Arlington, TX Cap Rate 2.54%
Arlington is the seventh-largest city in Texas and structurally unique among major US cities — uniquely anchored by being the sports-and-entertainment heart of the DFW metroplex (AT&T Stadium for the Cowboys, Globe Life Field for the Rangers, Six Flags Over Texas, Hurricane Harbor, plus the new Texas Live entertainment district). Combined with GM's major assembly plant and the University of Texas at Arlington, Arlington produces a uniquely diversified employer mix. The 2.54% cap rate at a $360,000 median price keeps the 0.45% rent-to-price ratio close to functional. Population growth at 1.3%/yr is steady.
Employment is anchored by GM Arlington Assembly (the major Chevrolet Suburban / Tahoe / Cadillac Escalade SUV plant — one of GM's most profitable US assembly plants, with the broader supplier ecosystem extending throughout Tarrant County), the broader Arlington entertainment district (AT&T Stadium for the Dallas Cowboys, Globe Life Field for the Texas Rangers, Six Flags Over Texas, plus the broader Texas Live entertainment-and-hotel complex — collectively a major hospitality employer), the University of Texas at Arlington (~42K students, the second-largest UT system campus), Lockheed Martin's broader DFW operations spillover, Texas Health Arlington Memorial and Medical City Arlington, the broader DFW commuter base (Arlington sits between Dallas and Fort Worth — meaningful commuter activity in both directions), and Bell Helicopter operations. Submarkets stratify cleanly: the Pantego and broader West Arlington areas are walkable urban with strong appreciation; the broader Mansfield ISD and Arlington ISD school-district zones draw family rentals at premium pricing; UT Arlington-adjacent zones are student-heavy; the broader Arlington extends with newer construction.
Texas has no state income tax (a structural cash-flow advantage). Property tax at 1.77% is on the higher end nationally (Texas property tax compensates for no state income tax). Tarrant County's appraisal cycle is annual; new buyers don't inherit seller's lower assessment. Insurance is reasonable but verify hail / tornado deductible structure (the DFW area has meaningful hail exposure). The structural advantages: GM + entertainment district + UT Arlington + DFW commuter access produces a genuinely diversified employer mix; sustained DFW metro growth provides demand; cost basis is materially below Dallas or Fort Worth proper. The structural risks: GM concentration matters (any major Suburban/Tahoe program decision would affect supplier employment); entertainment district employment is sensitive to discretionary spending cycles. For investors who want DFW-metro exposure with major-employer diversification at lower cost basis than Dallas/Fort Worth, Arlington is the most underrated DFW option.
Market data powered by Zillow Home Value Index (ZHVI) and Zillow Observed Rent Index (ZORI) · Updated Feb 2026
Market Data
2026 Market Update: Arlington
Arlington's 0.5% rent-to-price ratio is well below the 1% rule. At median prices of $360,000, the $1,630/mo rent produces only $763/mo in NOI. Investors here need to target below-median properties or pursue value-add strategies to make the numbers work.
At current rates, a 20% down conventional loan ($72K at 7%) would result in approximately $-1,152/mo cash flow — negative at median prices. Larger down payments, seller financing, or buying 15–25% below median are strategies to turn the numbers positive.
Property taxes consume 33% of gross rent here — one of the highest ratios in our dataset. This significantly compresses margins and makes Arlington a market where tax-conscious underwriting is essential. Every deal should be stress-tested with potential assessment increases.
Deal Modeling & Scenarios for Arlington
All figures below are computed from Arlington's real market medians. Use them as a baseline; override with property-specific numbers in the calculators.
Property Tax Bill in Real Dollars
At 1.77% effective rate on the $360,000 median price, the annual tax bill is $6,372 — that's very high (top 15% of US markets) (+67% 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 Arlington 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 | $360K | $1,630 | 2.5% |
| Year 1 | $370K | $1,679 | 2.6% |
| Year 2 | $380K | $1,729 | 2.6% |
| Year 3 | $390K | $1,781 | 2.6% |
| Year 4 | $400K | $1,835 | 2.6% |
| Year 5 | $411K | $1,890 | 2.6% |
Three Financing Scenarios
Same median-priced Arlington 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 | $360K | $763 | $9,154 | 2.5% |
| 20% down conventional @ 7% | $83K | $-1,152 | $-13,828 | -16.7% |
| 25% down DSCR @ 8.5% | $104K | $-1,313 | $-15,762 | -15.1% |
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) | $270K | $1,386 | $7,131 | 2.6% | $594 |
| At median | $360K | $1,630 | $7,464 | 2.1% | $622 |
| Above median (~125% price) | $450K | $1,874 | $7,798 | 1.7% | $650 |
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 Arlington's historical appreciation rate of 2.7%:
On a $72K down payment, that's a 5.2% total ROI over 5 years (not annualized). Tax benefits from depreciation are additional and depend on your personal tax bracket.
Risk Flags Specific to Arlington
Automated checks against the underlying data — surface only the risks that actually apply to Arlington, not generic boilerplate:
Cap Rate Calculator — Arlington
Pre-filled with Arlington medians. Adjust to match a specific property.
Cash-on-Cash Return — Arlington
Factor in financing to see your actual return on invested capital in Arlington.
Is Arlington a Good Place to Invest in Rental Property?
Arlington, TX has a population of 398,854 and has been growing at 1.3% annually — above the national average, suggesting steady demand pressure on housing. The median home price of $360,000 paired with median rents of $1,630/mo produces an estimated cap rate of 2.54%.
Property taxes at 1.77% 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 5.9% is moderate and within normal parameters for a healthy rental market.
At a price-to-income ratio of 6.0x, homes cost about 6.0 times the local median income of $60,200. This moderate ratio indicates a balanced rent-vs-buy market. 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: At current median prices, Arlington is challenging for pure cash flow investing. Consider BRRRR strategies with below-market purchases, or look at neighboring metros with stronger price-to-rent ratios.