Cap rate calculator — Texas

Frequently asked questions

How do you calculate cap rate on a rental property?

Cap rate is annual NOI divided by purchase price. NOI is effective gross income after vacancy minus operating expenses like taxes, insurance, and recurring costs.

What is a good cap rate?

A good cap rate depends on market risk, asset quality, and growth expectations. Many investors compare cap rate against local comps, financing terms, and target return hurdles.

Can I save cap rate calculator results?

This calculator does not save your session. Use a free Veld account to save deals in the deal analyzer and track portfolio assumptions over time.

Do Texas property taxes affect cash flow in this calculator?

Yes—and they matter. Texas has no state income tax but property taxes are among the highest in the country. Default inputs start with HUD-based rent estimates; enter your expected annual property tax and insurance load in the expenses field to model real cash flow.

What is a good cap rate in Texas?

Residential investment cap rates in Texas vary by market. DFW and Houston investors typically see 5.5–7% on SFR and small multifamily as of 2024–2025, while Austin and premium suburban markets compress closer to 4.5–5.5%. Texas's high effective property tax (~1.6–2% of value depending on county) meaningfully reduces NOI—enter your actual tax bill rather than using a national default to get an accurate cap rate.

How do I estimate cash-on-cash return in Texas?

Cash-on-cash return in Texas depends heavily on your down payment, financing rate, and how accurately you model property taxes and insurance. With a 20% down payment and 7–8% mortgage rate, many Texas SFR deals run 4–8% CoC. High property taxes reduce NOI, which compresses CoC relative to lower-tax states—use local tax estimates, not a national rule of thumb.

What cap rate benchmark should I use in Texas?

Recent residential cap rates in Texas are often near 6.2%, but deal quality and neighborhood risk can move that range. Underwrite with your actual 1.25% effective property tax and insurance quotes to avoid overstating NOI.