Rental Yield Calculator for Canada

What rental yield is

Rental yield is the annual income from a rental property expressed as a percentage of its purchase price. It is one of the quickest ways to compare properties and assess whether a purchase price is reasonable relative to the rent the property generates.

Gross rental yield uses the total annual rent before expenses. Net rental yield subtracts operating expenses from the annual rent before dividing by the purchase price. Net yield is more meaningful because it reflects actual income after the costs of ownership, but gross yield is faster to calculate and useful for quick comparisons.

Neither gross nor net yield accounts for your mortgage payments. Yield is a financing-independent metric, like cap rate, which makes it useful for comparing properties regardless of how they are financed.

How to calculate rental yield

Notice how net yield is meaningfully lower than gross yield once operating costs are factored in. The gap between gross and net yield tends to be larger for older properties with higher maintenance costs and properties in municipalities with high property tax rates.

Rental yield benchmarks across Canadian markets

Rental yield varies significantly across Canada. High-cost markets like Toronto and Vancouver tend to have low gross yields because property prices have risen faster than rents. Smaller and mid-sized markets offer higher yields because the price-to-rent relationship is more balanced.

These ranges are approximate generalizations based on typical residential properties in each market. Specific properties, neighbourhoods, property types and market conditions all affect where an individual property lands.

A high yield is not automatically better than a low yield. High-yield markets often have lower appreciation expectations, smaller rental pools and higher vacancy risk. Low-yield markets often have stronger long-term capital growth potential. The right balance depends on your investment goals.

Rental yield vs cap rate: what is the difference?

Yield and cap rate are closely related and often confused. The key difference is that cap rate is a more precise version of net yield that uses a consistent definition of operating expenses.

For a quick screen of many properties, gross yield is a useful first filter. For any property you are seriously considering, calculate cap rate and run a full cash flow analysis including the mortgage. The quick yield calculator on this page gets you started. The main calculator gives you the full picture.

What rental yield does not tell you

Yield is a starting point, not a complete analysis. On its own it leaves out several factors that materially affect whether a property is a good investment.

It ignores vacancy. Yield calculations assume 100% occupancy. A property that sits empty for one month per year generates 8.3% less income than the calculation suggests. Factor in a realistic vacancy allowance before making decisions.

It ignores your financing. Yield tells you about the property in isolation. Whether the property cash flows positively given your mortgage rate and loan amount is a separate question that yield does not answer. Two investors with different financing can have completely different experiences with the same property.

It ignores tax. Rental income is taxed at your marginal rate. The after-tax yield on a property for someone in a 43% marginal tax bracket is materially different from the pre-tax yield. The full calculator models rental income tax using your province and marginal rate.

It ignores appreciation. A property with a 3% gross yield in a market that appreciates 6% per year can outperform a property with a 7% yield in a flat market. Yield is a current income measure, not a total return measure.