Garden Suite Rental ROI Calculator (Ontario)
Put in what the suite really costs, what it will really rent for, and how you are paying for it. The calculator gives you cash flow, yield, cash-on-cash return and payback years, with vacancy, maintenance and HST counted. At a $280,000 build and $1,950 a month, a garden suite earns about 6% before financing. That is a decent pension plan, not a lottery ticket.
Default example (cash build)
Defaults are a starting point, not a quote. Swap in your own build price and a rent you can prove with real listings.
A larger two-bedroom garden suite that costs $280,000 all-in and rents for $1,950 a month nets about $17,000 a year after a 4% vacancy allowance, property tax, insurance and 1% maintenance. That is roughly a 6% net yield and a 16-year payback if you pay cash. Borrow the money at today’s rates and the cash flow can drop close to zero, so run your own numbers below. Depreciation on a rental is claimed as capital cost allowance.
Garden Suite Rental ROI Calculator
Everything updates as you type. Nothing is saved or sent anywhere.
Annual cash flow
Returns
HST is a rough estimate only: 13% of fair market value, less an estimated New Residential Rental Property Rebate (federal part 36% of the 5% GST up to $6,300, phased out between $350,000 and $450,000; Ontario part 75% of the 8% up to $24,000). Not tax advice. Run the free rental HST check before you count on any number.
Last checked October 2026 · Sources: CRA RC4231, CRA GI-093, CMHC Refinance fact sheet, County of Simcoe Secondary Suites Program
Five Minutes, Five Honest Numbers
The calculator is only as good as what you feed it. Garbage in, gospel out is how people end up with a $300,000 shed that rents for less than their car payment.
Start with the all-in build price
Not the kit price, not the "from" price on a brochure. Foundation, trenching for water, sewer and hydro, permits, design, any development charges and the final grading all go in. Our garden suite cost calculator gets you a realistic starting figure, and the servicing cost page covers the half of the budget people forget.
Price the rent from today's listings
Pull three to five current listings for similar one or two bedroom units in your town, then knock a bit off because yours is in someone's backyard. Cross-check against the CMHC rental market data.
Leave vacancy and maintenance in
4% vacancy and 1% maintenance are not pessimism. They are the two weeks between tenants and the furnace service you will absolutely need. If the deal only works at 0% and 0%, it does not work.
Pick how you are paying
Cash, a HELOC (interest only) or a CMHC insured refinance (amortized over up to 30 years, with the premium added to the loan). The financing guide and the CMHC refinance page explain which one your bank will actually do.
Tick the HST box if a stranger is moving in
If you build a detached suite to rent to someone unrelated, CRA can treat you as a builder and charge HST on the suite's value when it is first rented. Tick the box, enter a realistic value, and read the garden suite HST page.
Reading the Results Without a Finance Degree
Each line answers one plain question. Here is what it is, and how the calculator works it out.
| Result | Plain question it answers | How it is calculated |
|---|---|---|
| Effective annual rent | What actually lands in your account in a year? | Monthly rent x 12, less the vacancy % |
| Operating costs | What does owning it cost before any loan? | Tax increase + insurance increase + maintenance % of build cost |
| Net operating income (NOI) | What does the suite earn on its own? | Effective rent minus operating costs |
| Annual debt cost | What does the money cost? | HELOC: amount x rate (interest only). CMHC: 12 monthly payments on the loan plus premium, semi-annual compounding like a Canadian fixed mortgage |
| Annual cash flow | What is left over, or short, each year? | NOI minus annual debt cost |
| Gross yield | Quick rent-to-price check | Full rent x 12 divided by net project cost (build + net HST - grant) |
| Net yield | The real return if you paid cash | NOI divided by net project cost |
| Cash-on-cash return | What do your own dollars earn? | Annual cash flow divided by the cash you put in (project cost minus borrowed money and grant) |
| Simple payback | How many years until your cash comes back? | Cash you put in divided by annual cash flow. Ignores rent increases, inflation and resale |
| Estimated net HST | Does CRA want a cut? | 13% of fair market value, minus estimated federal and Ontario rental rebates, minus any input tax credits you enter |
Last checked October 2026 · Source: CRA RC4231 New Residential Rental Property Rebate
A note on principal
On a CMHC refinance, part of each payment is principal. That is not lost money, it is your debt going down, which is why the calculator tells you the year 1 split. But it still comes out of your chequing account, so we count it in cash flow. A bank manager will happily tell you it is "building equity." Your grocery budget will tell you something else.
What it leaves out on purpose
No appreciation, no rent increases, no income tax, no capital cost allowance. Those all matter, but they are guesses stacked on guesses, and they tend to make bad deals look good. Talk to your accountant about income tax on rental income. If the deal works without them, the extras are a bonus.
Three Ways to Make a Bad Deal Look Brilliant
We see the same three mistakes on almost every spreadsheet a homeowner brings us. Each one alone can turn a 6% suite into a money pit.
- Using 2023 peak rents. A lot of garden suite plans were drawn up when asking rents were at their highest, and many Ontario cities have seen asking rents soften since. If your rent number came from a 2023 news story, a neighbour's brag or an old listing, it is probably high. Use what is listed and actually renting this month.
- Forgetting vacancy. Every tenant leaves eventually. Then you paint, fix the screen door, show the unit and wait. Two to four weeks empty a year is normal, more in small towns and cottage country. At $1,950 a month, a single empty month costs you $1,950 plus the paint.
- Forgetting HST. This is the expensive one. A detached suite built to rent to an unrelated tenant can trigger the self-supply rule, which means HST on the suite's fair market value when it is first rented, land share included. On a $400,000 value that is $52,000 before rebates. The rental rebate can claw a big piece back, but you generally have two years to file and you have to know to file. Run the free rental HST check before you sign a build contract.
Two smaller ones while we are at it: property tax and insurance. MPAC will reassess your property once the suite is built, and many insurers treat a house with a rented suite differently from a single family home. Call both your broker and the property tax page before you trust our $1,800 and $700 defaults.
Grants are not free money. Programs like the County of Simcoe Secondary Suites Program forgive the loan over 15 years only if you keep the rent at or below CMHC average market rent and follow the program's tenant rules. Sell, or stop renting affordably, and you may owe some of it back. Enter the capped rent, not the market rent, when you use a grant. See the 2026 grants directory and the Simcoe grant page.
Got a builder's quote and a gut feeling?
Upload the quote or plans and we will mark up what is missing, what is padded and whether the rent can carry it. 60-minute plan or quote review, $249.99 + HST, credited toward any report, permit package or build.
Rules of thumb we use
- If the net yield is under 4%, the suite needs a second reason to exist, like housing a parent.
- If cash flow is negative at a 30-year amortization, it will be negative at 25 too, only more so.
- If the deal only works with no vacancy, no maintenance or no HST, it does not work.
- Build cost runs over. Rent rarely runs over. Plan accordingly.
For the bigger picture, including resale value and how lenders see a suite, read the garden suite ROI guide and the rental income guide.
The numbers work. Now, can your lot?
A rental return means nothing if zoning, setbacks, servicing or septic say no. Our $399 + HST Garden Suite Feasibility Report checks your actual lot in 48 hours, and the fee is credited toward permit plans or a build.
Garden Suite Rental Return FAQ
Is a garden suite a good investment in Ontario?
It can be, but it is a slow one. A $280,000 suite renting for $1,950 a month nets about 6% before financing, or roughly a 16-year payback if you pay cash. Borrow at mortgage rates and the yearly cash flow can shrink to almost nothing. Most owners who come out ahead either pay much of it in cash, hold it for a long time, or also use it for family.
What is a good cash-on-cash return for a garden suite?
There is no official number, but most small landlords want their own cash earning more than a safe investment would, with a margin for the work and risk. If the calculator shows a cash-on-cash return below what a GIC pays, the suite is paying you less to be a landlord than the bank pays you to do nothing.
How much vacancy should I allow for?
We use 4% as a default, which is about two weeks a year. In cities with tight rental markets you might do better; in small towns, seasonal areas and cottage country, use 6 to 8%. Also count the time between tenants for cleaning and repairs. Check local vacancy rates in the CMHC rental market data.
Do I have to pay HST on a garden suite I rent out?
Possibly. If you build a detached suite and rent it to an unrelated tenant, CRA can apply the self-supply rule and charge HST on its fair market value when it is first rented. A suite built for your own family is usually treated differently. The New Residential Rental Property Rebate can return a large part of it. Run the free rental HST check and read our HST rebate page. This is not tax advice.
How is the HST rental rebate estimated in this calculator?
The federal part is 36% of the 5% GST, up to $6,300, when fair market value is $350,000 or less, and it shrinks in a straight line to zero at $450,000. The Ontario part is 75% of the 8% provincial part, up to $24,000, with no value cap, per CRA RC4231 and GI-093. The calculator uses those rules as a rough estimate only.
Can I use the CMHC refinance to build a garden suite to rent?
Yes, on an owner-occupied property of up to 4 units worth under $2 million, up to 90% of the as-improved value, amortized up to 30 years, but the suite cannot be rented for periods under 90 days. The premium is added to the loan. Details and lender questions are on our CMHC refinance page.
Should I use a HELOC or a mortgage refinance?
A HELOC is flexible and usually interest only, so the yearly cost looks lower, but the debt never goes down unless you pay extra. An amortized refinance costs more per month and pays the debt off. Line of credit rates are usually variable. Compare both in the calculator, then read the financing guide.
Does a forgivable grant improve the return?
On cash-on-cash, yes, because you put in less of your own money. But grants like the County of Simcoe program require rent at or below CMHC average market rent for 15 years, so your rent goes down too. Enter both the grant and the capped rent and see which version wins. Programs are listed in our grants directory.