Cap Rate Calculator Canada
Solve for cap rate, property value or NOI. Build NOI from rent and expenses if you need to, then see how your number compares with CBRE market ranges.
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Cap Rate Analysis
Cap Rate Inputs
5.00%
$100,000
5.00%
$2,000,000
Your 5.00% sits inside Toronto Multifamily's 3.85–5.15% band.
Source: CBRE Canadian Cap Rates & Investment Insights Q2 2026 (published July 21, 2026)
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What is a cap rate?
A cap rate (capitalization rate) is the annual net operating income of a property divided by its value. It is the return the property would earn if you bought it with cash, before any mortgage.
The formula is cap rate = NOI ÷ property value. Because mortgage payments are not part of NOI, two buildings can be compared on the same footing even when one has a large mortgage and the other has none.
How to Use the Cap Rate Calculator
Pick what you want to solve for, enter the other two numbers, and read the result and the market comparison.
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Choose what to solve
Select cap rate, property value or NOI. The calculator hides the field it is solving for.
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Enter your numbers
Type in NOI directly, or tick the box to build it from rent, vacancy and operating expenses.
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Compare to the market
Pick a city and property type to see whether your cap rate sits below, inside or above the CBRE band.
Worked example
A building is priced at the value below and earns the NOI below. Dividing one by the other gives the cap rate.
| Property value | $2,000,000 |
|---|---|
| Net operating income (NOI) | $100,000 |
| Formula | NOI ÷ property value |
| Cap rate | 5.00% |
The same two numbers work backwards: value = NOI ÷ cap rate, and NOI = value × cap rate.
What is in NOI, and what is not
NOI measures what the property earns before any financing or tax decisions the owner makes.
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Included in NOI
Rent and other property income such as parking, laundry and storage, less vacancy and credit loss, less operating expenses: property tax, insurance, repairs and maintenance, management, and utilities the owner pays.
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Not included in NOI
Mortgage principal and interest, depreciation, capital expenditures such as a new roof, and the owner's income tax. Leaving debt out is what lets you compare two buildings regardless of how each is financed.
What is a good cap rate in Canada?
There is no single good cap rate. It depends on the city, the property type and how risky the income is. A lower cap rate usually means buyers are paying more for each dollar of income, often because the market is seen as safer or faster growing. A higher cap rate means more income per dollar of price, usually with more risk, such as weaker location, shorter leases or older buildings.
Use the market and property type selectors in the calculator to see the CBRE band for your city. The national averages are below.
CBRE national cap rate averages
National average
National average
National average
National average
Cap rate vs cash-on-cash return, ROI and DSCR
Cap rate ignores financing. Cash-on-cash return measures the cash you actually put in against the cash flow you keep after the mortgage. ROI usually adds appreciation and principal paydown on top. DSCR compares NOI to the mortgage payment to show whether a lender will fund the loan.
Cap rate is a yield on price, so it is also what people mean by "yield" when they compare buildings. Use it to screen, then test the deal with cash flow and coverage.
How lenders use cap rates
For income property, appraisers estimate value as NOI ÷ cap rate. That appraised value drives the loan-to-value ratio, so a small change in the cap rate an appraiser uses can move the maximum loan. Lenders then check that NOI covers the mortgage payment.
If you are sizing a loan, run the numbers on the commercial mortgage calculator or, for multi-unit rentals, the CMHC MLI max loan calculator.
Related Tools & Resources
next steps
- Property Cash Flow Calculator
Cash flow, cash-on-cash and GRM for a rental
- Real Estate Proforma Calculator
Build a Year-1 statement and export a PDF
- Canadian DSCR Calculator
Check whether NOI covers the mortgage
- Commercial Mortgage Calculator
Payment, DSCR and LTV for commercial property
- CMHC MLI Max Loan
Multi-unit CMHC insured financing
- Investor Resources
Free guides and tools for real estate investors
Cap Rate Calculator FAQ
Common questions about calculating and using cap rates.
Cap Rate Basics
Using Cap Rates
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