first, every time
Property condition, unit mix, finishes, all of that matters. But it matters within the context of a market that either supports what you're trying to do or doesn't. I'd rather own an average building in a market with real, durable demand than a beautiful building in a market that's about to get flooded with new supply.
If you want the full framework I use to read a market before I even consider the property, along with the underwriting and risk process that goes with it, I put it all together in The Real Estate Deal Analysis Guide. It's free, built specifically around Canadian market data, and it ends with a checklist you can run against your next deal before you make an offer.
