The short answer: to underwrite a duplex, start from the rent the tenants actually pay, take off a vacancy allowance, subtract every operating cost (tax, insurance, maintenance, management, any utilities you pay), and only then subtract the mortgage. On a typical $569,000 Kamloops duplex renting for $3,050 a month, that turns a 6.4% headline return into a 3.7% cap rate and about −$700 a month of cash flow at a 4.22% mortgage rate. The leases, the permit history and the utilities clause usually make it worse.
A listing tells you the price and the rent. Underwriting is everything in between. This post works through one example from listing sheet to monthly cash flow, then covers the three things a listing almost never tells you.
The property below is a worked example, built to look like a typical older Kamloops duplex. It isn't a real listing, and the rents and costs are assumptions you should replace with your own.
The example: what the listing shows
A 1974 side-by-side duplex, about 1,800 square feet in total. A three-bedroom unit and a two-bedroom unit, both tenanted. The listing says "positive cash flow" and shows this rent roll:
| Monthly | Yearly | |
|---|---|---|
| Upper unit | $1,700 | $20,400 |
| Lower unit | $1,350 | $16,200 |
| Gross rent | $3,050 | $36,600 |
At a $569,000 asking price, $36,600 is a 6.4% gross return. That's the number a listing leads with. Here's what happens when you keep going.
Step 1: build the real income line
Gross rent isn't what you collect. Tenants move, and units sit empty while you clean, repair and re-let them. Take a vacancy allowance off the top.
5% is a reasonable starting point in Kamloops, where CMHC's October 2025 survey put purpose-built rental vacancy at 1.2%. Some investors use 8–10% on older buildings. At 5%:
- $36,600 − $1,830 = $34,770 a year of effective income ($2,898 a month)
Step 2: subtract every operating cost
This is where most listings mislead, usually by leaving things out rather than by saying anything false.
| Cost | Monthly | Basis |
|---|---|---|
| Property tax | $310 | Estimate. The City of Kamloops's 2026 municipal rate is 4.65 per $1,000 of assessed value, about $220 a month here, before school and regional levies |
| Insurance | $125 | Assumed landlord policy; get real quotes |
| Maintenance and capital reserve | $475 | The 1%-of-value rule: $5,690 a year |
| Property management | $244 | 8% of rent. Include it even if you plan to self-manage |
| Utilities | $0 | The listing says tenants pay them (see below) |
| Total | $1,154 |
Net operating income (NOI) is effective income minus operating costs:
- $2,898 − $1,154 = $1,744 a month, or about $20,900 a year
The cap rate is NOI divided by price: $20,900 ÷ $569,000 = 3.7%. Not the 6.4% the listing implied.
Step 3: add the mortgage
A property you won't live in needs at least 20% down, and the mortgage is uninsured. The Bank of Canada's average rate on new uninsured 5-year fixed mortgages was 4.22% in March 2026.
- Down payment: $113,800. Mortgage: $455,200, over 25 years.
- Monthly payment at 4.22%: about $2,449
- Cash flow: $1,744 − $2,449 = about −$705 a month, or roughly −$8,500 a year
Negative cash flow doesn't automatically make a deal bad. Some investors accept it in exchange for mortgage paydown and long-term appreciation. But $8,500 a year out of pocket is a real cost, and it should be a decision, not a surprise.
For this duplex to break even on cash flow at 20% down, with the same rents and costs, the price would have to be about $405,000.
Three things a listing won't tell you
The numbers above take the listing at its word. Three checks often move them further.
1. How old the roof and systems really are
Ask the City for the permit history on the address. If the last roofing permit is from 2001, the roof is 25 years old, and a flat-roof section over one unit ages faster in Interior summers. Suppose a roofer quotes $23,000. At $5,690 a year, the 1% maintenance reserve takes four years to cover it. That's not a reason to walk away, but it is a reason to negotiate the price or ask for a holdback.
2. What the sitting tenants actually pay, and since when
Suppose the lower unit's tenant has been there six years on a month-to-month tenancy at $1,350. The market rent for a comparable two-bedroom is closer to $1,650 (CMHC's October 2025 Kamloops average was $1,679). In BC, a sitting tenant's rent can only rise by the annual cap: 2.3% for 2026 and 2.2% for 2027. Closing a $300 gap at that pace takes about nine years, even if market rents stand still. In practice it closes only when the tenancy ends.
That's why the underwrite uses current rent. If you'd used market rent ($1,700 + $1,650 = $3,350), the deal would look about $300 a month better than it is. You buy the lease that exists, not the one you'd like.
3. Who pays the utilities
Listings often say "tenants pay utilities". Read the leases anyway. If the lower unit's lease includes heat, and that unit has electric baseboard heating, you're paying a winter heating bill. Averaged over the year, call it $150 a month. That takes the example from −$705 to about −$855 a month.
The underwriting checklist
- Get the leases, not just the rent roll. Note each rent, start date and what's included.
- Pull the permit history before you book a showing.
- Use current rents in the main model. Put market-rent upside in a separate, clearly labelled scenario.
- Take a vacancy allowance of at least 5%.
- List every operating cost, including management even if you'll self-manage.
- Work out NOI and the cap rate before you think about the mortgage.
- Add the mortgage at today's rate, then check it again at the stress-test rate (rate plus 2%).
- Work out the break-even price. If it's far below the asking price, you know how much the deal depends on appreciation.
Two related checks: whether a legal suite would earn more on its cost than buying a second property, and how cap rate and cash-on-cash return answer different questions.
Common questions
How do you underwrite a duplex?
Start with the rent the tenants actually pay, subtract a vacancy allowance, subtract every operating cost to get net operating income, divide by the price for the cap rate, then subtract the mortgage payment to get cash flow. Check the leases, permit history and utilities before you trust any of it.
What is a good cap rate for a duplex in Kamloops?
There's no published cap-rate data for Kamloops. In this worked example, a $569,000 duplex renting for $3,050 a month works out to about 3.7% once costs are included. That's below the 4.22% mortgage rate, which is why it doesn't cash flow at 20% down.
Can a duplex in Kamloops cash flow?
At early-2026 prices and rates, a typical duplex bought with 20% down usually doesn't. In this example the break-even price was about $405,000 against a $569,000 asking price. A larger down payment, a lower price or living in one unit changes the picture.
Sources: Bank of Canada — interest rates for new lending by chartered banks · CMHC — Rental Market Survey data tables · Province of BC — rent increases · City of Kamloops — property taxes
Corrected 6 October 2026. The first version of this post used a 5.29% mortgage rate. A rental bought with 20% down isn't insured, and the Bank of Canada's average for new uninsured 5-year fixed mortgages was 4.22% in March 2026, so the payment and cash flow are recalculated at that rate. The example still loses money every month.
Written by Jagatjeet, as part of a public BC Interior real estate learning journey. Published 8 May 2026. Corrected 6 October 2026. Updated 7 October 2026. Jagatjeet is working toward a BC real estate licence and is not a licensed realtor. Nothing here is financial, legal or tax advice.