What this calculator answers
A rental cash flows when the rent you actually collect covers every cost of owning it: the mortgage, property tax, insurance, repairs, vacancy and any management or condo fees. Many deals look good until vacancy and maintenance are counted.
This calculator works through the first year line by line and shows the measures lenders and investors use: net operating income, cap rate, cash-on-cash return, debt coverage and the rent you need to break even.
How the calculation works
- Effective income is gross rent plus other income, minus the vacancy allowance.
- Net operating income (NOI) is effective income minus operating costs: property tax, insurance, condo fees, utilities, maintenance (a share of rent), management (a share of rent collected) and other costs. It does not include the mortgage.
- Cap rate is NOI divided by the price. It compares properties as if bought with cash.
- Cash flow is NOI minus the year's mortgage payments. Cash-on-cash return is cash flow divided by the cash you put in (down payment, closing costs and renovations).
- Debt coverage (DSCR) is NOI divided by mortgage payments. Break-even rent is the monthly rent at which cash flow is zero, with vacancy, maintenance and management scaled to that rent.
- The mortgage payment uses Canadian semi-annual compounding, simulated month by month for the principal repaid in year 1.
Assumptions and limits
- The example price, rent, rate and costs are illustrations, not market data or a rate quote.
- Lender policy: rentals you will not live in usually need at least 20% down, and lenders differ in how much of the rent they count when you qualify.
- Regulation: federally regulated lenders apply the stress test to uninsured mortgages, including rentals.
- Vacancy, maintenance and management percentages are assumptions. Use your own estimates.
- Income tax, capital cost allowance, rent increases, price growth and the costs of selling are not modelled.
Common questions
What is a good cap rate?
There is no single answer. Cap rates are usually lower where prices are high relative to rent and higher where they are not. Use it to compare similar properties in the same area, not as a pass or fail test.
Why is my cash flow negative when the rent is higher than the mortgage?
Because the mortgage is only one cost. Property tax, insurance, repairs and vacancy usually add a large share on top. The step-by-step breakdown shows where the rent goes.
Can I buy a rental with 5% down?
Usually not for a property you will not live in. If you live in one unit of a small multi-unit home, lower down payments can be possible. Ask about your specific property.
Will a lender count the rent as income?
Usually some of it, but the method varies. Some lenders add a share of the rent to your income, others subtract it from the property costs. This can change how much you qualify for.
Sources
- OSFI: minimum qualifying rate (rules checked 2026-10-31)
- Interest Act, section 6 (rules checked 2026-10-31)