You have probably heard that Toronto rents are falling. That part is true. But here is the part most people miss: multiplex cash flow in Toronto is actually going up at the same time. That sounds like it should not be possible, but it makes sense once you look at the full picture.
In this post, we break down why rents falling does not mean cash flow is falling too, and why today’s numbers may be some of the best we have seen in years for Toronto multiplex investors.
Why Falling Rents Don’t Tell the Whole Story
Most people remember the last headline, not the one from a few years back. Right now, everyone is focused on rents coming down. That sounds bad for landlords on its own.
But rents did not fall from a normal starting point. When interest rates climbed hard, rents shot up hard too. So the “falling” rents you are hearing about are falling from a much higher peak.
Even after the drop, Toronto rents are still higher than they were before COVID. The story is not that rents crashed. The story is that they came back down from an unusually high point.
Purchase Prices Are Down More Than Rents
While rents came down slightly, purchase prices dropped a lot more. Prices are down around 25% from their peak, which puts them well below pre-COVID levels too.
This is the piece that changes everything. You are paying a lot less for the property, while collecting rent that is still higher than it was a few years ago.
When the price you pay drops faster than the rent you collect, your return on that property goes up. That is exactly what is happening in Toronto multiplexes right now.
What Cap Rates Actually Show
The best way to see this shift is through cap rates. A cap rate measures how much income a property produces relative to its price. Slightly higher rents combined with lower prices push cap rates higher compared to 2021.
Higher cap rates mean better cash flow, even though interest rates are higher than they were back in 2021. The rate environment has not helped investors, but the price and rent combination more than makes up for it.
This is why an investor buying today can end up with stronger cash flow than someone who bought at the top of the market in 2021 or 2022, even with a higher mortgage rate.
More Units, More Rent: Toronto’s Zoning Changes
There is another factor that most people have not priced in yet: how many units Toronto now allows on a single house lot. Back in 2021, most houses were only allowed 2 units. Since 2023, most houses can now hold 4 units, plus a garden suite in the backyard, for 5 units total.
When you split a main floor and upper floor into 2 separate units instead of 1, the total rent goes up. Add a garden suite on top of that, and you have even more rentable square footage on the same lot.
This is a big reason why Toronto multiplex cash flow looks so different today compared to a few years ago. It is not just about price and rent. It is about how much income a single property can generate once you know how to create a multiplex in Toronto the right way.
What This Means for Investors Today
Rents usually move in line with interest rates. Now that rates are not expected to drop much further, and the next move is likely up, we may be close to the bottom of this rent cycle. It is too early to say for certain, but the trend is worth watching.
What we do know is that rents are still higher than before, and prices are lower. That combination makes today’s rent yields some of the most attractive we have seen in years.
The market is also quiet this summer, which means motivated sellers. We are seeing deals come in another 10% or more below already-discounted prices. Turnkey Toronto multiplexes around $1M are cash flowing over $1,000 a month. Value-add projects can double that cash flow, or add $100,000 or more in completion value.
Ready to See the Numbers on a Real Property?
Falling rents and rising cash flow can both be true at the same time, and right now, that is exactly what is happening in Toronto multiplexes. The numbers behind a deal matter more than the headlines, and today’s combination of lower prices, resilient rents, and more units per lot is creating some of the strongest opportunities we have seen in years.
Our brokerage specializes in Toronto multiplexes. We’ll help you find deals, crunch the numbers, and guide you through renovations and management. If you want full support in Toronto multiplex investing, our team can help you:- Find high-potential properties
- Crunch the numbers so you know exactly where you stand
- Coach you through renovations to maximize returns
- Lock in great tenants
- Provide full property management so your investment runs smoothly
What Toronto Real Estate Investment Is Right For You?
Check out our complete Toronto real estate investment guide for all the details and real-life examples. If you’re ready to dive in, just book a call with us!
This is for educational purposes only; it does not guarantee future performance or serve as financial or tax advice.
