Rental Property Calculator Canada: Cash Flow, Cap Rate and ROI (2026)

This calculator answers one question for a specific property: after the mortgage and every running cost, does the rent pay for it, and what does your cash earn? Enter the price, financing and rent, and it returns monthly cash flow, net operating income, cap rate, cash-on-cash return, gross yield, gross rent multiplier, debt service coverage and the rent you would need to break even. It is part of the WealthNorth guide to real estate investing in Canada.

The default rate is the Bank of Canada’s average rate on new uninsured 5-year fixed mortgages (4.49%, July 2026), because a property you won’t live in can’t carry mortgage default insurance and needs at least 20% down. Every other default is an example input to replace with the real numbers for the property.

What each number tells you

Cap rate gets its own guide, with how it varies between markets and what cap rate compression signals: see cap rate explained. Because the cap rate is NOI divided by price, it also runs backwards: NOI divided by a market’s typical cap rate gives a rough income-based value for a property.

Worked example: a $500,000 rental

The inputs below are illustrative assumptions, not market data: a $500,000 property bought with 20% down, a 4.5% five-year fixed rate on a 25-year amortization, $2,500 a month in rent, a 5% vacancy allowance, $5,000 of property tax, $1,500 of landlord insurance, a reserve of 10% of rent for maintenance and capital repairs, $600 of other costs, self-management, and $15,000 of closing costs and initial repairs.

What the results mean:

• Gross yield is 6.0% ($30,000 ÷ $500,000) and the cap rate is 3.68% ($18,400 ÷ $500,000). Vacancy and operating costs take about 39% of the gross rent before the mortgage is paid.
• Cash flow is a shortfall of about $681 a month. The owner covers it from other income.
• Cash-on-cash return is negative: the shortfall is 7.1% of the $115,000 invested ($100,000 down plus $15,000 of costs).
• Debt service coverage is 0.69: NOI covers that fraction of the mortgage payments.
• Break-even rent is about $3,301 a month. At that rent, rent after vacancy, reserve and fixed costs exactly covers the mortgage.
• Principal paydown in year one is about $8,914 (the payment’s principal share over the first 12 months). It builds equity but doesn’t reach your bank account until you sell or refinance.

A property like this only makes money if appreciation and principal paydown outweigh the cash you feed it. Whether that trade is worth making is the subject of whether a rental property is worth it, and the markets and structures where rent does cover costs are covered in positive cash flow rental property.

Stress-test the same property

A deal that works only on base-case inputs has no room for a bad year. Rerun the example with a 10% vacancy allowance, a 12% reserve and a 6.5% rate at renewal:

The stress-case payment uses the same $400,000 balance, which overstates it slightly, since five years of paydown would have shrunk the balance by renewal. The point stands: a two-point rate rise on this property adds several thousand dollars a year to the shortfall, which is why lenders qualify borrowers at a higher rate than the contract rate. How lenders qualify a rental purchase is covered in the guide to rental property mortgages.

Budgeting the expense lines

The calculator is only as good as its inputs. The lines most often understated:

• Vacancy. Even a single month between tenants is about 8% of a year’s rent. Local apartment vacancy rates come from CMHC’s annual Rental Market Survey; turnover in the unit you own can be higher than the market average.
• Maintenance and capital reserve. Budget for the big items on a schedule (roof, furnace, water heater, appliances, flooring), not only for small repairs. Older buildings need a larger reserve.
• Property management. Pricing management into the model, even if you plan to self-manage, shows whether the deal only works because your time is free. The trade-offs are covered in the property management guide.
• Condo or strata fees. They rise over time and special assessments come on top; see condo investment analysis.
• Insurance. A homeowner policy may not cover a property you rent out, so price a landlord (rental dwelling) policy for the property before buying.

Quick screens: the 1% rule, the 50% rule and GRM

Investors use three shortcuts to discard listings before building a full income statement:

• 1% rule: monthly rent of at least 1% of the price. That is a 12% gross yield, which most Canadian city properties don’t approach. It is more useful as a filter than a target.
• 50% rule: operating costs (excluding the mortgage) run about half of gross rent. The example above came in under that, at about 39%; older buildings, condo fees or paid management push costs higher.
• Gross rent multiplier: price divided by annual rent. A lower GRM means more rent per dollar of price; the example’s GRM is 16.7.

None of the three include financing, vacancy or the reserve, so a property that passes still needs the full calculation.

What the calculator leaves out

• Income tax. Rental profit is taxed at your marginal rate after deductible expenses, and only the interest part of each mortgage payment is deductible. See how rental income is taxed and when mortgage interest is tax deductible. Depreciation claims are covered in the guide to capital cost allowance on rental property.
• Tax on sale. A rental doesn’t qualify for the principal residence exemption, so the gain on sale is taxed as a capital gain; see capital gains on rental property.
• Closing costs by province. Land transfer tax varies widely; the land transfer tax calculator gives the figure for a specific price and province.

For the step-by-step process of finding, financing and renting out a first property, see how to buy your first rental property.