Fourplex Conversions vs. New Builds: Why a Fresh Start Wins
When considering a fourplex investment, the choice between converting an existing structure and building new is critical. While conversions may seem cost-effective, they come with significant risks and limitations. Modcity specializes in brand new purpose-built fourplexes, offering modern designs, optimized layouts, and high-quality construction. With only a marginal cost increase of 10%, a new build delivers a higher appraised value, better resale potential, and increased rental income—making it the superior long-term investment.
Numbers don’t lie: Because 90% of new build construction costs are financed, the actual out-of-pocket cost is lower than a conversion/renovation while delivering a vastly superior product in quality, durability, and efficiency. For example, a luxury new fourplex built by Modcity for $1.4M (Large 3-4 bedroom family-friendly luxury units) with 90% financing requires only $140K in upfront capital. In contrast, an $1.1M renovation/conversion demands over $550K in out-of-pocket costs because lenders offer less favorable terms due to the structural risks involved. It is widely known that older foundations and outdated elements add long-term liabilities. Ultimately, a new fourplex requires anywhere from $250K – $500K less out-of-pocket capital while appraising at $500K – $1M higher, with minimal construction risk and a more functional, optimized layout.
Renovation projects are inherently unpredictable, often exceeding budgets and timelines through change orders at the expense of the owner. Old foundations and outdated structures introduce unforeseen challenges, leading to costly delays. Many renovators take longer than nine months to complete a conversion, whereas Modcity delivers a brand-new fourplex within the same timeframe—or faster. As new builds have low construction risk if executed by our team, we can proudly offer a guaranteed fixed cost with no overruns. Our projects are meticulously designed for modern living, ensuring that every square foot is optimized rather than constrained by existing site conditions. This results in superior layouts, higher ceilings, and enhanced energy efficiency—qualities that lenders, appraisers, tenants, and buyers recognize and value at a premium.
The bottom line is clear: Why invest substantial capital into preserving outdated components that increase warranty risks and limit your return? The market demands quality, and stakeholders are no longer willing to accept subpar renovations. A purpose-built fourplex offers superior long-term value, reduced risk, and a more efficient development process.
Key Takeaways:
1. New builds have only a 10% marginal cost increase but significantly higher appraised and resale values.
2. 90% financing on new builds means substantially lower out-of-pocket costs than conversions.
3. Renovations come with unpredictable risks, cost overruns, and outdated structural liabilities.
4. Modcity delivers a brand-new fourplex in nine months or less—often faster than a conversion.
5. Purpose-built fourplexes offer superior layouts, energy efficiency, and structural integrity.
We encourage all investors interested in fourplexes and multiplexes to schedule a site visit with Modcity and another with a conversion/renovation company to witness the difference in quality and execution firsthand.
Contact us to learn more about partnering with Toronto’s leading fourplex development and construction company, with 17 fourplexes currently in progress.