Kitchener / Waterloo Property Investment Calculator
Investor Quick Calculators
Four fast checks for a rental property. Use yearly figures in every field.
Cap Rate
The yearly return a property earns on its value, before any mortgage.
What these terms mean
- Capitalization rate (cap rate)
- Net operating income divided by the property's value, shown as a percentage. It lets you compare the income return of different properties without the effect of financing.
- Gross rental income
- The rent the property would bring in over a year if every unit were rented.
- Vacancy rate
- The share of that rent you expect to lose to empty units or unpaid rent.
- Gross operating income
- Gross rental income less the vacancy allowance.
- Operating expenses
- The yearly cost of running the property, such as taxes, insurance, utilities, management and repairs, entered here as a percentage of gross operating income. Mortgage payments are not included.
- Net operating income
- Gross operating income less operating expenses.
Gross Rent Multiplier
How many years of gross rent it would take to equal the price.
What these terms mean
- Gross rent multiplier (GRM)
- The property's value divided by its yearly gross rental income. It is a quick way to compare asking prices on similar rental properties in the same area; a lower number means you pay less for each dollar of rent.
- Gross rental income
- The rent for a full year with every unit occupied. Count any vacant units at the rent they would normally earn.
- What it leaves out
- Vacancy, expenses and financing. Two properties with the same multiplier can have very different running costs, so use it as a first screen only.
Cash-on-Cash Return
The yearly cash you keep, as a percentage of the cash you put in.
What these terms mean
- Cash-on-cash return
- The property's cash flow for the year, usually before income tax, divided by the cash you invested at the start.
- Initial cash investment
- Your down payment plus the costs of buying, such as land transfer tax, legal fees, lender fees and the appraisal.
- Operating expenses
- Yearly running costs, entered as a percentage of gross operating income (rent after vacancy).
- Annual loan payment
- The principal and interest you pay on the mortgage over a year, also called debt service.
- Cash flow
- Net operating income less the annual loan payment.
Break-Even Ratio
The share of income used up by expenses and mortgage payments.
What these terms mean
- Break-even ratio
- Operating expenses plus loan payments (money out), divided by gross operating income (money in). Below 100% the property covers its costs; above 100% it needs money from you each year. Lenders use it to judge how much room a property has if rents fall.
- Gross operating income
- All rent and other income for the year, less an allowance for vacancy.
- Debt service
- The principal and interest paid on the loan over a year. It is worked out here from the loan amount, interest rate and term.
- Term
- The number of years over which the loan is paid off (the amortization).
Want the full picture on a property?
Run a complete five-year analysis, or ask me to pull the real rents and expenses for any property in Waterloo Region.
These calculators give estimates for general information only and are not investment, mortgage, tax or legal advice. Results depend entirely on the figures entered. Loan payments assume a fixed rate compounded semi-annually with monthly payments. Speak with a licensed professional before making an investment decision.
