Landlord Tools
Cap Rate Calculator Canada — Net Operating Income & ROI
Calculate the cap rate and net operating income (NOI) for any Canadian rental property. Compare investment properties using the same unlevered return metric.
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Common questions
What is a good cap rate for Canadian rental property?
Cap rates in major Canadian cities typically range from 3–6%. Toronto and Vancouver often see cap rates of 3–4% due to high property values, while smaller cities like Edmonton or Winnipeg may offer 5–7%. A higher cap rate means more income relative to price, but may also reflect higher risk or lower appreciation potential.
What is the difference between cap rate and cash-on-cash return?
Cap rate measures unlevered return — it ignores financing. It's calculated as NOI divided by purchase price. Cash-on-cash return measures levered return — it accounts for your mortgage payment and only considers the cash you personally invested. Both metrics are useful and measure different things.
What expenses are included in the cap rate calculation?
Cap rate uses Net Operating Income (NOI), which is effective gross income minus all operating expenses: property tax, insurance, maintenance, and management fees. Mortgage payments and capital expenditures are NOT included in the standard cap rate calculation.
What is a Gross Rent Multiplier (GRM)?
The Gross Rent Multiplier is purchase price divided by annual gross rent. A GRM under 15 is often considered reasonable, while over 20 suggests the property is expensive relative to rents. It's a quick screening metric, not a substitute for full cash flow analysis.