$800k property
3.52% cap rate
$3,000 rent, 5% vacancy, and $500 monthly operating expenses produce about $28,200 annual NOI.
/
Mortgage calculator
Cap rate compares rental property net operating income with purchase price before financing. Use it to screen Canadian rentals quickly, then check cash flow, cash-on-cash return, and DSCR before making an offer.
Scope
Canada mortgage planning estimate
Use this for
Calculator engine, worked examples and source-backed planning workflow
Not a substitute for
Cap rate excludes financing, income tax, capital gains, appreciation, and sale costs.
For a Canadian rental property, cap rate is annual net operating income divided by purchase price. A $800,000 property with $3,000 monthly rent, 5% vacancy, and $500 monthly operating expenses has about $28,200 annual NOI and a 3.52% cap rate before financing.
Verified: 2026-07-29 · Author: usecos.app Research & Engineering
Use the canonical URL for this page when referencing these facts. Figures are planning estimates and should be checked against the cited official sources and the calculator inputs.
Enter your own numbers here, then use the examples and notes below to check the result.
Compare unleveraged capitalization rates across Canadian urban markets and evaluate mortgage spread arbitrage against current debt rates.
| Region & Asset Class | Typical Cap Rate | NOI per $100k Value | Debt Arbitrage Spread | Institutional Stance |
|---|---|---|---|---|
| GTA / Metro Vancouver CondosHigh liquidity, Low default risk | 3.2% – 4.0%Unleveraged yield | $3,200 – $4,000/yr | Negative (-100 to -180 bps)vs. 5-yr mortgage | Core Capital Preservation Cap rates sit below borrowing rates. Unviable for cash-flow investors at 20% down; functions purely as a long-term urban equity preservation asset. |
| Montreal / Ottawa 4-6 PlexesMedium liquidity, Stable rent roll | 4.8% – 5.6%Unleveraged yield | $4,800 – $5,600/yr | Neutral (±30 bps spread)vs. 5-yr mortgage | Core-Plus / Balanced Growth Yield closely matches commercial borrowing rates. Cash flow is neutral-to-modest, but scale and multi-tenant diversity protect downside vacancy. |
| Calgary / Edmonton Multi-FamilyMedium liquidity, Economic sensitivity | 6.0% – 7.2%Unleveraged yield | $6,000 – $7,200/yr | Positive (+100 to +220 bps)vs. 5-yr mortgage | Value-Add / Income Focus Positive mortgage arbitrage: Property yield cleanly exceeds debt cost, creating strong positive cash-on-cash returns and healthy debt service coverage. |
| Atlantic Canada / Secondary HubsLower liquidity, Slower resale speed | 6.5% – 8.0%Unleveraged yield | $6,500 – $8,000/yr | Strong Positive (+150 to +300 bps)vs. 5-yr mortgage | High-Yield Income Generation Exceptional net yields counterbalanced by smaller tenant pools and longer sales cycles. Requires rigorous building condition audits. |
Cap Rate = Net Operating Income (NOI) ÷ Purchase Price. It measures pure asset productivity as if purchased 100% in cash. Never subtract mortgage interest or principal payments from NOI when calculating Cap Rate.
Realistic Canadian multi-unit operating expenses (taxes, insurance, property management, maintenance reserve, and heat) typically absorb 35% to 50% of gross scheduled rent. Under-budgeting expenses creates artificially high paper cap rates.
| Scenario | Result | Interpretation |
|---|---|---|
| $800k property, $3,000 rent | 3.52% cap rate | $2,350 monthly NOI before debt service. |
| $600k property, $2,800 rent | 4.22% cap rate | Higher income relative to price, but still needs DSCR testing. |
| $400k property, $2,200 rent | 5.07% cap rate | Better screening yield, yet financing can still turn cash flow negative. |
3.52% cap rate
$3,000 rent, 5% vacancy, and $500 monthly operating expenses produce about $28,200 annual NOI.
4.22% cap rate
$2,800 rent and $550 expenses produce about $25,320 annual NOI.
5.07% cap rate
$2,200 rent and $400 expenses produce about $20,280 annual NOI.
Cap rate = annual net operating income / purchase price
Net operating income is effective rent after vacancy minus operating expenses. Cap rate excludes mortgage payments, income tax, and appreciation.
| Metric | Formula | Use when |
|---|---|---|
| Cap rate | NOI / price | Compare properties before financing. |
| Cash flow | NOI - mortgage payment | Check whether rent covers debt service. |
| Cash-on-cash return | annual cash flow / cash invested | Measure return on your down payment and cash outlay. |
| DSCR | NOI / debt service | Estimate how a lender may view the rental income. |
It depends on city, property type, risk, and growth expectations. Higher cap rate is not always better if the property has more vacancy or repair risk.
No. Cap rate uses net operating income before financing. Use cash-on-cash return and DSCR to include financing.
This page uses the shared usecos calculator engine, visible methodology, and the source links below. Verified on 2026-07-29.