Know what is behind the numbers
Every result uses the same monthly calculation engine. All money is in Canadian dollars. Examples are illustrative and outputs are estimates before tax.
Mortgage payment and principal
The model uses a nominal annual fixed mortgage rate compounded semi-annually, with monthly payments. For a rate j expressed as a decimal, the equivalent monthly rate is r = (1 + j/2)^(1/6) − 1. Payment is P × r ÷ [1 − (1+r)^(-12A)], where P is principal and A is amortization in years. At zero interest, payment is P ÷ (12A).
Interest is calculated on the outstanding balance each month. The payment first covers interest, then principal. Extra payments reduce the remaining principal and cash flow. Annual and one-time prepayments occur at the end of the selected year. Payments stop at payoff; no negative mortgage balance is carried forward.
The interest rate is held constant for the projection. Actual mortgages renew and lender-specific rounding, rate conventions, payment dates, prepayment limits and penalties can change results. The model does not assess loan eligibility or add mortgage insurance premiums automatically.
Income, expenses and reserves
Year one uses the entered rents and costs. Rental growth and fixed-expense growth apply at the beginning of each later year. Vacancy is a percentage of scheduled rent. Management is a percentage of effective rent after vacancy; maintenance and capital reserves are percentages of scheduled rent. These percentage-based costs grow with rent.
NOI = scheduled rent − vacancy loss − operating expenses. Operating expenses include property tax, insurance, utilities, condo fees, other operating costs, management and routine maintenance. NOI excludes debt service, extra principal, capital reserves and income tax. Cash flow = NOI − capital reserve − scheduled debt service − extra principal payments.
Reserves are treated as cash outflows and are not returned at sale. This assumes they are spent or unavailable; if reserves remain in cash, the model understates sale-period wealth. Initial renovations and repairs are cash costs; any value they add must be reflected in your property-value assumptions.
Cash required, sale proceeds and returns
Cash required = down payment + entered agency fees, legal fees, inspection, renovations, initial repairs and other closing costs. Property equity = estimated value − outstanding mortgage. Sale proceeds = equity − percentage selling costs − fixed selling costs. Sale proceeds can be negative if more cash is needed to close.
Profit if sold = net sale proceeds + cumulative cash flow − upfront cash required. Cumulative ROI = profit ÷ upfront cash × 100. First-year cash-on-cash return = first-year cash flow ÷ upfront cash × 100. A zero upfront cash denominator is shown as N/A.
Annualized return is annual IRR using upfront cash as the initial outflow, year-end net cash flows, and net sale proceeds in the final year. Year-end cash timing is an approximation. A unique IRR is shown only for conventional cash flows with a single change from negative to positive; otherwise it is N/A. Cumulative ROI and IRR are different measures.
Property values and stress testing
Appreciation compounds once per year. A custom future value replaces the value at the end of that year; later years grow from that override. Sale costs apply to the resulting value.
The combined stress case adds two percentage points to the interest rate from the start and reduces every rent by 10%, leaving other assumptions unchanged. It is not a regulatory mortgage stress test, lender qualification result, or renewal forecast.
Sources and limits
Mortgage calculations were checked against the Financial Consumer Agency of Canada’s published $300,000, 25-year, 5% example ($1,744.81 monthly). Source links appear below. Methodology reviewed October 11, 2026.
Income tax, capital gains tax, GST/HST, depreciation/CCA, financing qualification, mortgage insurance premiums, land or title registration fees, lender fees, prepayment penalties and special assessments are not automatically calculated. Add known upfront costs to other closing costs and known ongoing costs to other operating expenses. Appreciation, vacancy and rental growth are user assumptions, not forecasts.