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Rental Property ROI Calculator Canada
Most Canadian rentals lose money monthly and make it back in equity. Model the full hold — cash flow, paydown, appreciation, and the IRR that ties it together.
Educational calculators — always consult a licensed professional before making financial decisions.
The agreed acquisition price.
Investment properties typically need 20%+ down.
Investment rates run above owner-occupied rates.
Gross rent across all units.
Tax, insurance, maintenance, management, repairs. Exclude the mortgage.
Parking, laundry, storage. Enter 0 if none.
Legal, title, inspection, lender fees.
One-time work to make it rent-ready.
~5% is a common baseline.
Use your local market trend.
How fast rents rise in this market.
How fast costs rise.
~4.5% is typical in this market.
25-year terms are typical here.
Longer holds usually improve returns.
Total Profit — 10 Year Hold
+$138,721
Cash flow + sale proceeds − $153,000 invested
Screeners
GRM
19.3
Price ÷ annual rent
1% rule
0.43%
✗ Below 1%
Year-1 NOI
$19,920
After vacancy & expenses
Debt service
$38,319
Annual mortgage
Year-by-Year Pro-Forma
| Yr | Cash flow | Cumulative | Value | Equity |
|---|---|---|---|---|
| 1 | -$18,399 | -$18,399 | $669,500 | $159,468 |
| 2 | -$17,741 | -$36,141 | $689,585 | $190,083 |
| 3 | -$17,063 | -$53,203 | $710,273 | $221,895 |
| 4 | -$16,362 | -$69,565 | $731,581 | $254,954 |
| 5 | -$15,639 | -$85,204 | $753,528 | $289,316 |
| 6 | -$14,892 | -$100,096 | $776,134 | $325,037 |
| 7 | -$14,121 | -$114,217 | $799,418 | $362,175 |
| 8 | -$13,326 | -$127,543 | $823,401 | $400,794 |
| 9 | -$12,505 | -$140,047 | $848,103 | $440,957 |
| 10 | -$11,657 | -$151,704 | $873,546 | $482,734 |
Equity = property value − remaining loan balance. Cash flow reflects rent growth and expense inflation compounding each year.
Where the Return Comes From
Pre-tax projection. Excludes income tax and depreciation. Growth assumptions compound — small changes move the result a lot, so test a conservative case too. Estimate only; consult a licensed professional.
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Modelling a Canadian rental honestly
Canadian rental investing rarely works on cash flow alone. With national multifamily cap rates near 4.4% and Toronto/Vancouver closer to 3.5–4.5%, a 20%-down investment mortgage usually produces a monthly deficit. The return, when it comes, arrives through appreciation and mortgage paydown — which means a month-one snapshot is close to useless. A multi-year pro-forma is the only way to see it.
This model runs each year forward: rent grows, expenses inflate separately, the loan amortises, the property compounds in value, and at the end it nets out the sale (value minus selling costs, roughly 5% in Canada, minus the remaining balance). The IRR turns that whole series into one annualised number — the fair way to weigh a cash-flow-negative Toronto condo against a cash-flowing Edmonton duplex.
Two Canadian specifics worth remembering: the figures here are pre-tax, and CCA (capital cost allowance) can shelter rental income but cannot create or increase a rental loss. On sale, capital gains apply at the 50% inclusion rate, plus recapture of any CCA claimed — see the capital gains calculator. For financing, check your DSCR.
How it works
Enter the purchase
Price, 20%+ down payment, rate, amortization, closing costs, rehab.
Add income and expenses
Rent, other income, vacancy, and annual operating costs.
Set growth and hold
Appreciation, rent growth, expense inflation, ~5% selling costs, hold period.
Where Canadian rental returns actually come from
| Source of return | Typical contribution |
|---|---|
| Monthly cash flow | Often negative in Toronto/Vancouver |
| Mortgage paydown | Steady equity build every payment |
| Appreciation | Historically the dominant driver |
| Net sale proceeds | Value − ~5% selling costs − loan balance |
Pre-tax. On sale, capital gains apply at the 50% inclusion rate, plus recapture of any CCA claimed.
Frequently asked questions
What is an IRR and why does it matter more than cash flow?+
Internal rate of return (IRR) is the annualized return across the entire life of the investment — every year of cash flow plus the proceeds when you sell — accounting for the fact that money received sooner is worth more than money received later. Cash flow alone tells you what the property pays you each month; IRR tells you what the whole investment earned per year. A property with weak cash flow but strong appreciation can have a far better IRR than one with the opposite profile.
What does the pro-forma table show?+
It projects the investment year by year: gross rent growing at your rent-growth rate, operating expenses rising with inflation, the resulting cash flow, cumulative cash flow, the property's appreciating value, and your equity (value minus remaining loan balance). This is where the compounding shows up — a deal that is break-even in year one often cash-flows meaningfully by year five if rents outpace expenses.
How accurate are these projections?+
They're only as good as the assumptions. Appreciation and rent growth compound, so small changes produce large differences over a 10- to 30-year hold — a one-point change in appreciation can swing total profit substantially. Treat the output as a model, not a forecast: run a conservative case alongside your base case, and be especially careful with the appreciation input, which is both the largest and least predictable component of total return.
Why does the calculator exclude income tax?+
This is a pre-tax projection. Tax treatment varies enormously by investor — your marginal rate, depreciation, how losses can be offset, and the tax on sale all depend on personal circumstances and jurisdiction. Modeling it generically would create false precision, so we show pre-tax figures and cover tax separately in dedicated depreciation and capital-gains tools.
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.