Cities with cap rates between 7-8% — excellent returns with slightly more market stability than the highest-yield tier. We track 16 cities in this range.
Cities in the 7% – 8% cap rate range represent some of the strongest cash flow markets in America. The 16 cities in this tier have an average home price of $156K and average rents of $1,263/mo. Prices are 53% below the national average — lower entry points mean less capital at risk and higher potential yields.
The top performer in this tier is Enterprise, AL with a 7.9% cap rate at $175K. The most affordable entry is Danville, IL at $95K. For growth, Big Spring, TX leads with 1.8% annual population growth.
Property taxes average 1.01% in this tier, below the 1.08% national average — a cash flow advantage. Vacancy rates average 6.1%, and population growth averages 0.86% annually. Positive growth supports sustained rental demand and long-term appreciation.
Markets in the 7% – 8% range offer compelling cash flow, but higher yields often correlate with slower growth or higher risk. The best approach is to cross-reference cap rate with population growth, vacancy, and local economic drivers.