Rental Property Investing in Canada: A Landlord’s Reality Check

Rental property investing in Canada right now looks nothing like the spreadsheet most investors build before they buy. Natasha Feghali runs a small portfolio across three Canadian provinces, pulls in roughly $100,000 to $110,000 a year in rent, and is out of pocket almost every month after bills and repairs. Two of her mortgages are upside down, including a condo she bought recently that is renting below market because she cannot find a tenant.

That is not a cautionary tale about a bad operator. It is what the math looks like when rent increases are capped at one to two percent, market rents in her areas have fallen $200 to $500, and selling into a down market means owing money at closing.

This article walks through her actual operating numbers, why the exit is blocked at both ends, how she underwrites tenant risk after a year in court, and the three levers she still pulls — repeat BRRRRs, garage rentals, and absolute control over repair requests.

From the Real Estate Pros Show

This article draws on an interview with Natasha E. Feghali of Feghali Group Inc. on the Real Estate Pros Show, hosted by Quentin Edmonds.

The Operating Math Behind a Small Canadian Rental Portfolio

Feghali’s portfolio brings in roughly $100,000 to $110,000 a year in revenue. Every dollar of it is absorbed by bills and repairs, and she is out of pocket most months.

That is the number investors should sit with. It is not a vacancy problem or a mismanagement problem — it is a structural gap between what the rents produce and what the properties cost to carry. Her portfolio is small multifamily, properties under four units, self-managed locally with property managers handling the out-of-province doors.

Two of her mortgages are currently upside down. One of them is a condo she bought recently: the loan is underwater and the unit is renting well below market rent because she cannot find anyone to move in. Buying into a softening market did not fix the carrying cost; it added another negative line.

Her framing of where returns actually live is the most useful part of her numbers:

• Holding produces very little profit. In her words, there is essentially none on an operating basis.
• Profit shows up at a liquidity event — a refinance or a sale.
• That event ranges from roughly $20,000 to $50,000 to $75,000, depending on how long the property has been held and what the market will pay.

If you underwrite a Canadian rental expecting monthly cash flow to fund the business, you are underwriting the wrong line. Feghali funds hers from a full-time job alongside the portfolio, and she credits that diversification — not the rents — with letting her weather the last six years.

Rent Caps, Falling Rents, and Tenants Paying in Installments

The squeeze comes from both ends at once. Feghali’s account: across most of Canada, rents are effectively frozen — you cannot raise more than one or two percent a year. At the same time, market rents in the areas she operates have come down $200, $300, $400, even $500.

Think about what that combination does to a pro forma. The cap limits your upside on existing tenancies, so you cannot inflate your way out of rising insurance, taxes, and repair costs. The falling market rents remove the other escape hatch, which is turnover — normally a vacated unit is the chance to reset to market. When market is below your current rent, turnover is a downgrade, not a reset.

Underneath that, tenant payment behaviour has changed. Feghali has tenants paying a single month’s rent in three separate installments because they have lost their jobs and do not have the money in one piece. She attributes it to local employment conditions and the broader economic pressure in her markets.

Three installments is not a default, and she is not treating it as one. But it changes the operating reality: your collections calendar fragments, your cash position becomes less predictable, and the gap between gross scheduled rent and cash actually banked widens. For a landlord already out of pocket most months, a few days of slippage per unit is the difference between covering the mortgage and funding it from another income source.

This is her on-the-ground experience in her own markets, not a national figure. But if you are modelling Canadian rentals, model collections risk explicitly rather than assuming full rent lands on the first.

There is very little profit on properties. The only time you’re going to have a profit is when you refinance or sell.

— Natasha E. Feghali, Feghali Group Inc.

Why the Exit Is Harder Than the Entry

Asked what business decision she would take back, Feghali did not name a property. She named a jurisdiction: investing in a place where your capital is bound and you cannot move it.

The contrast she drew is with the United States. There, as she put it, you can sell and roll that money into another property without a tax event at the point of sale. In Canada, she said, capital gains come off the top — in her description, potentially well over 40 percent. She also noted that Canadian landlords cannot write off anywhere near what US investors can. Tax treatment varies by structure, province, and holding period, so confirm your own numbers with an accountant before acting on any of this.

Even if she wanted to eat the tax, the door is shut on the other side. She has not sold a property in ten years, and she cannot sell now because the market is low enough that she would still owe on the mortgage after closing. Many Canadian investors she knows have liquidated and moved their capital to the US. She would do the same — she just cannot get out without writing a cheque.

Her view on what changes the picture is the foreign-buyer restriction. Canada has a mandate barring outside investors from buying property. If it is lifted, she expects values to move sharply upward. If it stays, she expects the market to keep grinding. That single policy variable is why her twelve-month plan is to hold and watch rather than to buy or sell.

Tenant Risk Is the Real Line Item

Feghali and her business partner spent most of a year in court with one tenant. The hit was large enough that they refinanced properties to absorb it. That is the number worth internalising: a single bad tenancy cost more than a year of portfolio operating profit, and the fix was a capital event, not a budget adjustment.

Her resulting position is blunt. No small landlord takes on a high-risk tenant unless the city goes on the lease as the renter. She has worked with a city to rehouse someone, watched it go wrong, and been told the problem belonged to her and the Landlord and Tenant Board. One experience like that, she said, is enough to make an operator say never again.

She has also inherited high-risk tenants with acquisitions — a reminder that your tenant risk on a small multifamily purchase is set before you close, and due diligence on the people is as important as due diligence on the roof.

Two practices follow from this:

• Existing tenants help vet new occupants. Her long-term tenants have a say in who moves in, on the logic that they live with the new person and she does not.
• Character reads kill deals. She recently passed on an off-market opportunity where the seller wanted to remain in the property after closing. Her read on the individual was that it would end in court, so she declined.

Walking from a deal on a character read costs you a spread. Not walking can cost you a year and a refinance.

What Still Works: Repeat BRRRRs, Garages, and Repair Control

When holding does not pay, the strategy is to pull capital out of what you already own. Feghali has run the BRRRR method in Canada on two properties twice each — a double BRRRR, as she calls it, meaning she has refinanced the same two assets through the strategy a second time. That is how she funded her way through the year in court, and it is her stated recommendation: find the method that works and do it over and over again.

The second lever is income that has nothing to do with the residential lease. She rents the garage at each of her properties, mostly to restaurant owners who need storage. It is an additional revenue line on an asset she already carries, it does not touch the capped residential rent, and it does not add a tenancy.

Her buy box is deliberately narrow: small to medium properties, under four units each. She self-manages what is local to her and uses property managers in the other provinces. She also operates a third-party property management business for out-of-town investors, which doubles as deal flow — her managers sometimes bring her exhausted landlords who want out, which produces off-market opportunities without an agent in the middle.

The third lever is cost control on the repair side, and it is a rule rather than a tactic. Tenants are not permitted to contact repair vendors directly, and her subcontractors are trained not to accept tenant requests. As she put it, tenants will tell a contractor on site that everything needs repairing. Routing every request through her is what keeps the repair line from eating the rest.

The Self-Management Stack of a Multi-Province Landlord

Feghali’s systems are deliberately low-cost. There is no expensive property management platform underneath a portfolio spread across three provinces — there is a communications discipline.

• A WhatsApp group for all tenants, used to push information out to everyone at once.
• Text message groups for the same purpose, plus phone and email for individual matters.
• ChatGPT to draft and send correspondence, which is what makes one person handling all tenant communication across multiple provinces realistic.
• Microsoft tools to collect and organise information and push it back out to tenants and vendors.
• A hard rule: tenants do not contact repair people, and contractors do not take tenant repair requests.

Asked what would break if she disappeared for 30 days with no contact, her answer was: not much. She rates her operations efficiency at the top and runs on a nothing-waits-until-tomorrow standard. The one exception is repair coordination, precisely because she is the single routing point for every request. That is the tradeoff of the control rule — it caps your repair spend and creates a key-person dependency at the same time.

The one function she watches hardest is finances, and specifically the finances handled by her out-of-province property managers. She is comfortable delegating most things because she has to be, but she follows up constantly on the money. For any investor running doors in a market they do not live in, that is the right place to put your remaining attention: you can delegate the work, but you verify the ledger.

Frequently asked questions

How much can a Canadian landlord raise rent each year?

Feghali’s experience across her markets is that rents are effectively frozen — you cannot raise more than roughly one or two percent annually in most of Canada. Caps are set provincially and change year to year, so check your own province’s current guideline before planning an increase.

The practical consequence is that annual increases will not keep pace with rising taxes, insurance, and repair costs. If your model depends on raising rent to restore margin, it will not work in a capped market.

Does the BRRRR method still work when a Canadian rental is cash-flow negative?

It can, and for Feghali it is the main lever available. She has refinanced two properties through the BRRRR strategy twice each, and used the proceeds to absorb the cost of a year in court with a tenant — a hit she could not have covered from operating income.

The caveat is that a refinance requires equity and an appraisal that supports it. With two of her mortgages currently upside down, not every property in a portfolio qualifies.

What happens if you need to sell a Canadian rental property into a down market?

You may owe money at closing. Feghali has not sold in ten years and says she cannot sell now because the market has fallen far enough that she would still owe on the mortgage after the sale.

On top of that, she describes capital gains being taken off the top on a Canadian sale — potentially well over 40 percent in her experience — with no equivalent of rolling proceeds into a replacement property tax-deferred. Confirm your own tax position with an accountant, because treatment depends on structure and holding period.

Why won’t small landlords rent to high-risk or city-referred tenants?

Because the downside is unlimited and the landlord absorbs it alone. Feghali worked with a city to rehouse a tenant, it went wrong, and she was told it was now her problem and the Landlord and Tenant Board’s. Her position is that no small landlord will take a high-risk tenant unless the city itself signs the lease as the renter.

Her own year in court with a tenant forced a refinance to cover the loss. One event at that scale is enough to end a small portfolio.

How can a landlord add income to a property without raising rent?

Rent space that isn’t part of the residential lease. Feghali rents the garage at each of her properties, primarily to restaurant owners who need storage — a separate revenue line on an asset she already carries.

In a rent-capped market this is one of the few increases available to you, because it sits outside the residential tenancy and does not add another tenant to manage.

The bottom line

If you own or are underwriting Canadian doors, stop modelling monthly cash flow as the return and start modelling the refinance as the return — then stress-test whether your equity position actually supports one. That single change in how you frame the deal tells you, before you buy, whether you have an exit or just a holding pattern.