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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Frequently Asked 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.