What is the cap rate in Houston, TX?

The median cap rate in Houston, TX is 5.1%. This is based on HUD Fair Market Rents and current home values.

Is Houston a good place to buy rental property?

Houston has a cap rate of 5.1% and estimated cash flow of -$294/month. Returns are moderate — consider the appreciation potential. Median home price is $256,258 with average 3BR rent of $1,680/month.

What is the average rent in Houston, TX?

The HUD Fair Market Rent for a 3-bedroom in Houston, TX is $1,680/month. This represents the estimated rent for standard-quality housing in the area.

Houston, TX — Rental Investment Analysis

🟡MODERATE— average returns

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

Investment Summary

As of 2026, rental properties in Houston, TX yield a 5.1% cap rate. Median home price is $256,258 with 3-bedroom rents at $1,680/month.

Houston is a moderate market — workable but not exceptional for cash flow. Median home price sits at $256,258 — moderate by national standards, requiring a solid down payment but not out of reach. With 3-bedroom rents around $1,680/month, the 5.1% cap rate tells the story. Cash flow is deeply negative at -$294/month with standard assumptions. This market requires appreciation to justify the investment.

At 0.69% 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 0.79 is below 1.0, meaning rental income doesn't cover the mortgage. DSCR lenders will likely decline this market at current prices.

Bottom line: Houston offers a balance of moderate cash flow and growth potential. Good for investors who want some income while building equity over time.

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

Cap Rate

5.1%

Below average

Monthly Cash Flow

-$294

After all expenses

Price-to-Rent

12.1

Investor-friendly

DSCR

0.79

Fails

Key Metrics

Median Home Price: $256,258
Average Rent (3BR): $1,680/mo
Price-to-Rent Ratio: 12.1(good)
1% Rule: 0.69%(fails — need 1%+)
Cash-on-Cash Return: -5.8%
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

29.9%

Affordable

Section 8 Max Rent

$1,680/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

+6,695 households

GROWING

Total Inflow

39,280

households moved in

Avg Income (New Residents)

$74,975

per household

Where they're coming from:

1.Brazoria, TX3,481 households · avg $56,649

2.Bexar, TX1,833 households · avg $61,614

3.Los Angeles, CA1,719 households · avg $84,165

4.Cook, IL1,127 households · avg $81,177

5.Miami-Dade, FL925 households · avg $80,188

Where residents are leaving to:

1.Brazoria, TX5,173 households

2.Bexar, TX1,716 households

3.Chambers, TX1,171 households

4.Los Angeles, CA982 households

5.Collin, TX792 households

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

Best Zip Codes in Houston for Investors

77054

Cap Rate: 14.3%Cash Flow: +$894/mo$136,310

77033

Cap Rate: 9.2%Cash Flow: +$341/mo$145,362

77002

Cap Rate: 8.9%Cash Flow: +$519/mo$250,329

All Zip Codes in Houston

Zip	Cap Rate	Cash Flow	Home Price	Rent (3BR)	DSCR
77054	14.3%	+$894	$136,310	$2,210/mo	2.23
77033	9.2%	+$341	$145,362	$1,610/mo	1.44
77002	8.9%	+$519	$250,329	$2,690/mo	1.39
77053	8.3%	+$313	$200,632	$2,030/mo	1.29
77036	7.7%	+$174	$165,230	$1,570/mo	1.20
77078	7.5%	+$147	$166,774	$1,550/mo	1.17
77028	7.4%	+$134	$161,355	$1,490/mo	1.16
77016	7.4%	+$132	$160,568	$1,480/mo	1.15
77045	7.1%	+$117	$199,223	$1,780/mo	1.11
77032	7.0%	+$89	$188,706	$1,660/mo	1.09
77093	6.7%	+$37	$166,051	$1,410/mo	1.04
77046	6.6%	+$52	$319,656	$2,690/mo	1.03
77047	6.5%	+$22	$252,291	$2,100/mo	1.02
77044	6.5%	+$23	$287,452	$2,390/mo	1.01
77026	6.3%	-$11	$147,646	$1,200/mo	0.99
77039	6.3%	-$14	$188,245	$1,530/mo	0.99
77063	6.3%	-$22	$247,872	$2,010/mo	0.98
77066	6.3%	-$29	$246,414	$1,990/mo	0.98
77072	6.2%	-$31	$206,522	$1,660/mo	0.97
77076	6.2%	-$31	$190,767	$1,530/mo	0.97
77021	6.2%	-$38	$197,938	$1,580/mo	0.96
77051	6.1%	-$47	$191,910	$1,520/mo	0.95
77012	6.0%	-$45	$156,276	$1,230/mo	0.95
77058	6.0%	-$70	$242,815	$1,910/mo	0.95
77015	6.0%	-$63	$200,316	$1,570/mo	0.94
77041	6.0%	-$101	$299,762	$2,340/mo	0.94
77013	6.0%	-$69	$193,963	$1,510/mo	0.93
77017	5.9%	-$70	$186,763	$1,450/mo	0.93
77049	5.9%	-$94	$242,706	$1,880/mo	0.93
77085	5.9%	-$97	$226,098	$1,740/mo	0.92
77084	5.9%	-$117	$267,990	$2,060/mo	0.92
77020	5.8%	-$83	$163,219	$1,240/mo	0.90
77060	5.8%	-$103	$196,520	$1,490/mo	0.90
77082	5.8%	-$135	$256,074	$1,940/mo	0.90
77099	5.8%	-$118	$221,864	$1,680/mo	0.90
77050	5.7%	-$99	$180,103	$1,360/mo	0.90
77038	5.7%	-$129	$219,972	$1,650/mo	0.89
77064	5.6%	-$170	$270,967	$2,020/mo	0.88
77057	5.6%	-$182	$277,673	$2,060/mo	0.88
77598	5.6%	-$178	$263,729	$1,950/mo	0.87
77034	5.5%	-$165	$226,492	$1,660/mo	0.86
77073	5.5%	-$170	$232,131	$1,700/mo	0.86
77339	5.5%	-$228	$297,847	$2,170/mo	0.86
77086	5.4%	-$174	$220,502	$1,600/mo	0.85
77087	5.4%	-$145	$182,074	$1,320/mo	0.85
77074	5.4%	-$179	$215,213	$1,550/mo	0.84
77048	5.4%	-$185	$218,556	$1,570/mo	0.84
77037	5.3%	-$174	$202,257	$1,450/mo	0.84
77090	5.3%	-$218	$248,993	$1,780/mo	0.84
77088	5.3%	-$193	$217,283	$1,550/mo	0.83
77070	5.2%	-$290	$298,601	$2,100/mo	0.82
77067	5.2%	-$218	$212,503	$1,480/mo	0.81
77042	5.1%	-$300	$274,516	$1,890/mo	0.79
77083	5.0%	-$295	$264,009	$1,810/mo	0.79
77089	5.0%	-$307	$274,251	$1,880/mo	0.79
77040	4.9%	-$328	$262,865	$1,760/mo	0.77
77065	4.9%	-$360	$288,331	$1,930/mo	0.77
77095	4.7%	-$463	$327,920	$2,130/mo	0.73
77661	4.6%	-$294	$196,952	$1,260/mo	0.72
77071	4.5%	-$375	$239,440	$1,510/mo	0.71
77075	4.5%	-$397	$253,576	$1,600/mo	0.71
77014	4.5%	-$398	$250,132	$1,570/mo	0.70
77003	4.5%	-$573	$356,363	$2,230/mo	0.70
77022	4.5%	-$340	$212,322	$1,330/mo	0.70
77011	4.4%	-$324	$194,139	$1,200/mo	0.69
77345	4.4%	-$692	$413,008	$2,550/mo	0.69
77081	4.4%	-$427	$254,365	$1,570/mo	0.68
77336	4.3%	-$478	$275,414	$1,680/mo	0.67
77564	4.1%	-$421	$221,825	$1,310/mo	0.64
77023	4.0%	-$505	$253,801	$1,470/mo	0.63
77035	4.0%	-$523	$261,282	$1,510/mo	0.62
77031	4.0%	-$515	$256,443	$1,480/mo	0.62
77059	3.9%	-$922	$451,976	$2,590/mo	0.62
77069	3.9%	-$683	$332,482	$1,900/mo	0.61
77077	3.9%	-$805	$392,083	$2,240/mo	0.61
77061	3.9%	-$485	$231,421	$1,310/mo	0.61
77068	3.9%	-$659	$314,399	$1,780/mo	0.61
77092	3.8%	-$608	$280,045	$1,560/mo	0.59
77062	3.7%	-$714	$315,280	$1,720/mo	0.57
77007	3.5%	-$1,219	$508,270	$2,690/mo	0.55
77445	3.4%	-$690	$281,224	$1,470/mo	0.54
77354	3.4%	-$963	$382,596	$1,970/mo	0.53
77091	3.4%	-$681	$270,170	$1,390/mo	0.53
77006	3.0%	-$1,624	$568,269	$2,690/mo	0.46
77043	2.9%	-$1,139	$395,300	$1,860/mo	0.46
77004	2.9%	-$1,021	$353,480	$1,660/mo	0.46
77080	2.9%	-$1,031	$353,691	$1,650/mo	0.45
77094	2.8%	-$1,719	$566,559	$2,560/mo	0.43
77363	2.7%	-$1,061	$348,418	$1,570/mo	0.43
77484	2.6%	-$1,105	$352,562	$1,550/mo	0.41
77030	2.6%	-$1,656	$528,053	$2,320/mo	0.41
77025	2.5%	-$1,568	$479,645	$2,030/mo	0.39
77517	2.4%	-$1,273	$386,076	$1,620/mo	0.38
77056	2.2%	-$2,331	$673,147	$2,690/mo	0.35
77009	2.1%	-$1,372	$384,948	$1,490/mo	0.33
77019	2.1%	-$2,499	$698,177	$2,690/mo	0.33
77096	2.1%	-$1,581	$439,073	$1,680/mo	0.32
77098	2.0%	-$2,552	$706,058	$2,690/mo	0.32
77485	2.0%	-$1,213	$330,824	$1,240/mo	0.31
77008	1.9%	-$2,220	$595,896	$2,190/mo	0.30
77027	1.5%	-$3,337	$822,529	$2,690/mo	0.24
77018	1.3%	-$2,312	$540,231	$1,620/mo	0.20
77079	1.2%	-$3,103	$722,130	$2,150/mo	0.19
77055	1.0%	-$2,778	$616,654	$1,680/mo	0.15
77024	0.0%	-$7,596	$1,427,751	$2,470/mo	0.00
77005	-0.1%	-$9,222	$1,695,752	$2,690/mo	-0.02