I run real numbers with investors before they fall in love with a property. Appreciation is a hope; cash flow is a fact. Start with the facts.
1. Cap rate — the property's raw yield
Cap rate is your net operating income (annual rent minus operating expenses, before mortgage) divided by the purchase price. It strips out financing so you can compare two properties fairly. In the GTA, cap rates are often tight, which is exactly why running the math matters — a property can "feel" like a deal and still barely clear its costs.
2. Cash flow — what actually hits your account
Cash flow is what's left after the mortgage and every real expense. The mistake new investors make is forgetting the costs that don't show up until they do:
- Property tax and insurance
- Condo fees (if applicable)
- A vacancy allowance — it won't be rented 100% of the time
- A maintenance/repair reserve — furnaces and roofs don't care about your projections
- Property management, if you're not doing it yourself
Leave those out and a "positive" property quietly turns negative.
3. Cash-on-cash return — return on the money you actually put in
This is your annual pre-tax cash flow divided by the cash you invested (down payment + closing + any upfront repairs). It's the truest measure of how hard your money is working, because it accounts for leverage. Two properties with the same price can have very different cash-on-cash returns depending on financing.
Where the real edge is: your entry price
The single biggest lever on every one of these numbers is what you pay going in. That's why I steer investors toward power-of-sale and bank-sale opportunities — buying 5–15% under market does more for your returns than years of rent increases. Get the entry right and the math takes care of itself.
Let's pressure-test your next deal
Send me a property you're considering and I'll run the honest numbers with you — and put you on my investor deal-alert list so the right opportunities come to you first.