Cap Rate

A metric used to evaluate income-producing properties, calculated by dividing the annual net operating income (NOI) by the property’s purchase price or current market value, expressed as a percentage. Cap rates in Ontario’s major urban markets — particularly Toronto — are typically compressed (low) due to high property values relative to rents. Investors in smaller Ontario cities like London, Windsor, or Sudbury often find higher cap rates. Formula: Cap Rate = NOI ÷ Property Value.