What is the cap rate in Austin, TX?

The median cap rate in Austin, TX is 3.1%. This is based on HUD Fair Market Rents and current home values.

Is Austin a good place to buy rental property?

Austin has a cap rate of 3.1% and estimated cash flow of -$1,407/month. Cash flow is challenging at current prices. Median home price is $560,806 with average 3BR rent of $2,670/month.

What is the average rent in Austin, TX?

The HUD Fair Market Rent for a 3-bedroom in Austin, TX is $2,670/month. This represents the estimated rent for standard-quality housing in the area.

Austin, TX — Rental Investment Analysis

🔴WEAK— appreciation play only

Data: HUD FMR FY2024 + Zillow ZHVI April 2026 + Freddie Mac rates. Last updated June 2026.

Investment Summary

As of 2026, Austin, TX has a 3.1% cap rate, indicating limited cash flow potential at current prices of $560,806 median.

Austin is primarily an appreciation play with limited cash flow potential. At $560,806 median home price, Austin requires significant capital. A 20% down payment alone is $112,161. With 3-bedroom rents around $2,670/month, the 3.1% cap rate tells the story. Cash flow is deeply negative at -$1,407/month with standard assumptions. This market requires appreciation to justify the investment.

At 0.49% on the 1% rule, rents are low relative to purchase prices. You'd need a significant discount from asking price to make the numbers work. DSCR of 0.49 is below 1.0, meaning rental income doesn't cover the mortgage. DSCR lenders will likely decline this market at current prices.

Bottom line: Consider Austin only if you believe in long-term appreciation. The numbers don't support cash flow at today's prices and rates.

Data sources: HUD Fair Market Rents (FY2024), Zillow Home Value Index (April 2026), Freddie Mac Primary Mortgage Market Survey.

Cap Rate

3.1%

Below average

Monthly Cash Flow

-$1,407

After all expenses

Price-to-Rent

16.9

Overpriced for rent

DSCR

0.49

Fails

Key Metrics

Median Home Price: $560,806
Average Rent (3BR): $2,670/mo
Price-to-Rent Ratio: 16.9(high)
1% Rule: 0.49%(fails — need 1%+)
Cash-on-Cash Return: -14.1%
Vacancy Rate: 8.0%

Market Strength

Unemployment Rate: 4.3%(0% vs national)
Rent Growth (YoY): +2.9%(national avg)
Population Growth: +1.5% YoY

Assumptions Used

20% down, 6.52% rate, 30yr, 8% vacancy, 10% maintenance

Customize these numbers →

Property Tax Rate

1.68%

of assessed value (TX avg)

Median Income

$67,321

household (TX avg)

Rent-to-Income

47.6%

Stretched

Section 8 Max Rent

$2,670/mo

3BR voucher payment

TX Investor Climate

Landlord Friendly

9/10

State Income Tax

None

Property Tax

1.68% effective

Population Trend

+1.5% (3yr)

Population Movement (Tax Year 2021→2022)

Net Migration

+5,136 households

GROWING

Total Inflow

25,578

households moved in

Avg Income (New Residents)

$142,759

per household

Where they're coming from:

1.Bexar, TX1,913 households · avg $119,904

2.Los Angeles, CA1,455 households · avg $191,137

3.Cook, IL936 households · avg $201,967

4.Santa Clara, CA776 households · avg $347,481

5.Bell, TX762 households · avg $57,576

Where residents are leaving to:

1.Bastrop, TX2,044 households

2.Bexar, TX1,997 households

3.Bell, TX1,000 households

4.Los Angeles, CA689 households

5.Comal, TX625 households

Strong net inflow suggests growing rental demand and upward pressure on rents.

Best Zip Codes in Austin for Investors

78725

Cap Rate: 9.1%Cash Flow: +$622/mo$280,012

78705

Cap Rate: 6.7%Cash Flow: +$79/mo$336,342

78747

Cap Rate: 6.2%Cash Flow: -$70/mo$363,253

All Zip Codes in Austin

Zip	Cap Rate	Cash Flow	Home Price	Rent (3BR)	DSCR
78725	9.1%	+$622	$280,012	$3,060/mo	1.42
78705	6.7%	+$79	$336,342	$2,860/mo	1.04
78747	6.2%	-$70	$363,253	$2,900/mo	0.96
78724	5.6%	-$206	$323,873	$2,410/mo	0.88
78741	5.1%	-$354	$332,462	$2,300/mo	0.80
78744	4.9%	-$407	$334,234	$2,250/mo	0.77
78621	4.9%	-$377	$298,112	$1,990/mo	0.76
78754	4.8%	-$484	$363,822	$2,400/mo	0.75
78758	4.8%	-$512	$374,039	$2,450/mo	0.74
78748	4.6%	-$612	$415,653	$2,670/mo	0.72
78753	4.6%	-$508	$344,231	$2,210/mo	0.72
78652	4.6%	-$713	$473,308	$3,020/mo	0.72
78727	4.2%	-$830	$458,988	$2,760/mo	0.66
78745	4.2%	-$786	$426,876	$2,550/mo	0.65
78721	4.0%	-$849	$422,858	$2,440/mo	0.62
78729	3.9%	-$909	$436,578	$2,480/mo	0.61
78752	3.9%	-$801	$379,281	$2,140/mo	0.60
78701	3.8%	-$1,396	$658,527	$3,710/mo	0.60
78728	3.7%	-$904	$410,298	$2,270/mo	0.59
78616	3.3%	-$973	$373,067	$1,880/mo	0.51
78749	3.2%	-$1,508	$560,806	$2,770/mo	0.49
78751	3.1%	-$1,648	$609,615	$3,000/mo	0.49
78702	3.0%	-$1,602	$566,243	$2,700/mo	0.47
78736	3.0%	-$1,714	$604,837	$2,880/mo	0.47
78723	2.9%	-$1,407	$483,808	$2,260/mo	0.45
78750	2.9%	-$1,791	$607,647	$2,810/mo	0.45
78722	2.8%	-$1,761	$587,411	$2,680/mo	0.44
78739	2.8%	-$2,435	$812,765	$3,710/mo	0.44
78717	2.7%	-$1,769	$575,233	$2,570/mo	0.42
78737	2.7%	-$2,420	$788,631	$3,530/mo	0.42
78719	2.7%	-$1,312	$423,439	$1,880/mo	0.42
78759	2.3%	-$2,285	$665,106	$2,680/mo	0.35
78704	2.1%	-$2,584	$731,436	$2,860/mo	0.34
78757	2.1%	-$2,135	$601,480	$2,340/mo	0.33
78735	1.9%	-$3,172	$838,155	$3,020/mo	0.29
78738	1.9%	-$3,210	$849,852	$3,070/mo	0.29
78726	1.8%	-$2,753	$717,502	$2,540/mo	0.28
78732	1.8%	-$3,202	$829,258	$2,910/mo	0.27
78756	1.6%	-$2,828	$711,642	$2,400/mo	0.25
78733	1.4%	-$4,881	$1,172,076	$3,680/mo	0.22
78731	0.7%	-$4,876	$1,025,311	$2,480/mo	0.11
78730	0.5%	-$5,518	$1,126,689	$2,530/mo	0.08
78703	0.4%	-$6,535	$1,312,839	$2,820/mo	0.06