The Toronto Build Strategy That Skips Development Charges — and Most Investors Still Don’t Know About It
Recorded: March 2026
Host: Erwin Szeto, The Truth About Real Estate Investing for Canadians Podcast
Guest: Andy Tran
Andy Tran has been building things in Ontario for over a decade. He’s done basement conversions, garden suites, a 60-unit student residence in Hamilton he eventually sold, and everything in between.
His conclusion after all of it: you don’t have to build big to do well. In fact, in 2026, the most powerful move available to Ontario investors might be the smallest one on the scale — the 4+1 or 6+1 unit build in Toronto.
Andy calls it the sweet spot. Here’s why it works.
The Problem With the Market Right Now
New home sales in January 2026 hit their lowest level in roughly 30 years — around 270 sales. Housing starts are a lagging indicator, but the pipeline is nearly empty. Traditional builders aren’t moving because development charges make the numbers impossible.
The result: a supply crunch is quietly building. Rents are soft now, but the math on what’s coming — especially in three to four years — is hard to argue with.
“When you look at the last 25 years with real estate going up 7%, that’s in lockstep with money supply. It’s not going to be a straight line, but at some point it will pick back up.”
The question isn’t whether to invest. It’s what to build, and where.
Why 4+1 and 6+1 Are the Sweet Spot
Ontario’s missing middle zoning changes opened the door to multi-unit builds on single-family lots — but not all unit counts are equal. Andy’s sweet spot is the 4+1 (four units plus a garden suite) and the 6+1 (six units plus one).
The reason comes down to three advantages that stack on top of each other:
- No development charges. Six-plus units are exempt from development charges — the single biggest cost that makes traditional development unworkable right now.
- As-of-right construction. These builds qualify as-of-right, meaning no special city approvals, variances, or committee hearings.
- Commercial financing. Five or more units opens access to MLI Select — CMHC’s commercial financing program with highly favorable terms.
Ten-unit builds get the site plan approval exemption but lose the development charge exemption. For most mom-and-pop investors, Andy says four-plus-one or six-plus-one is the better trade-off.
Why Toronto Specifically
Andy makes the case for Toronto over Hamilton, Oshawa, or other secondary markets that many Ontario investors have used for the past decade.
Toronto eliminated its floor space index (FSI), meaning you can build larger structures with minimal setbacks — reducing per-square-foot cost. The tenant profile is stronger: professional, higher income, lower conflict. And the city, despite all its bureaucratic quirks, is actively leading the missing middle push.
The most compelling angle is for immigrant families. Andy’s strategy targets three-bedroom units near high-ranking schools in Etobicoke, Scarborough, and East York — exactly the product that isn’t being built anywhere else.
“If you’re building three-bedroom units near a good elementary, middle, and high school — how valuable is that to an immigrant family that wants to settle and own?”
An investor could build a six-unit building, condominiumize it, and sell individual units to families who want ownership but can’t afford a $1.2M townhouse. The Mortimer project in Toronto did exactly this, with units selling at $1M+ each in 2023.
Who This Strategy Is For
Andy breaks the investor pool into two groups:
Equity builders — younger investors growing their net worth who are better off buying existing tenanted duplexes in secondary markets and accumulating. Don’t build — buy.
Cashflow seekers — investors in their 50s and 60s who have equity, don’t want to sell in a down market, but want income. They have a big backyard or a property that can support a build. For them, adding a $300K garden suite to get $3,000/month in rent makes complete sense.
The key is knowing which avatar you are before you act.
How Passive Can This Be?
Very — if you build the right team.
Andy’s firm, Suite Additions, handles design and permitting. You find the property (or a realtor who understands missing middle), hire a Tarion-registered builder, and find a lender familiar with MLI Select. Andy’s office navigates the city so you don’t have to.
“We take the beating from the city so you don’t have to.”
For investors who want to go even more passive, there are GP/LP joint ventures and REITs now entering the missing middle space. The more hands-off, the lower the return — but the optionality exists.
Andy also recommends downloading the Ontario Missing Middle Toolkit — a free 30-page guide his team built from scratch covering contractors, planners, financing, and city processes. Available at suiteadditions.com. https://creators.spotify.com/pod/profile/erwinszeto/episodes/Build-6-Units-in-Toronto-and-Pay-Zero-Development-Charges-e3gke47/a-acho5ab
🎧Listen to the full episode here
10 Questions Answered on Missing Middle Real Estate and Development in 2026
1. What is the “sweet spot” for real estate development in Toronto?
Andy Tran defines the “sweet spot” as building 4+1 or 6+1 units (four or six primary units plus a garden suite).These configurations are permitted “as of right” and are completely exempt from massive development charges.
2. Why should investors avoid building 10-unit properties in Toronto?
While 10-unit builds are exempt from lengthy site plan approvals, they lose the crucial development charge exemption. For small-to-medium investors, paying development charges on 10 units destroys the profitability of the project.
3. Why is Toronto a better market for multi-unit builds than secondary cities?
Toronto eliminated its floor space index (FSI), allowing developers to build larger structures with minimal setbacks. Additionally, the tenant profile in Toronto is typically stronger, professional, and lower-conflict compared to secondary markets.
4. What type of housing is in the highest demand for new immigrant families?
Immigrant families want ownership and space. They are looking for three-bedroom units near high-ranking schools in areas like Scarborough and East York. Because condo developers generally do not build three-bedroom suites, there is a massive supply gap.
5. Can you sever and sell individual units in a 6+1 multiplex?
Yes. Investors can build a six-unit building and “condominiumize” it—creating separate legal titles for each unit. These units can then be sold individually for $700,000 to $1,000,000 to families who cannot afford a traditional townhouse.
6. Should young investors build garden suites to grow their equity?
According to Andy, younger “equity builders” are usually better off buying existing, tenanted duplexes in secondary markets to accumulate wealth, rather than taking on the high capital costs and risks of new construction.
7. Who benefits the most from adding a garden suite in 2026?
“Cashflow seekers”—typically investors in their 50s and 60s who already have significant equity in their properties. They can invest approximately $300,000 to build a garden suite that yields $3,000 a month in steady rental incom.
8. What is CMHC MLI Select financing, and is it hard to get?
MLI Select offers highly favourable commercial financing with amortizations up to 45 or 50 years. However, CMHC is increasingly favouring new construction over conversions, and making it much harder to qualify unless strict accessibility and energy efficiency targets are met.
9. Do you need to deal with the city to build a multiplex or garden suite?
No. Investors can hire architectural design firms like Suite Additions to handle all the design, permitting, and municipal bureaucracy. They navigate the red tape and hand you a permit ready for a Tarion builder.
10. How much capital is required to build a tear-down multiplex in Toronto?
For a project that involves tearing down an old property and building a new multiplex with a garden suite, investors should expect capital requirements to range between $800,000 and $1.5 million.
🎧Listen to the full episode here
Thinking about your next move as a real estate investor?
Book a free strategy call with the iWIN team. Apply here.
Connect with Andy
Andy Tran is the founder of Suite Additions, an architectural design firm specializing in missing middle housing across Ontario.
Website: suiteadditions.com — including the free Ontario Missing Middle Toolkit
YouTube: suiteadditions
To Listen:
Audible: https://www.audible.ca/pd/B0GSZYL4QT?source_code=ASSGB149080119000H&share_location=pdp
YouTube: https://youtu.be/gZw7xMmxqrI
You’ve Built Wealth. Now It’s Time to Understand It.
You’ve Built Wealth. Now It’s Time to Understand It.
After dozens of consultations, I’ve noticed the same pattern again and again: most investors have built real wealth, but they’re not confident they can retire from it. They’re sitting on $2M–$5M in property but feel cash-flow poor. They’re paying more tax than they should because everything is held in personal names. They have no liquidity, no insurance strategy, and no clear plan for what happens if something happens to them. And almost every single client tells me the same thing: “I don’t actually know what retirement looks like for us.”
Real estate builds equity, but it doesn’t automatically build freedom. Without a coordinated plan for taxes, income, protection, and exit strategy, investors often end up working harder in retirement than they did in their 30s. That’s why I created the Wealth Freedom Blueprint – a simple, practical guide to help you understand where you stand today, what gaps are costing you money, and how to turn the wealth you’ve built into a life you can actually live.
Download your free Wealth Freedom Blueprint
Final Thoughts
Whether you’re building wealth, protecting it, or preparing to transition it, you deserve a clear, tax-smart strategy that works in real life.
That’s what iWIN Wealth Planning is here for.
This is how we’re creating predictable, stress-free wealth for Canadian families…
so you can enjoy the life you’re building.
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Sponsored by… Me!
This episode isn’t sponsored—except by my wife Cherry and me. Real estate investing is our life. It’s helped us build wealth and achieve peace of mind about retirement and our children’s future.
Till next time—just do it. I believe in you.
Erwin Szeto
W: erwinszeto.com
FB: facebook.com/erwin.szeto
IG: @erwinszeto
Disclaimer
As a committed advocate for transparent and responsible investing, I want to disclose that I am an Advisor to SHARE SFR (Single Family Rental). I hold equity in the company and earn referral commissions from clients I refer.
My endorsement of their model—focusing on positive cash flow and direct ownership—is based on personal experience and belief. Still, every investor should do their own due diligence.
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