Mercedes, TX — Rental Investment Analysis
🟢GOOD— solid returnsData: HUD FMR FY2024 + Zillow ZHVI April 2026 + Freddie Mac rates. Last updated June 2026.
Investment Summary
As of 2026, Mercedes, TX offers a 6.5% cap rate with median home prices of $141,382 and 3-bedroom rents of $1,180/month.
Mercedes offers solid returns for rental investors. With a median home price of $141,382, entry costs are low — making it accessible for beginning investors or those buying multiple properties. With 3-bedroom rents around $1,180/month, the 6.5% cap rate tells the story. Cash flow is modest at +$15/month — positive but tight. Rate increases or vacancies could flip it negative.
The 1% rule comes in at 0.83% — doesn't quite pass, but close enough to find individual deals that work. DSCR of 1.02 is tight — you'll pass most lender minimums but with little margin for error.
Bottom line: Mercedes 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
6.5%
Above average
Monthly Cash Flow
+$15
After all expenses
Price-to-Rent
10.0
Investor-friendly
DSCR
1.02
Tight
Key Metrics
- Median Home Price
- $141,382
- Average Rent (3BR)
- $1,180/mo
- Price-to-Rent Ratio
- 10.0(good)
- 1% Rule
- 0.83%(fails — need 1%+)
- Cash-on-Cash Return
- 0.6%
- 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
Property Tax Rate
1.68%
of assessed value (TX avg)
Median Income
$67,321
household (TX avg)
Rent-to-Income
21%
Affordable
Section 8 Max Rent
$1,180/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)