What Is a Good Rental Yield in Canada? (2026 Benchmarks)

A 6% gross yield can shrink to a 3.4% net yield once vacancy, taxes, insurance, maintenance, and reserves come out. That gap is often the difference between a property that pays you every month and one that quietly costs you money.

According to Global Property Guide, the average gross rental yield in Canada is 5.72% in Q1 2026, up from 5.55% in Q3 2025. Meanwhile, the Bank of Canada held its policy rate at 2.25% on March 18, 2026. Debt is no longer cheap enough to cover for a mediocre property, so the quality of the income matters more than it did a few years ago.

If you need the formula first, start with how to calculate rental yield. Once you've calculated the yield, judge it against your goal for the property.

A practical first answer: good, average, or weak?

Use Global Property Guide's Q1 2026 national average of 5.72% gross as an initial benchmark.

Gross yield	First interpretation	What it usually means
Below 5.0%	Weak on income alone	Usually not a cash-flow deal; can still work as a capital-growth buy
Around 5.0% to 5.7%	Slightly below average	Acceptable if the location, resale, or appreciation case is stronger than usual
Around 5.7% to 6.5%	Average to good	Reasonable territory if the net yield holds up after real expenses
Around 6.5% to 7.5%	Stronger income	Interesting for cash flow, as long as the building and tenant demand are solid
Above 7.5%	High-yield territory	Attractive on paper; check what the market knows that you do not

That is the gross view. What you actually keep is the net result after taxes, insurance, maintenance, vacancy, and reserves.

Global Property Guide also notes that net yields typically run 1.5 to 2 percentage points below gross. Apply that to the 5.72% national average and you get an estimated 3.7% to 4.2% net. Use that estimate as a rough screening range.

• well below that zone: weak, unless the appreciation case is strong
• around that zone: roughly market average
• well above it: stronger current income, if the assumptions behind it are real

Subtract your mortgage payments from what remains after expenses and reserves to estimate your cash flow.

Capital-growth vs cash-flow: two different games

Strategy 1: capital-growth or appreciation play

Here you accept weaker current income because the location, scarcity, or long-term demand should support stronger value growth over time.

Typical signs:

• prime urban location, or a neighborhood with a strong long-term case
• easy to resell when you need to
• low long-term vacancy risk
• weak present-day cash flow, sometimes flat or negative after the mortgage

This is how many investors treat core assets in major cities. A central Montreal property may be a mediocre monthly cash-flow asset once taxes, maintenance, insurance, and financing are counted. It can still be a rational buy if you are deliberately paying for asset quality and appreciation potential.

Strategy 2: cash-flow or income play

Here the income engine is the point. If the goal is cash flow, sitting below the national gross average is hard to justify.

Typical signs:

• gross yield clearly above the national average
• net yield that survives realistic expenses
• cash flow that still looks decent after the mortgage payment
• tight discipline on vacancy, tenant quality, and maintenance

City benchmarks and cap-rate context

The national average is useful, but the city averages from the same Global Property Guide dataset make the answer concrete:

Market	Average gross rental yield	How to read it
Montreal	4.24%	Clearly below the national average; usually a capital-growth market more than an income market
Hamilton	5.19%	Below the national average, but not dramatically
Vancouver	5.75%	In line with the national benchmark
Ottawa	5.99%	Slightly above average; balanced territory
Toronto	6.27%	Above average across all locations, but submarkets vary sharply
Calgary	6.87%	Strong for cash flow on paper, with a more cyclical local economy

If you read institutional research, this is also where cap rate comes in. A cap rate is net operating income (NOI) divided by property value, before debt, which makes it closer to a net yield than a gross one. Cap-rate surveys from firms like Altus Group or Avison Young are useful context, but do not compare them directly with the gross residential yields used in this article.

Even within a city, yields vary by neighbourhood and property type. Toronto's all-locations average is 6.27%, yet in the same dataset Downtown Toronto yields 3.52% on a 3-bedroom and 4.72% on a 2-bedroom. One market can hold capital-growth submarkets and income submarkets at the same time, which is why city headlines are not enough.

Montreal's city-wide average of 4.24% sits well below the national figure. At that yield, a purchase often depends on the quality of the property, the strength of the neighbourhood, or long-term appreciation.

Calgary's gross yield of 6.87% is well above the national average. Check how vacancy, rent stability, and a local downturn could affect what you actually earn.

So what is a good rental yield in Canada?

The most useful answer depends on your strategy.

For a cash-flow investor

A "good" rental yield usually means:

• at least the national gross average of 5.72%, ideally above it
• a net yield that still looks healthy after real expenses
• enough margin left after the mortgage that one bad month does not break the plan

If the deal sits below the national average and you still call it a cash-flow play, the burden of proof is on you.

For a capital-growth investor

A "good" rental yield can be lower than the national average, sometimes much lower, if the trade-off is real and deliberate:

• exceptional location
• durable long-term demand
• easy resale when you need out
• an appreciation case you can defend with more than hope
• lower vacancy and leasing risk

For a balanced investor

If you want respectable income and reasonable upside, start around or above the national average gross, with a net yield around the estimated market zone or better.

In plain English:

• below average: weaker on income; not necessarily bad, but probably not a cash-flow deal
• around average: workable, if the net yield and the mortgage math hold
• above average: stronger income, good only if the risk is controlled

When a low yield is defensible, and when a high yield is suspicious

A property below the 5.72% national benchmark can still make sense. You just need to know exactly why.

The acceptable reasons usually look like this:

• the location is unusually durable
• the property will be easy to resell
• long-term vacancy risk is below average
• there is no backlog of deferred repairs
• you are holding it for appreciation, not monthly income

The bad version looks different: the yield is below average simply because the buyer overpaid, underestimated expenses, ignored the mortgage, or assumed rent growth the market has not earned yet.

The same caution works in reverse. A yield well above the national average is interesting, but the market rarely gives income away for free. A high gross yield often prices in a real problem:

• repairs the seller has been postponing
• weaker tenants or constant turnover
• soft demand from renters
• homes that take a long time to sell in that area
• rents that look good on paper but will be hard to sustain

A high-yield property should trigger more diligence, not less. And if the operating side of a borderline deal needs work, how to increase rental income and how to reduce rental vacancy are better levers than hoping the headline yield saves you.

How to pressure-test the deal before you buy

Before you decide whether the yield is good, run the same property twice:

1. Realistic case: real market rent, realistic vacancy, normal operating costs
2. Conservative case: softer rent, more vacancy, heavier reserves, tougher financing

The 4 questions to ask

1. Is the gross yield above or below the 5.72% national benchmark?
2. If it is below, do I have a real capital-growth case, or am I just accepting weak income?
3. Does the net yield hold up after actual costs?
4. Does the deal still work once the mortgage is layered in?

If the numbers still work in the conservative case, the property is worth a closer look.

Turn the benchmark into a real decision

A good rental yield in Canada is a relative number. It only means something next to the market average, the city, the submarket, the real operating costs, and the strategy you are buying.

The 5.72% national gross average from Global Property Guide gives you the starting line: below it, income is below average; around it, market average; above it, stronger.

A low-yield downtown condo can work if you have a credible case for appreciation. In a smaller market, check what risks come with a high yield before counting on the income.

Run the property in the rental investment simulator, compare it against the 5.72% national benchmark, and check whether the net yield still clears your mortgage costs with room to spare. Use those numbers to judge what a yield of 5%, 6%, or 7% would mean for that property.