I represent investors and run a property management company on the side. Here is how I actually underwrite a small multi-unit in greater Fredericton, what the numbers look like, and the quirks that catch out-of-province buyers.
This is the version of the playbook I would give a friend. No fluff, no buyer pitch, just the working math and the local realities I walk through with every investor client.
Fredericton is a stable, slow-growth, resilient rental market. Provincial government and the University of New Brunswick anchor the employment base. Vacancy runs around 2% per CMHC. Two-bedroom average rents are roughly $1,420 in the regional reports, with newer or renovated stock trading well above that. Cap rates on small multi-unit (duplex to 6-plex) typically come in around 5.5% on stabilized in-place rents, with upside if rents are below market or the building has deferred maintenance to address. Appreciation has been steady but modest. This is not a market where you make money on speculation. It is a market where you make money on operations.
For most investor clients, the deals that work are within a tight buy-box. Variance from the buy-box is fine when there is a clear thesis, but you need to know where you are deviating.
Price band. $400,000 to $1,200,000 covers 90% of small multi-unit activity. Below $400,000 you are usually in marginal product or geography. Above $1,200,000 you are in mid-sized buildings where the financing changes and the buyer pool narrows.
Unit count. Two to six units. Triplexes and quads are the sweet spot for first-time investor clients. Single rentals work but the per-door diligence cost is the same and the risk is more concentrated.
Geography. Inside Fredericton city limits, with a strong preference for Devon, Nashwaaksis, the south side near UNB, and the established east end. The further you go from the core, the harder you have to underwrite vacancy assumptions.
Condition. Two flavours work. Either fully stabilized, recently updated, professionally managed; or visibly tired with clear value-add upside but mechanical and structural sound. Avoid in-between deals where you are paying for cosmetic updates that have not been done and the rents are already pushed.
Every deal gets a one-page pro forma before we make an offer. Here is the structure.
Gross scheduled rent. Sum of the rent each unit could realistically command, at market, today. Not what the seller is collecting. Not what Kijiji says. What I have signed leases for, in comparable buildings, in the last 90 days.
Less vacancy. 4% on most product. 5% if there is unit-mix risk or a problem unit. 3% on premium product in the core.
Effective gross income. Gross rent minus vacancy.
Operating expenses. Real numbers, not 50% rule of thumb.
Net operating income. EGI minus operating expenses. This is the number that drives valuation.
Cap rate check. NOI divided by purchase price. If you are below 5%, the deal needs a clear thesis (rent growth, value-add, premium location). If you are above 6.5% you are looking at problem product and should figure out why.
Debt service. Run financing at three down-payment scenarios (20%, 25%, 35%) and see what the cash flow looks like at each. Investor financing on small multi-unit in Canada typically needs 20% down minimum, often 25% for non-CMHC financing.
Cash on cash. Annual pre-tax cash flow divided by total cash invested (down payment plus closing costs plus immediate capex). A healthy small multi-unit deal in Fredericton in 2026 produces 4% to 7% cash on cash at year one, with upside as rents step up over the hold.
I have walked deals with investors from Toronto, Calgary, Halifax, and Boston. Here are the things they consistently miss.
Multi-residential property tax. The mill rate on properties classified multi-residential is higher than residential. This is a meaningful difference on a duplex versus a single-family. Always pull the actual tax bill, not the asking-side estimate.
Oil heat is still common. A surprising number of small multi-unit buildings in greater Fredericton are still on oil. Oil tank age and material matter for insurance. Some carriers will not write a policy on a multi-unit with an aging steel tank. Conversion to natural gas or heat pumps is a real and growing capex line.
New Brunswick Residential Tenancies framework. Different from Ontario and Quebec. There is no formal vacancy decontrol; rent increases are governed but less restrictive than Ontario; eviction processes have specific timelines. If you are coming from another province, get a copy of the act and read the parts that apply to small landlords. Or ask me, because my management company deals with this every week.
Snow load and roof condition. New Brunswick has real winters. A flat roof on a small multi-unit needs proactive maintenance. A failing membrane on a tired flat roof is a $20,000 to $50,000 line item depending on size. Always ask for documentation of the last roof work, and have a roofer inspect during due diligence.
Spring flooding on river-adjacent product. Some streets along the St. John River and the Nashwaak flood in freshet. Some carriers will not insure flood-zone properties at all. Check before you commit, not after.
The legal-suite question. Many small multi-unit buildings in Fredericton operate suites that are not formally legal under current zoning. This is not always a deal breaker but you need to know what you are buying and how the City would treat the unit if a complaint forced a review. We can usually get a zoning compliance letter from the City for a clean answer before close.
Most of the deals I close for investors are on MLS. Off-market exists but it is overhyped. The difference for investor clients is not access to secret deals; it is the speed and quality of underwriting on the deals everyone can see. The investor who runs a real pro forma in 24 hours and shows up with a clean offer wins more deals than the investor who waits a week for a "better" off-market opportunity.
Where off-market matters: portfolios. If you are looking to buy three to five buildings in a year, I can usually find a couple of those off-market through my management network and through other agents who know I move deals quickly.
Always know your exit before you buy. For most small multi-unit in Fredericton, the exit is one of three things.
Hold to retirement. Cash flow grows, mortgage pays down, building serves as a yield asset. The most common exit and the cleanest tax treatment.
Sell to another investor. Cap rate compression or rent growth produces a sale at a meaningfully higher value. Common on value-add deals that have been stabilized.
Owner-occupy or family transition. Especially relevant on duplexes and triplexes. Sometimes the best exit is a kid going to UNB or a parent moving in.
Each exit implies different design choices on the way in. Hold-to-retirement deals can take more capex up front because the long-term math absorbs it. Sell-to-investor deals need to be marketable in 5 to 7 years to a buyer pool that may have very different cap rate expectations. Family-transition deals need at least one unit that is genuinely livable for the future occupant, not just rent-able.
Run the real pro forma. Use real rent comps, real expenses, real reserve assumptions. Buy where the math works at a cap rate that reflects the risk. Mind the local quirks: multi-residential tax, oil tanks, RTA framework, snow load, flood zones, suite legality. Know your exit before you buy.
If you want a sample pro forma on a deal you are looking at, send me the address. I will run the numbers and email it back the same day, no commitment.