How to buy your first rental property in Canada
Built by Nate Rempel, a Canadian real estate investor. The math is golden-tested to the penny against a CPA-audited spreadsheet.
The first deal is the hardest, because you have never made the call before. This guide walks the whole path, from what you need saved to how to know a deal is real, in plain steps. Then you can run a real deal yourself, no signup.
Looking at a listing right now? Try a deal. Run a real deal, no signup.
Start with the fear, then move past it
Almost every first-time investor says the same thing: I am nervous about buying my first rental. That is normal, and it is healthy. The fear comes from not knowing whether the numbers will hold up. The fix is not more confidence, it is a process you trust. Once you can run a deal the same way every time, the fear gets smaller. You stop guessing and start checking.
Step 1: Work out what you actually need saved
On a standard rental you do not live in, plan for at least 20 percent down. Add closing costs, which run about 1.5 to four percent depending on the province and land transfer tax, plus a repair reserve. On a $500,000 property that is $100,000 down before you count closing and reserves. If you live in one of the units, a CMHC-insured path can lower the down payment a lot. Know your real number before you fall for a listing.
Step 2: Pick where the numbers work
Buy where the deal cash flows, not where you happen to live. Plenty of investors priced out of Toronto or Vancouver screen secondary cities for better returns. The catch is that you do not know the local rents and costs by feel, so lean on real rent comps and the actual city mill rate. A high property tax can quietly erase the cash flow you thought you had. City data does the work your gut cannot.
Step 3: Get your financing sorted early
Talk to a mortgage broker before you make an offer, not after. A good one who invests themselves will tell you what you qualify for and which path fits. Conventional financing needs more down but is simple. A CMHC path can stretch your dollar but adds a premium and rules. Either way, your lender will check the DSCR, the debt service coverage ratio, so you want to know yours going in.
Step 4: Find and screen a deal
Most first deals come off realtor.ca. Set a filter, then screen fast. Pull the rent comp, take off vacancy, subtract real operating costs, and look at the cap rate. If a property fails on the rough numbers, move on. You will look at many to find one, so make the first pass quick and only go deep on the ones that pass. Spending 90 minutes on every listing is how people burn out before they buy.
Step 5: Run the full math before you offer
Once a property passes the screen, run the whole thing. Cap rate, cash flow after the mortgage, cash-on-cash return, and the DSCR your lender uses. The thresholds to know are 1.20 DSCR on a conventional mortgage and 1.10 on a CMHC MLI Select path. Then pressure-test it: does it still work at a rate two points higher, and what happens if a unit sits empty for two months. A deal that only works in the best case is not a deal.
Step 6: Make the offer with numbers, not hope
When the math holds, you make the offer knowing why. You walk into the broker meeting with the DSCR, the CMHC path, and a clean proforma, in the format they already trust. That is the difference between hoping for a yes and arriving with the case for it. You will still feel the nerves. The difference is that now they are backed by numbers, not just a leap.
Run your first deal before you offer
Paste a Canadian listing and BrickROI fills in the property tax, rent comps, and mill rate, then runs the cap rate, cash flow, DSCR, and the CMHC paths. You get the answer the lender wants in two minutes, built for Canadian rules. It is the second opinion you have not wanted to ask anyone for.
Try a dealRun a real deal, no signup.
Questions first-time buyers ask
How much money do I need to buy my first rental in Canada?
Plan for at least 20 percent down on a non-owner-occupied rental, plus closing costs of roughly 1.5 to four percent and a repair reserve. On a $500,000 property that is $100,000 down before closing and reserves. A CMHC-insured path can lower the down payment if you live in one of the units.
Should I buy in my own city or somewhere cheaper?
Buy where the numbers work, not where you happen to live. Many investors priced out of Toronto or Vancouver screen secondary cities for cash flow. The risk of buying far away is that you do not know the local rents and costs, so lean on real rent comps and the city mill rate, not a gut feel.
How do I know if a first deal is any good?
Run the cap rate, the cash flow after the mortgage, and the DSCR your lender will use. If it cash flows positive, clears a 1.20 DSCR on a conventional mortgage, and still works at a rate two points higher, it is worth a closer look. Negative cash flow on day one is a warning, not a feature.