Cap Rate Calculator
Sizing up a rental in Edmonton, Calgary, or anywhere in Alberta? Calculate the cap rate, then add financing to see your monthly cash flow and cash-on-cash return — the numbers that tell you whether a deal works.
Share of the year the unit sits empty
Property tax, insurance, maintenance, management, condo fees — not the mortgage
Capitalization rate
5.27%
$18,444 NOI ÷ $350,000
Net operating income
$18,444
annual, before financing
Effective rent
$24,444
after 3% vacancy
Cap rate, cash flow, and cash-on-cash
These three numbers answer different questions. Cap rate tells you how the property performs on its own, regardless of how you finance it — useful for comparing deals. Cash flow tells you whether the rent covers the mortgage and costs each month. Cash-on-cash return tells you how hard your actual invested dollars are working. A strong deal usually looks good on all three.
Why Alberta appeals to investors
Relatively affordable prices, no provincial land transfer tax, and steady rental demand in Edmonton and Calgary mean Alberta rentals often pencil out better than in higher-priced markets. Lower entry costs also mean less cash tied up at purchase, which lifts your cash-on-cash return. Always pressure-test a deal with a realistic vacancy allowance and honest expense numbers — optimistic inputs are how rentals disappoint.
Frequently asked questions
What is a cap rate and how is it calculated?+
The capitalization rate is a property's net operating income divided by its purchase price, expressed as a percentage. NOI is your rent after a vacancy allowance, minus operating expenses like property tax, insurance, maintenance, and management — but not your mortgage. A $350,000 property with $18,444 of NOI has a cap rate of about 5.3%.
What is a good cap rate in Edmonton or Calgary?+
It depends on the property type and risk, but many Alberta rentals trade in the 4% to 6% range. Higher cap rates suggest more income relative to price (and often more risk or work); lower cap rates suggest a premium or appreciation play. Compare a property's cap rate to similar ones in the same market rather than to a universal target.
What's the difference between cap rate and cash-on-cash return?+
Cap rate ignores financing — it measures the property itself. Cash-on-cash return measures your actual cash: annual pre-tax cash flow after the mortgage, divided by the cash you put in (down payment plus closing costs). Two investors buying the same building can have very different cash-on-cash returns depending on their down payment and rate.
Do lenders require a bigger down payment for a rental?+
Yes. A non-owner-occupied rental property generally needs at least 20% down and cannot use CMHC owner-occupied insurance, so there's no premium. That's why this calculator starts at 20% down for the financing section.
What counts as an operating expense?+
Property tax, insurance, repairs and maintenance, property management fees, condo fees, and any utilities you pay as the owner. It does not include your mortgage payment — financing is handled separately so the cap rate reflects the property on its own.
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Find your next investment property
Run the numbers, then browse Edmonton listings with a hômm REALTOR® who knows the rental market.
Estimates are for general information only and are not financial advice or a mortgage approval. Rates, premiums, and rules were last reviewed 2026-06-01. Confirm exact figures with your lender, lawyer, and a hômm REALTOR®.