El Paso, TX Cap Rate: 4.71% — Rental Property Analysis
El Paso is a budget-friendly market in the South with a major metro of 681,728 residents. At a 4.71% estimated cap rate, this is a moderate market where rents of $1,450/mo lag behind home prices. With a median home price of $225,000 and steady population growth supports long-term rental demand, El Paso offers opportunities for investors who source deals carefully.
Market data powered by Zillow Home Value Index (ZHVI) and Zillow Observed Rent Index (ZORI) · Updated Feb 2026
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Moderate — source deals carefully
Based on $225,000 median price and $1,450/mo median rent
Est. Cap Rate
4.71%
1% Rule
0.64%
Fails
GRM
12.9x
Price / Income
4.9x
Market Data
Median Home Price$225,000
Median Monthly Rent$1,450
Property Tax Rate1.74%
Population681,728
Population Growth0.6% / yr
Median Household Income$46,100
Vacancy Rate6.2%
Annual Appreciation2.3%
2026 Market Update: El Paso
El Paso's 0.6% rent-to-price ratio is well below the 1% rule. At median prices of $225,000, the $1,450/mo rent produces only $884/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 ($45K at 7%) would result in approximately $-313/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 23% of gross rent here — one of the highest ratios in our dataset. This significantly compresses margins and makes El Paso a market where tax-conscious underwriting is essential. Every deal should be stress-tested with potential assessment increases.
Cap Rate Calculator — El Paso
Pre-filled with El Paso medians. Adjust to match a specific property.
Property Details
$
$
3–8% typical
%
Monthly Expenses
1.74% rate
$
$
8–10% of rent
$
8–12% of rent
$
Cap Rate
3.72%Low
Net Operating Income ÷ Purchase Price
NOI / Year
$8,377
net operating income
Gross Rent Multiplier
12.9x
Good (<15)
1% Rule
0.64%
✗ Fails
Monthly Cash Flow
$698
before debt service
Annual Breakdown
Gross Rental Income$17,400
Less Vacancy−$1,079
Effective Income$16,321
Less Operating Expenses−$7,944
Net Operating Income$8,377
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Factor in financing to see your actual return on invested capital in El Paso.
$
$56,250
%
%
years
$
taxes + ins + maint + mgmt
$
$
Cash-on-Cash Return
-4.94%Weak
Annual Cash Flow ÷ Total Cash Invested
Total Cash Invested
$63,000
$56,250 down + $6,750 closing
Monthly Mortgage
$1,100
on $169K loan
Monthly Cash Flow
$-259
after all expenses
Annual Cash Flow
$-3,109
before taxes
Cash Flow Breakdown
Monthly Rent$1,450
Less Expenses−$609
Less Mortgage−$1,100
Monthly Cash Flow$-259
Is El Paso a Good Place to Invest in Rental Property?
El Paso, TX has a population of 681,728 and has been growing at 0.6% annually — roughly in line with national trends, meaning demand is stable but not exceptional. The median home price of $225,000 paired with median rents of $1,450/mo produces an estimated cap rate of 4.71%.
Property taxes at 1.74% 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 6.2% is moderate and within normal parameters for a healthy rental market.
At a price-to-income ratio of 4.9x, homes cost about 4.9 times the local median income of $46,100. This moderate ratio indicates a balanced rent-vs-buy market. Home values have appreciated at roughly 2.3% annually. Steady appreciation means total returns will be primarily cash flow-driven — the more sustainable model for long-term wealth building.
Bottom line: El Paso presents moderate opportunities. Cap rates near 4.71% mean deals need careful sourcing — look for value-add rehabs or emerging neighborhoods where rents are climbing.
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