Rental Yield Calculator

Understanding Rental Yield and Cap Rates in Canada

Rental yield measures the annual return a property generates relative to its value. Gross yield is the simplest calculation—annual rent divided by property value—but it overstates real returns because it ignores expenses. Net yield (also called the capitalization rate or cap rate) subtracts operating expenses such as property tax, insurance, maintenance, vacancy allowance, and property management fees. In Canadian markets, gross yields typically range from 4% to 8%, while net yields fall between 2.5% and 5.5%, depending on the city and property type.

Vacancy rates are a critical factor. CMHC’s 2025 Rental Market Report showed national purpose-built apartment vacancy at roughly 2.2%, though this varies significantly by market. Cities like Vancouver and Toronto have historically tight vacancies under 2%, while some prairie and Atlantic markets see rates above 4%. A conservative investor should budget 3%–5% vacancy regardless of local averages to account for tenant turnover and seasonal gaps.

Approximate Gross Rental Yields by City

Higher gross yields do not always mean better investments. Properties with lower yields in expensive markets may offer stronger long-term capital appreciation, while higher-yield properties in smaller markets can carry greater tenant risk and slower value growth. The best approach is to evaluate net yield alongside appreciation potential, financing costs, and your overall investment time horizon.