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What is cash-on-cash return in rental investing?
Cash-on-cash return (or cash-on-cash ROI) is the annual cash flow from the property divided by the total cash you invested (down payment plus closing costs). It shows the return on the actual money you put in, before tax and appreciation.
Why does the calculator include a vacancy rate?
Vacancy rate accounts for periods when the property is empty between tenants. In Canada, 3%–6% is typical depending on the market. Using a conservative vacancy assumption in your cash flow estimate helps avoid overstating returns.
What landlord insurance do I need for a rental property?
Landlord or commercial property owners insurance typically covers the building, loss of rental income if the property is uninhabitable, and liability to tenants and visitors. It differs from standard home insurance, which usually does not cover rental use.
How is monthly cash flow different from profit?
Monthly cash flow is rental income minus all operating expenses and mortgage payments. It is the cash left in your pocket each month. Profit (for tax purposes) also factors in non-cash items like depreciation and principal paydown.
Is this calculator suitable for multi-unit properties?
You can use it for a single unit by entering the total rent and expenses for that unit. For a multi-unit building, sum the rent and allocate expenses (tax, insurance, maintenance) across units, or run the calculator once per unit and add results.
