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Cap Rate Calculator Canada
Canadian cap rates are among the lowest in North America — many Toronto and Vancouver rentals earn just 3–4%. Enter a price and rent to see the capitalization rate and net operating income before you make an offer.
Educational calculators — always consult a licensed professional before making financial decisions.
The all-in acquisition price of the property.
Gross rent before any expenses — check local comps.
Know your costs? Enter them. If not, the 50% rule estimates them.
Share of the year the unit sits empty. ~5% is a common baseline. (Ignored under the 50% rule.)
Property tax + insurance + maintenance + management + repairs. Exclude mortgage. (Used only in 'Enter my expenses' mode.)
Cap Rate
2.6%
NOI $16,800 ÷ price $650,000
Marker shows this property's cap rate against the CA healthy band.
Cap rate excludes mortgage payments and income tax by design. Compare it against similar properties in the same market — not a universal benchmark. Estimate only; consult a licensed professional.
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What a good cap rate looks like in Canada
The capitalization rate is net operating income divided by purchase price — the return a property produces before any mortgage. In Canada it runs low by international standards: the national multifamily average was about 4.4% at the end of 2025. Toronto and Vancouver typically sit at 3.5–4.5%, while Calgary, Edmonton, Ottawa, and Montreal reach 4.5–6%. A cap rate of roughly 4–6% is considered healthy for Canadian residential property.
Because prices have outpaced rents for years, many big-city rentals are cash-flow negative on day one. If the cap rate is below your mortgage rate, you have negative leverage — you're relying on appreciation and mortgage paydown rather than income. That can still be a sound long-term play, but you should know the exact figure going in. Remember cap rate excludes financing; to see your return after a 20%-down investor mortgage, use cash-on-cash return or the full rental property calculator.
How it works
Enter price and rent
Input the purchase price and expected gross monthly rent.
Set operating expenses
Enter annual costs (tax, insurance, condo fees, maintenance) or use the 50% rule.
Read the cap rate
Get NOI and cap rate versus a Canadian healthy band.
Typical cap rate by Canadian market (2025–2026)
| Market | Residential cap rate |
|---|---|
| Vancouver | 3.5–4.5% |
| Toronto | 3.8–4.5% |
| Ottawa / Montreal | 4.5–5.5% |
| Calgary | 4.5–6.5% |
| Edmonton | 5.0–6.5% |
Directional multifamily ranges (LendCity 2026, CBRE Q4 2025 national avg ~4.4%). National figures move quarterly.
Frequently asked questions
What is a good cap rate for a rental property in Canada?+
In high-priced markets like Toronto and Vancouver, cap rates are often just 2–4% because purchase prices are so high relative to rents. In Calgary, Edmonton, Montreal, and smaller cities, cap rates of 4–6% are achievable. A cap rate below your mortgage rate means negative leverage — you're relying on appreciation rather than cash flow.
How is cap rate calculated?+
Cap rate = Net Operating Income ÷ purchase price × 100. NOI is effective gross rent (after vacancy) minus operating expenses such as property tax, insurance, maintenance, condo/strata fees, and management. It excludes your mortgage payment and income tax, so it measures the property's return independent of financing.
Why are Canadian cap rates so low?+
Home prices in major Canadian cities have risen much faster than rents, compressing cap rates. Many Toronto and Vancouver rentals are cash-flow negative on day one, with investors betting on long-term appreciation and mortgage paydown. Running the cap rate before you buy tells you exactly how much current income the property produces.
What is the 50% rule?+
The 50% rule assumes operating expenses (management, maintenance, taxes, insurance, vacancy — but not the mortgage) total roughly half of gross rent. It's a quick screening estimate; replace it with your actual expense figures for a precise cap rate.
Cap Rate Calculator Canada is built and maintained by the RealCostIQ editorial team. Cost ranges and rates are checked against published industry data and contractor quotes, and revised when the underlying figures move. Read our data methodology or more about who builds this. Every calculation runs in your browser — no account, and none of your inputs are stored.
Cost ranges and rates here are checked against contractor quotes and published industry data. If a number still looks off, email Support@RealCostIQ.com and we'll review and fix it.