For a Hamilton duplex, triplex or fourplex, plan on operating costs of 30% to 34% of the rent. For a building with five or more units, plan on 34% to 37%. Those are the shares we underwrite with, line by line, in the Found Spaces underwriting standard. Ask an AI assistant the same question today and it will often say 40% to 50%. On a small Hamilton building, that number makes good deals look like losses.
Where 30 to 34% comes from
These are the costs that come off the rent before any mortgage payment, for a building under five units.
| Cost | Share of rent, 1 to 4 units | Share of rent, 5+ units |
|---|---|---|
| Property tax | 8 to 11% | 18 to 22% |
| Property management | 8% | 5 to 6% |
| Insurance | 4 to 5% | 4 to 5% |
| Repairs and upkeep | 6 to 8% | 3 to 4% |
| Empty weeks and unpaid rent | 3% | 3% |
| Utilities the owner pays | 0 to 3% | 2 to 3% |
| Caretaker | none | 2 to 3% |
| Saving for the roof and furnace | 1 to 3% | 1 to 2% |
| Total | 30 to 34% | 34 to 37% |
We get these from buildings our property management team runs and from deals we have underwritten. When a real statement exists, the real numbers replace them.
Why the 40 to 50% rule runs high in Hamilton
The 50% rule is a rough shortcut meant to cover any building in any market. In Hamilton, the biggest cost line runs low on small buildings.
Property tax is the biggest line on the table, and Ontario taxes it on old values. Ontario has not reassessed since the January 1, 2016 valuation date, and the 2026 tax bill still uses it. On a duplex or triplex, that keeps tax at about 8% to 11% of rent. Once a building has five or more units it moves into the multi-residential tax class, and tax jumps to 18% to 22% of rent. That one line explains most of the gap between small and large buildings.
So match the ratio to the size of the building: 30% to 34% for one to four units, 34% to 37% for five or more.
One Hamilton duplex, run both ways
16 Garrow Drive on Hamilton Mountain sold on August 25, 2026 for $680,000. It has a 3-bedroom up and a 2-bedroom down. Taxes are $4,956 a year. At the median Hamilton lease rents from July to October 2026 ($2,800 and $2,200), it brings in $60,000 a year.
Assume 20% down, a 25 year mortgage and a 4.25% rate. Mortgage payments come to about $35,229 a year.
| At our 35% | At the 45% shortcut | |
|---|---|---|
| Rent a year | $60,000 | $60,000 |
| Costs a year | $20,856 | $27,000 |
| Left before the mortgage (NOI) | $39,144 | $33,000 |
| Cap rate on $680,000 | 5.8% | 4.9% |
| Left after the mortgage, a year | $3,915 | minus $2,229 |
| Left after the mortgage, a month | $326 | minus $186 |
The shortcut turns a home that pays about $326 a month into one that seems to lose $186 a month. An investor using it would walk away from this deal.
When to use a higher number
Some buildings really do cost more to run. Go above 34% when:
- You pay the heat and hydro for every unit.
- The building is old and the roof, windows or furnace are near the end of their life.
- The tenants turn over every year, like a student rental near McMaster.
- The building has five or more units. Use 34% to 37% and take the tax from the bill.
And always take the tax figure from the listing or the assessment roll. Estimating it from the price you pay will overstate it, because the bill is based on 2016 values.
What the lender looks at
Lenders look at debt coverage: the money left before the mortgage, divided by the mortgage payments. On multi-unit buildings they usually want 1.20 or better. They also put a property manager into the costs, even if you plan to manage it yourself. So budget the 8% for management from day one. If you do the work yourself, that 8% is extra money in your pocket.
What a duplex costs right now
Our Hamilton duplex, triplex and fourplex report puts the median up-and-down duplex at $749,450 asking in early November 2026. That is about $374,725 per unit. These are asking prices from current listings, updated every week. Run 30% to 34% on the rent before you compare any of them.
Questions people ask
What expense ratio should I use for a rental property in Ontario?
For a duplex, triplex or fourplex, 30% to 34% of rent, before the mortgage. For five units or more, 34% to 37%, mostly because property tax is much higher in the multi-residential class. Our underwriting standard lists every line.
Is the 50% rule right for Hamilton?
For a small building it runs high. In Hamilton, tax on a duplex is about 8% to 11% of rent, and the full list of costs adds up to 30% to 34%. The 50% figure works as a stress test, to see whether a deal survives a bad year.
Does the expense ratio include the mortgage?
No. The expense ratio covers what it costs to run the building: tax, insurance, repairs, management, empty weeks, utilities and savings for big repairs. The mortgage comes after. What is left before the mortgage is the net operating income, or NOI.
Your next step
Send us a Hamilton listing and we will run these numbers on it with you, using the real tax bill, the leases in place and a real insurance quote. No charge. Talk to the team, or look at the Hamilton investment properties we are watching this week.
Cost shares are the Found Spaces underwriting assumptions, not quotes. The 16 Garrow Drive sale, tax and the lease rents are from MLS records read across PropTx and ITSO as of November 2, 2026. Mortgage math assumes 20% down, 25 years and 4.25%. Run your own deal before you buy.