Calculate net operating income, cap rate, and implied market value for any Austin investment property.
Send me the address. I can pull comps, verify the rent assumptions, and walk you through whether the numbers work.
Residential investment properties in Austin typically trade at 4-6% cap rates in desirable areas and 6-8% in suburban markets. Cap rates compressed to 3-4% at the 2021-2022 peak. Today's numbers are more investor-friendly. A 5-5.5% cap rate is realistic for a well-located Austin single-family rental.
Cap rate = Net Operating Income / Purchase Price. NOI is gross rent minus all operating expenses before mortgage payments. Example: $24,000 gross rent, $10,000 expenses, $200,000 price = 7% cap rate.
No. Cap rate is a property-level metric calculated before debt service. A property's cap rate is the same whether you pay cash or finance 80%. To understand your actual cash return with financing, use the cash-on-cash calculator.
For Austin single-family rentals in 2026, 5-8% is a reasonable planning assumption. In tight submarkets (78704, Mueller, North Loop), use 3-5%. In areas with heavy new construction, use 8-12%. I underwrite at 8% unless there is strong evidence otherwise.
Austin property managers charge 8-12% of monthly rent, plus one month's rent for leasing. Budget 12-15% total including placement amortized over a 2-year tenancy.
Property taxes (1.95%/year), homeowners insurance ($2,400-$4,000/year), property management (8-12% of rent), maintenance (1-1.5% of value/year), vacancy allowance (5-8% of gross rent), and HOA if applicable. Do not include mortgage payments in operating expenses.
The 1% rule says monthly rent should equal 1% of purchase price. In Austin this is hard to achieve — realistic rents are 0.5-0.7% of price. Use cap rate and cash-on-cash return for more accurate analysis in high-cost markets like Austin.
Austin has strong fundamentals: population growth, a diversified economy, and a track record of long-term appreciation. The post-2022 correction reset prices to more investor-friendly levels. The main headwind is high property taxes (1.95%) which compress NOI. I work with investors regularly and can help you identify properties that underwrite at target returns.
Cap rate = Net Operating Income / Purchase Price. NOI is calculated as: Effective Gross Income (gross rent minus vacancy) minus all operating expenses (taxes, insurance, management, maintenance, HOA, other). Operating expenses do not include mortgage payments or capital expenditures.
Implied market value = NOI / Market Cap Rate. This answers the question: at the cap rate comparable properties are trading for, what is this property worth? Use it to check whether a listed price is reasonable given the income the property produces. Defaults: Travis County 2026 tax rate, 10% management, 8% vacancy. Last updated July 2026.
