Rental Property ROI
Calculator — Canada

Six essential return metrics in one place: Cap Rate, Cash-on-Cash Return, Gross & Net Yield, NOI, and DSCR — with Canadian mortgage math, investment property rules, a 5-year projection, and deal grading benchmarked against Canadian market standards.

6 Return Metrics
DSCR Lender Gauge
5-Year Projection
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Rental ROI Analysis

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Rental Property ROI Analyzer
Canadian-specific rules built in: investment properties require 20% minimum down, semi-annual compounding mortgage math, and rental income is taxable. DSCR benchmarks reflect Canadian lender thresholds: 1.10–1.25× for CMHC multi-unit, 1.25–1.40× for conventional lenders.
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20.0% — meets minimum for investment property
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LTT + legal + title. Run the LTT calculator for your province.
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Investment property rates typically 0.25–0.50% above owner-occupied. Stress test at rate + 2% or 5.25%.
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Canadian average: 2–5%. Use 5–8% for conservative planning.
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Parking, laundry, storage locker.
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ON guideline: ~2–3%. BC: similar. AB: no rent control.
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Landlord / rental property insurance. Not tenant's renter's insurance.
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Leave $0 for non-condo properties.
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% of monthly rent. Typical: 8–12%. Enter 0 if self-managed.
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% of monthly rent as reserve. Recommended: 5–10%.
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If you pay heat/water. Leave $0 if tenant pays all.
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Canadian long-run avg ~4–5% nominal. Adjust to your market.
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Annual increase in property tax, insurance, maintenance.
Property ROI Analysis
Calculating
Cap Rate ?
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NOI / purchase price
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Cash-on-Cash ?
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annual CF / cash in
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Gross Yield ?
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gross rent / price
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Net Yield ?
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net CF / price
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NOI / Month ?
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before debt service
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Monthly Cashflow ?
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after mortgage
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DSCR — Debt Service Coverage Ratio
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NOI ÷ Annual Debt Service
0×1.0 (break-even)1.25 (lender min)2.0+
Below 1.0 — negative cashflow
1.0–1.25 — tight, lender concern
1.25+ — lender qualifying threshold
Monthly Cashflow Waterfall
Your Metrics vs. Canadian Benchmarks
5-Year Projection
Year Gross Rent NOI Cashflow Equity Home Value Total Return
Total Return = cumulative cashflow + equity build (principal paydown) + appreciation gain. Excludes capital gains tax on non-primary properties. Includes closing costs in year 1 equity calculation.
Canadian Investment Property Notes
Projections are estimates only. Rental income is fully taxable in Canada. Capital Cost Allowance (CCA) can defer tax but is recaptured on sale. Consult a licensed mortgage broker, accountant, and lawyer before purchasing investment property. DSCR thresholds reflect typical Canadian lender requirements and may vary.
Understanding Rental Property Returns in Canada

Canadian real estate investors use six core metrics to evaluate rental properties. No single number tells the full story — a strong cap rate with poor cashflow, or great cashflow with a low DSCR, both signal risk in different ways. The best deals score well across multiple metrics simultaneously.

Canadian context: Investment properties require a minimum 20% down payment — CMHC mortgage default insurance is not available for non-owner-occupied properties. Lenders also count only 50% of gross rental income toward your TDS ratio when qualifying for mortgages, which affects your ability to scale a portfolio. Rental income is fully taxable as business income in Canada, though you can claim deductions for mortgage interest, property taxes, insurance, maintenance, and management fees.

Cap Rate Benchmarks
Canadian residential cap rates: Toronto/Vancouver 3–4%, mid-markets (Hamilton, Ottawa, Calgary) 4–6%, smaller cities 5–8%. Lower cap rate = lower risk and premium location. Higher cap rate = more return, more risk or less desirable area. Do not cross 4%+ to 8%+ without understanding the reason.
DSCR Lender Thresholds
CMHC-insured multi-unit: 1.10–1.25×. Conventional Canadian lenders (1–4 units): 1.20–1.30×. Commercial / 5+ units: 1.25–1.40×. A DSCR below 1.0 means the property doesn't cover its own debt — you're subsidizing it from other income. Most lenders won't approve without 1.20+ minimum.
CCA & Tax Strategy
Capital Cost Allowance (CCA) lets you deduct a portion of the building's value each year, reducing taxable rental income. However, CCA is fully recaptured as income when you sell. It's a deferral, not elimination. The land portion of your purchase price is not eligible for CCA. Work with a real estate accountant.
The 50% Qualifying Rule
When applying for your next mortgage, most Canadian A-lenders count only 50% of your gross rental income toward your TDS ratio. This limits how quickly you can scale. B-lenders and credit unions may count more. Factor this into your portfolio growth plan — buying property #2 and #3 is harder than #1.
Free Investment Property Analysis
Tell us about your goals — Top Mortgages Inc will identify properties that hit your target metrics.

Rental Property ROI Calculator: the quick answer

A good rental property in Canada typically shows a positive cash flow, a cap rate that beats the mortgage rate and a debt service coverage ratio (DSCR) above 1.1 to 1.25. Enter the price, rent, expenses and financing to see your numbers.

How this calculator works

Net operating income (NOI) is rent minus operating expenses (not including the mortgage). Cap rate is NOI divided by the price. Cash-on-cash return is annual cash flow after the mortgage divided by the cash you invested. DSCR is NOI divided by annual mortgage payments, and lenders often want 1.1 or more.

Reviewed November 2026 by the mortgage team at Top Mortgages Inc. Figures are estimates for general information. They are not a quote, an approval or financial advice, and lenders set their own final terms.

Quick answers

What is a good cap rate for a rental property in Canada?

It varies by city and property type. Many investors look for a cap rate above their mortgage rate; 4% to 6% is common in major cities.

What is cash-on-cash return?

The annual pre-tax cash flow divided by the total cash you put in (down payment, closing costs and renovations).

What does DSCR mean for rental properties?

Debt service coverage ratio is net operating income divided by mortgage payments. Lenders usually want at least 1.1 to 1.25.

How much down payment do I need for a rental?

Typically 20% for a one-to-two-unit rental, or 20% to 35% for larger or non-owner-occupied properties, depending on the lender.

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