Cap Rate Calculator
Build up the real income and expense picture for any North Shore rental property, and see your net operating income and cap rate instantly.
Calculate Cap Rate
Fill in the property value, rental income, and operating expenses below. Cap rate and NOI update as you type.
Do not include your mortgage payment — cap rate is calculated before financing.
How This Works
Cap rate is the percentage return a property generates from its income alone, before any mortgage financing enters the picture. The formula is straightforward: net operating income divided by the property's value. This calculator builds up to that number the right way, starting with your actual income and expenses, rather than asking you to pre-calculate NOI yourself.
The NOI figure that comes out of the income and expense section is the number that feeds directly into the cap rate. It's rent in, minus the real costs of running the property: property taxes, insurance, strata fees if applicable, maintenance, and property management if you use it. The mortgage payment stays out of it entirely, by design, because cap rate is meant to measure the property's performance independent of how it's financed.
One thing worth knowing about North Shore cap rates specifically: they run low compared to most markets, typically 3–4% for older rental buildings, up to 4.5–6.5% for newer multiplex rentals. That's not a warning sign, it's a reflection of expensive land in a high-demand coastal market. A property with a modest cap rate here can still deliver a strong return once you factor in leverage, rent growth, and long-term appreciation, none of which cap rate captures on its own.
Frequently Asked Questions
Why doesn't the cap rate include my mortgage payment?
By design. Cap rate is meant to measure a property's income performance independent of how it's financed, so you can compare two properties fairly even if you'd finance them differently. Once you layer in a mortgage, you're measuring your specific financing deal as much as the property itself. That's useful, but it's a different calculation, cash-on-cash return.
What's a good cap rate on the North Shore right now?
Metro Vancouver cap rates currently run roughly 3–4% for older rental buildings and 4.5–6.5% for newer multiplex rentals. Those numbers are lower than most other Canadian markets, which reflects the cost of land here relative to rents, not a fundamental problem with the investment case. A 3% cap rate in North Vancouver isn't the same signal as a 3% cap rate somewhere else.
If cap rate is low here, why would anyone buy a rental property on the North Shore?
Because cap rate only measures income return, and income return is only one part of the picture. Long-term price appreciation has historically been a meaningful part of the total return on North Shore real estate, and mortgage paydown adds equity over time regardless of the income yield. Investors who focus only on cap rate and skip the rest of the math can pass on properties that turn out to be strong long-term holds.
What's the difference between cap rate and cash-on-cash return?
Cap rate ignores financing entirely. Cash-on-cash return measures what you actually receive as a cash return on the money you put in, after your mortgage payment. A property with a 3% cap rate can still deliver a higher cash-on-cash return if your mortgage rate is lower than the cap rate, which is the basic case for using leverage in real estate.
Should I use the asking price or assessed value when calculating cap rate?
Use whichever reflects the real decision you're making. If you're evaluating a listing, use the asking price, or the price you're considering offering. If you already own and want to know your current yield on market value, use your best estimate of current market value. BC Assessment values often lag the market, so they're less reliable for this purpose unless you're using them as a rough sanity check.
How do strata fees affect the cap rate on a condo rental?
Strata fees are an operating expense, so they reduce NOI directly. On a condo rental, this can compress the cap rate meaningfully compared to a freehold property at the same rent, since the fees come off the top before you get to NOI. It's one of the reasons detached and multiplex rentals sometimes show higher cap rates than strata units at comparable price points.
Want the Full Investment Picture?
Cap rate is a useful starting point, but the real question is how a specific property performs for your situation, including financing, realistic rent growth, and your timeline. Send me a message and I'm happy to run through the numbers with you.
Talk This Through With Matt