Cap rate calculator for Canada
Net operating income over price: the one number that lets you compare rental properties to each other, no financing involved. Enter the rent and expenses, set your market's cap rate, and see what the property is actually worth.
Property & income
What you would actually pay, not the assessment
All units combined
Operating expenses (annual)
Of gross rent; 5–10% is typical
0 if self-managed
Condo fees, snow, lawn care
Your market
What similar properties trade at in this market
Cap rate
6.21%
$34,148 NOI on $550,000
Cap rate deliberately ignores financing: it is NOI divided by price, so you can compare properties regardless of how each buyer pays. The implied value inverts it: the price at which this NOI would hit your target cap rate. Useful as a negotiating anchor.
Reading a cap rate like an appraiser
Cap rate answers one question: how much income does this property produce relative to its price? A higher cap rate means more income per dollar invested, which sounds strictly better until you notice that the highest cap rates cluster in markets and buildings with slower appreciation, older systems, or tougher tenants. Investors are not mispricing those properties; they are demanding to be paid more for the risk. That is why the useful comparison is always against similar properties in the same market.
The expense ratio in the ledger is a quick honesty check, but calibrate it to the property. An apartment building where the owner pays utilities and hires management typically runs 35% to 45% of effective gross income; a self-managed house where tenants pay their own utilities can legitimately come in near 20%. What should make you suspicious is a listing pro forma far leaner than comparable properties: it is almost always missing maintenance, management, or both, and the cap rate built on it is fiction. Rebuild the NOI with your own numbers before you trust anyone else's.
Cap rate is the start of the analysis, not the end
Once a property clears your cap rate screen, the next question is whether it survives your actual financing. The rental property calculator takes the same NOI and adds the Canadian mortgage math: cash flow, cash-on-cash return, and year-one ROI with principal paydown.
Frequently asked questions
What is a good cap rate in Canada?+
It depends on the city and property type. Vancouver and Toronto multifamily typically trades around 3.5% to 4.75%, while Calgary, Edmonton, Winnipeg, and Halifax tend to run 4.5% to 5.5%, and smaller markets higher still. Judge a property against recent sales in its own market, not a national average: a 5% cap is expensive in Moncton and a steal in Vancouver.
Does cap rate include the mortgage?+
No, and that is deliberate. Cap rate is net operating income divided by price, with no financing anywhere in the formula, so two buyers with different mortgages can compare the same property on equal terms. To see what the property returns on your actual cash after debt service, use cash-on-cash return instead.
What expenses go into NOI?+
Everything it costs to run the property regardless of financing: property tax, insurance, maintenance, property management, utilities you pay, condo fees, and a vacancy allowance against gross rent. Mortgage payments, income tax, and capital improvements stay out. Leaving management at zero because you self-manage inflates the cap rate; appraisers include it either way.
How do I use the implied value number?+
It is the price at which the property's NOI would equal your target cap rate, so it works as a negotiating anchor. If a building earns $30,000 of NOI and similar buildings trade at a 5% cap, it supports a value of $600,000; a $650,000 asking price means you are paying a premium you should be able to explain, such as a renovation opportunity or below-market rents you can raise.