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Cash-on-Cash Return Calculator Canada
With a 20% minimum down payment and high prices, many Canadian rentals are negative cash flow. See exactly what your invested cash earns before you make an offer.
Educational calculators — always consult a licensed professional before making financial decisions.
The all-in acquisition price.
Investment properties typically need 20%+ down.
Investment rates run above owner-occupied rates.
Gross rent across all units, before expenses.
Legal, title, inspection, lender, and transfer fees.
One-time work to make the unit rent-ready.
Tax, insurance, maintenance, management, repairs. Exclude mortgage.
Share of the year empty. ~5% is a common baseline.
25-year terms are typical in this market.
Cash-on-Cash Return
-12.0%
-$18,399/yr on $153,000 invested
Cash Invested
Pre-tax figure. Excludes income tax, appreciation, and principal paydown — cash-on-cash measures only the cash return in year one. Estimate only; consult a licensed professional.
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Cash-on-cash return for Canadian rentals
Cash-on-cash return is your annual pre-tax cash flow divided by the cash you put into the deal — down payment, closing costs, and any upfront repairs. In Canada, investment (non-owner-occupied) properties require a minimum 20% down payment, and CMHC insurance isn't available for pure investment purchases, so your invested cash is substantial from the start.
Because prices in Toronto and Vancouver have outrun rents, a large share of financed rentals show negative cash-on-cash returns in the early years — investors rely on appreciation and mortgage paydown instead. That can be a legitimate strategy, but you should quantify the monthly shortfall first. Cap rate tells you about the property; cash-on-cash tells you about your financed position. For the complete picture, use the rental property calculator or the cap rate calculator.
How it works
Enter price and financing
Input price, 20%+ down payment, rate, and amortization.
Add income and costs
Enter rent, operating expenses, closing costs, and rehab.
Read your return
Get monthly cash flow and cash-on-cash return.
Why Canadian cash-on-cash returns run low
| Factor | Effect on cash-on-cash |
|---|---|
| 20% minimum down | Large cash invested lowers the ratio |
| High price-to-rent | Rent covers less of the mortgage |
| No CMHC for investment | No low-down, insured option |
| Appreciation focus | Return comes from equity, not cash flow |
Many Toronto/Vancouver rentals are cash-flow negative on day one. Cash-on-cash quantifies the monthly shortfall.
Frequently asked questions
What is a good cash-on-cash return?+
For residential rentals, most investors target a cash-on-cash return of 8–12%. Below about 8%, a rental often underperforms simpler passive investments once you account for the effort and risk. Returns above 12% are excellent but deserve a second look to confirm the rent and expense assumptions are realistic. Cash-on-cash is a year-one, pre-tax measure — pair it with total return, which also captures appreciation and principal paydown.
How is cash-on-cash return calculated?+
Cash-on-cash return = annual pre-tax cash flow ÷ total cash invested × 100. Annual pre-tax cash flow is your net operating income (rent after vacancy and operating expenses) minus annual mortgage payments. Total cash invested is your down payment plus closing costs plus any upfront rehab. It answers a simple question: for every dollar of your own cash in the deal, how many cents come back each year?
How is cash-on-cash return different from cap rate?+
Cap rate ignores financing — it divides net operating income by the full purchase price, as if you paid all cash. Cash-on-cash return includes your specific mortgage and only counts the cash you actually invested. Two buyers of the same property can have identical cap rates but very different cash-on-cash returns depending on their loan terms and down payment. Use cap rate to compare properties, and cash-on-cash to evaluate your own financed position.
Does cash-on-cash return include appreciation?+
No. Cash-on-cash return measures only the cash flow you receive in a year relative to your invested cash. It deliberately excludes appreciation, mortgage principal paydown, and tax benefits. A property with a modest cash-on-cash return can still deliver a strong total return if it appreciates well, which is why appreciation-heavy markets often show lower cash-on-cash figures.
Why are cash-on-cash returns often low in Canada?+
High purchase prices relative to rents in cities like Toronto and Vancouver, combined with the 20% minimum down payment required on investment properties, compress cash-on-cash returns and frequently produce negative early cash flow. Many Canadian investors accept this in exchange for long-term appreciation and mortgage paydown.
Run your next deal through the numbers.
Back to the calculator ↑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.