Cap Rate Calculator Ontario
A $650,000 purchase at $2,034 a month is a 2.47% cap after 3% vacancy.
Use in-place rent unless the unit is vacant and you can legally reprice it.
CMHC October 2025 Toronto CMA. Condo vacancy stayed well below purpose-built. Last verified October 1, 2025.
Preloaded with Toronto's combined residential rate. Hamilton, Ottawa, and the 905 sit higher — swap in the number from the tax bill.
Leave at 0 if you self-manage. 8% is a typical third-party fee.
Cap rate
2.47%
Gross yield
3.76%
Expense ratio
32.1%
Cap rate is $16,067 of NOI on a $650,000 price. It does not include mortgage payments, land transfer tax, or closing costs. 2.1% guideline, vacancy decontrol on most post-2018 units.
Cap rate is net operating income divided by the price you pay. It ignores the mortgage, and it ignores Ontario land transfer tax, which is cash you never get back. On a typical Toronto two-bedroom the yield is compressed by the price, not by vacancy.
A $650,000 purchase rented at $2,034 a month, with 3% vacancy, produces $16,068 of NOI — a 2.47% cap rate. Vacancy last verified October 1, 2025.
How the Ontario cap rate is built
Gross rent $24,408, minus $732 of vacancy, minus $7,608 of operating costs, leaves $16,068 of NOI. Divide by $650,000.
- The $2,034 rent default is CMHC's October 2025 average for a purpose-built two-bedroom in the Toronto CMA — sitting tenants, not asking rent on a vacant unit.
- A 3% vacancy assumption is the CMA average. A student-area building is running hotter than Old Toronto.
- Land transfer tax in Toronto is a second, full municipal tax on top of Ontario's. It does not appear in the cap rate and it does smash cash-on-cash.
Vacancy in Toronto CMA
CMHC's 2025 Rental Market Report put the Toronto CMA purpose-built vacancy rate at 3.0% — the first time it has hit 3% since the pandemic. Rental condos stayed tighter at 1.0%. Post-secondary neighbourhoods in Mississauga and Brampton climbed above 4%.
2.1% guideline, vacancy decontrol on most post-2018 units
Ontario's 2026 rent increase guideline is 2.1% for units that are covered. Units first occupied after 15 November 2018 are exempt, and on a covered unit you can still reset the rent to market when the tenant leaves. A cap-rate model that assumes you can grow in-place rent with inflation is only true for the exempt stock.
Ontario cap rate FAQs
What is a typical cap rate in Ontario?
On a $650,000 Toronto CMA two-bedroom rented at $2,034 a month, with 3% vacancy, the cap rate is 2.47%. That is $16,068 of NOI. Change the rent to the amount on the actual rent roll.
How is cap rate calculated in Ontario?
Cap rate is NOI divided by purchase price. In Ontario, NOI starts with the Toronto CMA two-bedroom sitting rent, minus 3% vacancy, property tax, insurance, and maintenance. The mortgage and land transfer tax are not in the number.
Is there rent control in Ontario?
Ontario's 2026 rent increase guideline is 2.1% for units that are covered. Units first occupied after 15 November 2018 are exempt, and on a covered unit you can still reset the rent to market when the tenant leaves. A cap-rate model that assumes you can grow in-place rent with inflation is only true for the exempt stock.
What vacancy rate should I use in Ontario?
CMHC's 2025 Rental Market Report put the Toronto CMA purpose-built vacancy rate at 3.0% — the first time it has hit 3% since the pandemic. Rental condos stayed tighter at 1.0%. Post-secondary neighbourhoods in Mississauga and Brampton climbed above 4%.
Does the Ontario cap rate include land transfer tax?
No. Cap rate is unlevered operating income over price. Ontario land transfer tax or registration fees are cash on closing and belong in cash-on-cash, not here.
Cap rate by city
Cap rate calculators for other provinces
Sources
- CMHC 2025 Rental Market Report (Toronto CMA vacancy 3.0%, 2-bed rent $2,034)Ontario, last verified October 1, 2025
- Ontario: 2026 rent increase guideline is 2.1%Ontario, last verified October 1, 2025
This calculator is an estimate for planning. Cap rate turns on the rent you can legally collect, empty months, and the tax bill — none of which a national average replaces. Confirm against the rent roll and the latest assessment notice.
Comparing provinces before you buy?
The national cap rate calculator ranks every province on the same price and on a typical local deal. When you are ready, get matched with an ON agent who has closed investment purchases in this market.