Cap Rate Calculator Toronto
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.
Toronto's combined residential rate. The 905 is higher — Mississauga, Brampton, Hamilton, and Ottawa each have their own cap rate page with that city's mill rate loaded.
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.
Toronto's cap rate is a price problem, then a municipal land transfer tax problem. Vacancy at 3% is not what is flattening NOI. The second, full municipal land transfer tax never appears in this number and it is the cheque that makes a 2.5% cap look worse in cash.
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 Toronto 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 is CMHC's October 2025 purpose-built two-bedroom average for the Toronto CMA — sitting tenants, not asking rent on a vacant unit. Condo two-bedrooms averaged $2,904.
- A 3% vacancy line is the CMA average. Downsview (York University) went from 0.7% in 2023 to 3.1% in 2025. Old Toronto did not.
- Toronto charges a full municipal land transfer tax on top of Ontario's. Cap rate ignores both.
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 at 1.0%. Old Toronto held steadier than the rest of the CMA; 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 grows in-place rent with inflation is only true for the exempt stock.
Toronto cap rate FAQs
What is a typical cap rate in Toronto?
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 Toronto?
Cap rate is NOI divided by purchase price. In Toronto, 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 Toronto?
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 grows in-place rent with inflation is only true for the exempt stock.
What vacancy rate should I use in Toronto?
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 at 1.0%. Old Toronto held steadier than the rest of the CMA; post-secondary neighbourhoods in Mississauga and Brampton climbed above 4%.
Does the Toronto cap rate include land transfer tax?
No. Cap rate is unlevered operating income over price. Toronto land transfer tax or registration fees are cash on closing and belong in cash-on-cash, not here.
Other Ontario cities
Sources
- CMHC 2025 Rental Market Report (Toronto CMA vacancy 3.0%, 2-bed rent $2,034)Toronto, last verified October 1, 2025
- Ontario: 2026 rent increase guideline is 2.1%Toronto, 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 a Toronto agent who has closed investment purchases in this market.