🏘️Rental Property Calculator

Understanding Rental Yields in Canada

In major Canadian markets like Toronto and Vancouver, rental yields are often low (2-4%), meaning investors rely heavily on capital appreciation. However, in secondary markets like Edmonton or parts of the Maritimes, cash flow yields can be higher. Use this tool to calculate your 'Cap Rate' (Net Operating Income / Purchase Price) to compare different Canadian cities and ensure your investment meets your yield targets before committing capital.

Statistics Canada – Residential Property Data

Tax Treatment of Canadian Rental Income

Rental income in Canada is taxed as regular income at your marginal rate. However, the Canada Revenue Agency (CRA) allows you to deduct legitimate expenses like mortgage interest, property taxes, insurance, and Capital Cost Allowance (CCA). Be careful with CCA, as it can trigger a 'recapture' tax when you sell. Our calculator helps you estimate your net 'after-tax' cash flow, which is critical for accurate Canadian real estate planning.

CRA – Rental Income Guide

Navigating Residential Tenancy Acts

Landlord-tenant laws in Canada are provincial. For instance, Ontario's 'Standard Lease' and rent control rules can impact your ability to increase revenue. Additionally, vacancy rates reported by CMHC influence how much 'vacancy loss' you should buffer in your projections. This tool includes a vacancy rate field, allowing you to stress-test your investment against the latest CMHC data for your specific Canadian urban area.

CMHC – Rental Market Reports

What is a 'Good' Cap Rate for Canada?

A 'good' Cap Rate depends on the market. In low-risk cities like Toronto, 3-4% is standard. In higher-risk or smaller towns, investors often look for 6-8%. This calculator helps you find your Cap Rate by subtracting all operating expenses (property tax, insurance, repairs) from your gross rental income. It's the most objective way to compare Canadian real estate to other asset classes like GICs or stocks.

How do I calculate the Cash-on-Cash return in Canada?

This is your annual pre-tax cash flow divided by the total cash you invested (down payment + closing costs). In Canada, with high property prices, achieving a positive cash-on-cash return after all expenses and mortgage payments can be challenging. Our tool identifies this figure clearly, helping you decide if the leverage from a Canadian mortgage is working in your favor or against you.

Are short-term rentals (Airbnb) more profitable in Canada?

While gross revenue is higher, short-term rentals in Canada face higher vacancy risks, management fees, and increasing municipal regulations. This calculator allows you to adjust for 'higher turnover' costs and cleaning fees, helping you compare the net profitability of a long-term lease versus a short-term rental under current Canadian bylaws.

Cap Rate

Cap Rate (Capitalization Rate) is annual NOI divided by purchase price. Shows return if you paid cash. Good: 6%+, Excellent: 8%+.

Cash-on-Cash Return

Annual cash flow return on your cash investment (down payment + closing costs). Accounts for leverage. Good: 8%+, Excellent: 12%+.

1% Rule

A quick rule: monthly rent should be at least 1% of purchase price. If a property costs $300,000, it should rent for $3,000+/month.

DSCR

Debt Service Coverage Ratio shows how much NOI covers mortgage payments. Below 1.0 means negative cash flow. Lenders typically require 1.25+.

NOI

Net Operating Income is income after all operating expenses, but BEFORE mortgage payments. It's the standard metric for valuing commercial properties.