How to Calculate Rental Property Cash Flow in Canada?

Cash flow is the lifeblood of rental property investing. It tells you whether a property puts money in your pocket each month or drains it.

The Cash Flow Formula

Monthly Cash Flow = Total Monthly Income - Total Monthly Expenses

Monthly Income Sources

• Rental income: The primary revenue source
• Parking fees: Additional income from parking spots
• Laundry income: Coin-operated or card laundry
• Storage fees: Rent for storage lockers or units
• Other income: Pet fees, late fees, amenity charges

Monthly Expenses

All costs of operating the rental property:

1. Mortgage payment (principal + interest)
2. Property taxes (annual amount / 12)
3. Insurance (landlord/rental property insurance)
4. Property management fees (typically 5 to 10% of gross rent)
5. Maintenance and repairs (budget 1 to 2% of property value annually)
6. Vacancy allowance (typically 5% of gross rent)
7. Utilities (if landlord-paid: water, gas, electricity)
8. Condo/HOA fees (if applicable)
9. Legal and accounting (annual / 12)
10. Snow removal / landscaping (if applicable)

Positive vs. Negative Cash Flow

• Positive cash flow: Income exceeds expenses — you profit each month
• Negative cash flow: Expenses exceed income — you pay out of pocket monthly
• Break-even: Income exactly covers expenses

Why Cash Flow Matters

• Positive cash flow provides passive income and financial resilience
• Negative cash flow can be sustainable if property appreciation exceeds the shortfall, but carries risk
• Lenders evaluate cash flow when approving investment property mortgages (DSCR)
• Cash flow determines whether you can hold a property through market downturns