Abilene, TX Cap Rate 7.24%
Abilene is the regional anchor of the Big Country in West-Central Texas — anchored by Dyess Air Force Base (one of two US B-1B Lancer bomber bases), Hendrick Medical Center, and a deep university base for a metro this size. The 7.24% cap rate at a $205,000 median price keeps the 0.86% rent-to-price ratio close to functional. Population growth at 1.8%/yr is essentially flat.
Employment is anchored by Dyess Air Force Base (the home of the 7th Bomb Wing — one of two US Air Force B-1B Lancer bomber bases, plus the 317th Airlift Wing operating C-130J aircraft; produces a sustained military-and-contractor tenant base with BAH-supported rents), Hendrick Health (the dominant regional medical system serving the Big Country — Hendrick Medical Center is one of the larger rural-anchor hospitals in Texas), the broader Abilene Christian University and Hardin-Simmons University and McMurry University (three private universities concentrated in Abilene make it unusually education-anchored for its size), the broader Taylor County government, the broader Texas oil-and-gas services economy with operations tied to the Permian Basin to the south, and a meaningful agricultural and ranching base. Submarkets stratify cleanly: the Elmwood and broader near-ACU areas are walkable urban-historic with strong appreciation; the broader South Abilene draws professional family rentals at premium pricing; the broader Wylie ISD areas are family-school suburban zones; the Dyess-adjacent zones have military family rentals; the broader Abilene extends with deeper-value workforce inventory.
Texas has no state income tax (a structural cash-flow advantage). Property tax at 1.72% is on the higher end nationally. Taylor County's appraisal cycle is annual. Insurance is reasonable but verify hail / tornado / severe-weather deductible structure (West Texas has meaningful hail exposure). The structural advantages: Dyess's mission concentration (B-1B bomber wing + airlift) makes it relatively durable against BRAC consolidation; the three-private-university base provides student-and-faculty tenant depth unusual for a metro this size; Hendrick Health is durable rural-anchor healthcare employment; no state income tax. The structural risks: any major bomber-force-structure decision (the B-1B is aging and will eventually be retired in favor of the B-21 Raider — though Dyess is widely expected to receive B-21s) would affect rental demand; the broader West Texas demographic trajectory has been mixed. For investors who want Texas tax structure with a military + healthcare + multi-university anchor at low cost basis, Abilene is one of the most defensible smaller-Texas Air Force base options.
Market data powered by Zillow Home Value Index (ZHVI) and Zillow Observed Rent Index (ZORI) · Updated Feb 2026
Market Data
2026 Market Update: Abilene
At a 0.9% rent-to-price ratio, Abilene falls just below the 1% rule threshold. A median-priced property at $205,000 with $1,770/mo rent yields approximately $1,237/mo in NOI — workable with favorable financing but not a slam-dunk cash flow market.
On a conventional loan with 20% down ($41K) at 7%, estimated monthly cash flow is $146 — a thin 4.3% cash-on-cash return. Investors should negotiate below asking price or target properties with above-median rents to build a meaningful cash flow buffer.
With 1.8% annual population growth paired with 2.7% home appreciation, Abilene offers a rare combination of current cash flow and future equity upside. The 9.7x gross rent multiplier suggests the market hasn't fully priced in this growth trajectory.
Deal Modeling & Scenarios for Abilene
All figures below are computed from Abilene's real market medians. Use them as a baseline; override with property-specific numbers in the calculators.
Property Tax Bill in Real Dollars
At 1.72% effective rate on the $205,000 median price, the annual tax bill is $3,526 — that's very high (top 15% of US markets) (+62% vs the national average of ~1.06%). Verify the actual assessed value before purchase; sale-triggered reassessments can push the bill higher than the seller's current statement.
5-Year Cap Rate Trajectory
If Abilene continues appreciating at 2.7%/yr while rents grow at a conservative 3%/yr, cap rate holds roughly steady as price growth outpaces rent. Year-by-year projection at the median:
| Year | Est. Price | Est. Rent/Mo | Cap Rate |
|---|---|---|---|
| Today | $205K | $1,770 | 7.2% |
| Year 1 | $211K | $1,823 | 7.3% |
| Year 2 | $216K | $1,878 | 7.3% |
| Year 3 | $222K | $1,934 | 7.3% |
| Year 4 | $228K | $1,992 | 7.3% |
| Year 5 | $234K | $2,052 | 7.3% |
Three Financing Scenarios
Same median-priced Abilene property — different capital structures. All-cash maximizes cap rate. Leverage trades cash flow for higher cash-on-cash return when the spread between cap rate and borrowing cost is positive.
| Scenario | Cash Invested | Monthly Cash Flow | Annual CF | Cash-on-Cash |
|---|---|---|---|---|
| All cash | $205K | $1,237 | $14,842 | 7.2% |
| 20% down conventional @ 7% | $47K | $146 | $1,755 | 3.7% |
| 25% down DSCR @ 8.5% | $59K | $55 | $654 | 1.1% |
Three Price Tiers: Below, At, and Above the Median
Properties don't always trade at the median. Lower-priced units typically offer higher cap rates but harder operations; higher-priced properties tend to compress cap rates while attracting better tenants. All-cash assumptions below:
| Tier | Price | Rent/Mo | NOI/Yr | Cap Rate | Monthly CF |
|---|---|---|---|---|---|
| Below median (~75% price) | $154K | $1,505 | $10,863 | 7.1% | $905 |
| At median | $205K | $1,770 | $12,264 | 6.0% | $1,022 |
| Above median (~125% price) | $256K | $2,035 | $13,664 | 5.3% | $1,139 |
Total Return Over a 5-Year Hold
Cap rate is just one piece. Real estate returns come from four sources: cash flow, appreciation, principal paydown, and tax benefits. Assuming 20% down conventional financing at 7% and a 5-year hold at Abilene's historical appreciation rate of 2.7%:
On a $41K down payment, that's a 122.6% total ROI over 5 years (not annualized). Tax benefits from depreciation are additional and depend on your personal tax bracket.
Risk Flags Specific to Abilene
Automated checks against the underlying data — surface only the risks that actually apply to Abilene, not generic boilerplate:
Cap Rate Calculator — Abilene
Pre-filled with Abilene medians. Adjust to match a specific property.
Cash-on-Cash Return — Abilene
Factor in financing to see your actual return on invested capital in Abilene.
Is Abilene a Good Place to Invest in Rental Property?
Abilene, TX has a population of 50,000 and has been growing at 1.8% annually — above the national average, suggesting steady demand pressure on housing. The median home price of $205,000 paired with median rents of $1,770/mo produces an estimated cap rate of 7.24%.
Property taxes at 1.72% are notably high and represent a significant drag on cash flow — model this expense carefully, as it can make or break a deal. The vacancy rate of 5.8% is moderate and within normal parameters for a healthy rental market.
At a price-to-income ratio of 3.2x, homes cost about 3.2 times the local median income of $63,735. This relatively affordable ratio suggests a deep pool of renters who find buying out of reach, supporting rental demand. Home values have appreciated at roughly 2.7% annually. Steady appreciation means total returns will be primarily cash flow-driven — the more sustainable model for long-term wealth building.
Bottom line: Abilene offers attractive fundamentals for rental investors. Strong population growth, and cap rates above 6% put it in the upper tier of investable markets.